MOSCOW, November 23 (RIA Novosti) - The head of Russia's Central Bank said Thursday he is skeptical about the idea of replacing the value added tax (VAT) with a sales tax.
The economics ministry earlier said the value added tax could gradually be replaced by the sales tax in 2009-2011 because the VAT refund on export operations involved a complicated procedure.
"I am skeptical about the replacement of the VAT with a sales tax," Sergei Ignatyev told a government meeting Thursday, adding that a new tax would involve no fewer problems with administration.
A government source said before the government session that the issue of VAT replacement was not currently under consideration. The finance and economics ministries hold the opinion that the administration of the value added tax has potential can be improved and, therefore, it is inexpedient to think about its replacement, the source said.
The current VAT rate in Russia is 18%, with a preferential rate of 10% for "socially important" staple goods. Russia had a sales tax between 1998 and 2003, simultaneously with the VAT, but it was abolished. The economics ministry earlier proposed replacing the value added tax with a 10-15% sales tax.
At the same time, Deputy Finance Minister Sergei Shatalov told the government session that VAT collection can be optimized.
The finance ministry proposes introducing a system of control over the exports of goods and a VAT refund involving close cooperation between tax and customs authorities, Shatalov said.
