Text 2. Read this article and give Russian equivalents to the underlined expressions.

Tax Deadline Inevitably Draws Near…

As the statutory deadline for submission of individual income tax returns is fast approaching, it seems the ideal time for a general recap of tax legislation.

What should be the first question one asks oneself with regards to tax obligations? In reality, there are a few important questions, for example: ―Am I a taxpayer in Russia? What income should I declare? What rates should be applied to this income and by what date should the tax declaration be filed and tax payment made?‖

The core issue of individual income tax is determining one’s tax residency status. In Russia this does not depend on a person’s citizenship or domicile, instead it is based solely on the number of days spent on the territory of Russia in the calendar year. An individual is considered to be a tax resident of Russia for income tax purposes if he or she is physically present in Russia for 183 days or more in a calendar year.

Based on tax residency status, taxable income can be determined: for tax residents of the Russian Federation it should be their worldwide income and for non-residents it should only be income received from Russian sources.

Russian source income includes, but is not limited to, income received as a result of carrying out activities in Russia regardless of the nature of the payment, for example it may be remuneration from employment, rendering services and other actions in Russia, dividends from Russian companies, insurance payouts paid from a Russian source, income received from the use or sale of property in Russia, etc. Both Russian tax residents and non residents may be taxed on income paid in cash or in kind or in relation to which a taxpayer has received the right of disposal, as well as on imputed income.

Due to the low resident tax rate, most types of income are taxable, but there are a limited number of exemptions allowed by law.

Russian tax residents may decrease their taxable base by means of allowable taxdeductions: standard, professional, social and property deductions. Tax non-residents are not allowed to claim any deductions.

Social tax deductions may be granted to the taxpayer if they have made a charitable donation to a Russian budgetary financed organisation approved by law (for the actual amount, but not more than 25 percent of total income); payments for the education of the taxpayer and/or their children if paid by the taxpayer personally (in the amount of not more than RUR 38,000 ($1,300) per person per year); payments for medicines and medical treatment for the taxpayer and members of their family rendered by licensed medical institutions in Russia (in the amount of not more than RUR 38,000 per person per year).

However, acquiring the documentation required to claim these deductions may outweigh the potential tax savings.

Property deductions may be granted for the full amount of income derived from the sale of real estate and land plots or from the sale of other property which has been owned by the taxpayer for a period of at least three years. If property has been owned for less than three years, then a deduction from the taxable income of up to 1 million rubles ($35,700) for immovable property or 125,000 rubles ($4,500) for other property may be claimed. Alternatively, the taxpayer has the choice of taxing the difference between the sale price and the documented expenses on the acquisition and sale of the property. There is also a special deduction granted once in a lifetime deduction for the purchase of residential property in Russia, whereby up to 1 million rubles of capital costs may be deducted from the taxpayer’s taxable income. Interest on a loan to construct or acquire such property is also deductible.

The tax rate on individual income is generally 13 percent for Russian tax residents, but other rates may apply to specific types of income, such as 9 percent on dividend income and 35 percent on bank interest which exceeds the statutory norms, on certain insurance payouts, prizes and imputed income from low- or zero-interest loans. Individuals who are not tax residents of Russia are taxed at the flat 30 percent tax rate on their Russian source income.

For non-residents, exemption from Russian tax under a double tax treaty may be possible providing the applicable treaty relief criteria are met and appropriate supporting documentation is provided to the Russian tax authorities. If Russian tax residents pay taxon their income in other countries, then it may be possible to claim a foreign tax credit on their Russian tax returns under an applicable double tax treaty.

Russian legislation establishes that Russian organisations, entrepreneurs and permanent establishments of foreign legal entities should act as tax agents. In other words, they have to calculate and withhold income tax from payments made to individuals and remit it to the budget. Therefore, if individuals receive income from sources from which there is no tax agent or if their tax liability was incorrectly withheld by the tax agent, then the taxpayers should file tax returns to report the income and pay the taxes owed based upon tax returns. Resident taxpayers may also have a filing obligation if they want to claim any deductions.

Should the obligation to file a personal income tax return for 2005 arise, an individual is required to do so either personally or via registered mail no later than April 30, 2006.

Foreign nationals who permanently depart Russia before the end of the year are also subject to a special filing requirement; they should file a departure tax return for the income received up to the date of leaving the country no later than one month prior to departure.

The tax calculated in the tax declaration is payable by July 15, 2006 or within 15 days after the submission of a departure tax return.

Finally, when submitting a tax return, foreign nationals should include a photocopy of all pages of their passports with their tax returns to confirm their residency status. Additional documentation confirming reported income in the tax returns may also be requested by the tax authorities. Therefore, we recommend taxpayers to plan well in advance of the April 30, 2006 filing deadline.

Task 1. Translate the following sentences into Russian:

1. The top corporate tax rate was reduced sharply under President Reagan, from 46 percent to 34 percent. Yet today, with a federal corporate tax rate of 35 percent, America has one of the highest corporate tax rates in the developed world.

2. Since World War II, tax receipts have averaged around 18 percent of the economy, or gross domestic product. Tax receipts  were 17.7 percent of GDP in 2008, slightly below the 60-year average, and are projected to fall to 15.4 percent in 2009 due mostly to the struggling economy.

3. Social insurance taxes, which fund programs such as Social Security and Medicare, are now the second-largest source of revenue. Yet without reforms, dramatically higher taxes will be needed to pay for these programs.

4. The average American household's tax burden has increased steadily since 1965. The largest increase occurred during the Clinton Administration, when taxes per household rose over 20 percent. Today's tax burden is near the highest in history, even with the 2001 and 2003 tax cuts.

5. The most dramatic decline in the top individual income tax rate, from 70 percent to 28 percent, occurred during the Reagan Administration, yet tax receipts remained relatively constant.

6. The U.S. tax system is highly progressive. The top 1 percent of income earners paid 40 percent of all federal income taxes in 2006, while the bottom 50 percent paid 3 percent.

7. Under current law, tax revenues are expected to leap to 25.5 percent of the economy by 2082. Under President Obama's plan, tax revenues would remainconsistently above the historical average of 18.4 percent of GDP.

8. The economy boomed after the 2003 tax cuts, leading to the highest level of corporate tax receipts in over 20 years. Although revenues recently have fallen significantly, this is due to a weakened economy rather than changes in tax policy.

 

Task 2. Give a free translation of this article, using the following expressions:

tax dodgers/ evaders, to contribute to the public purse, devise a formula, to meet the annual target of revenue collection, habitual defaulters, repeat offenders, persuasive eunuchs, to cover one’s dues, to be ostracised by modern society