According to the data of the Accounts Chamber of the Russian Federation, on the back of benefits attributed to tax expenses the RF Ministry of Finance’s short-received budget revenues will amount to over Rb8 trillion in 2023. Elisei Leonov, Researcher of the Tax System Development Department of the Gaidar Institute shared his opinion with the Nezavisimaya Gazeta daily on tax benefits efficiency in the Russian Federation and criteria for their evaluation.

Having analyzed the introduction of the concept of tax expenditures in the RF budget, the Accounts Chamber has pointed to the need to strengthen control over the quality of evaluation of efficiency of tax expenses. According to the data of the Accounts Chamber, tax expenses “are equal on average to about 30% of the overall volume both of federal budget expenditures and revenues.” A portion of tax expenses is left without being evaluated in terms of efficiency because of a lack of evaluation methods or approval thereof in case they exist, the Accounts Chamber explains. Further, in its report the Accounts Chamber drew attention to the fact that there was an increase in the number of tax expenses in the period since 2020 ‘on the back of the practice of attributing benefits to tax expenses, rather than emergence of new benefits.”

Elisei Leonov has noted that the analysis of efficiency of tax expenses is complicated in Russia because one often has to deal with the so-called “Bermuda Triangle”: “tax expense–subsidies–public procurement”.

“One can often encounter a situation where the same company becomes a recipient both of a tax benefit and subsidy and simultaneously participates in public procurement. It is clear that all sorts of manipulations are possible. A company which receives a subsidy and is eligible for tax benefits is in a more advantageous position to make a better bid at an auction,” Elisei Leonov believes.

Judging by the expert’s comments, a more non-transparent situation is taking place at the regional level, particularly, if problems related with efficiency of special economic zones are taken into account. “It is difficult to understand to what extent recipients of all these benefits actually need them,” Elisei Leonov says. It is noteworthy that by some country assessments Russia is the leader as regards tax expenses, Elisei Leonov added.