Amnesty of capital is ... Amnesty of capital in Russia

Legalization, also known as capital amnesty, is an economic mechanism that, in fact, is a kind of contract between the state and economic agents or citizens, allowing to build relations between the parties from scratch. The success of the procedure depends on the level of trust between the parties. Legalization of both income and property is the preliminary stage of declaring. The state allows all residents to legitimize all their incomes, without incurring punishment or penalties. In such a format, private individuals and organizations have the opportunity to clear their history and eliminate a number of errors. There are a lot of amnesty mechanisms. Legalization can be accompanied by the payment of income tax or not have it. Parallel implementation of fiscal reforms or their absence, liberalization or tightening of tax administration standards is allowed .

Amnesty Worldwide: America and Switzerland

The amnesty of capital is a procedure for legitimizing property, the history of which began back in the 1920s in the 20th century. For the first time, the procedure was proposed by the US government almost immediately after the end of the Great Depression and after the repeal of the dry law. It was at that time that the Government of America offered the citizens of the country to register their income from the illegal sale of alcohol. On the territory of Europe, Switzerland was the first to practice the procedure. After the end of World War II, it was here that the capital of the Third Reich was registered.

The mechanism for the implementation of the amnesty, the conditions of its implementation and the effect from each of the countries is individual. But the essence of the process is reduced to forgiving the state of taxpayers all their debts. This encouragement of the government makes it possible to attract very large capitals from the shadow economy to the state budget.

One of the most successful amnesties in history

In 2001, a full amnesty of capital was held in Kazakhstan. It was also one of the most successful procedures that took place in the territory of the post-Soviet space. During the month, specialized accounts in 16 banks were ordered about 480 million dollars. The state guarantee was the destruction of the documentation of taxpayers who took part in the legalization of their own free will. In parallel with the amnesty, the country reduced VAT by approximately 4%. Social tax decreased by 5%. To ensure that the money returned was not idle, the government issued special government securities. It was the amnestied funds that helped Kazakhstan to eliminate the consequences of the 1998 crisis.

A new breakthrough in the Turkish economy

The amnesty of capital is an economic procedure that is carried out from time to time in virtually all countries of the world. A vivid example of how the mechanism of legalization should work is Turkey. At the moment, five successful amnesties have already been held on the territory of the state. For the first time the process of legalization was launched in 1998, which was the period of the beginning of a new economic era. Material means, which were deposited in bank accounts, were not taxed, and no one was interested in their origin. The result of the government's actions was $ 20 billion in bank accounts.

Unsuccessful amnesty: Russia, Georgia and India

The amnesty of capital in Russia in 2007, in India and Georgia, was the most unsuccessful in the history of the existence of legalization. In India, for example, tax services began to be interested in the origin of capital during the amnesty, which allowed them to enrich the budget by only 2.5 billion dollars. Here, the fact that in a multi-million country only 5% of residents pay the income tax is striking. A similar procedure in Georgia attracted the attention of only eight people and a capital of $ 35,000. Separately, we can say about Russia, where citizens and commercial organizations were asked to legalize their profits, paying only 13 percent of income tax. The response from the society so to wait and did not work.

What is the secret of the success of the amnesty?

Amnesty financial should be accompanied by a powerful legislative base, which, unfortunately, is absent in Russia. Any project should be studied in detail and take into account all interests of entrepreneurs, businessmen and individuals. In the history of successful capital legalization processes were accompanied by important moments:

• The exemption of project participants from the need to file a declaration and pay tax debts.
• Audit of funds is not mandatory.
• Complete liquidation of records on tax debts, on a foam with penalties against assets.
• Confidentiality of information on the directions of the movement of assets before the tax authorities and other controlling structures.
• All funds or property that will be included in the income declaration form will be registered through special institutions. Information for the tax authorities will remain confidential.

Attractive conditions for an amnesty to obtain the optimal effect should be accompanied by a toughening of punishment in case of violation of tax legislation. This can be both confiscation of property, and the increase of fines.

Amnesty of capital in Russia in 2015

The government of Russia already in the beginning of December 2014 began to conduct active conversations about the amnesty of capital. The issue in the future will affect not only people who have evaded taxes, but also those who have committed a certain category of financial crimes. Despite public skepticism, according to the government, for Russia the amnesty of capital is an opportunity to help its wealthy citizens who, due to sanctions from the West, suffer certain inconveniences saving their capital abroad. According to Putin, this measure will have a voluntary nature and will make life easier for many "strong" Russians. According to experts, the economic situation in the country will become a powerful foundation and prerequisite for the fact that legalization once again simply failed.

Contradictions in the Legislation of Russia

The expanded amnesty, which is scheduled to be held as of May 9, 2015, does not yet have reliable legislative reinforcement. There was information that the planned procedure is inherently completely contrary to international standards for combating money laundering. Trying to save the situation, the president continues to actively promise fundamental changes in laws that will not contradict the FATF rules. To date, the President has submitted several draft laws, but each of them does not yet provide security guarantees for persons who will accept the terms of legalization. It should also be noted that the wealthy citizens of Russia, who exported their capitals abroad, continue to partially invest in the domestic economy under the guise of foreign investment. They are not very interested in financial amnesty as such, as it is not in a position to offer a certain package of advantages to the present moment.

Why can an amnesty in Russia fail?

Financial and credit amnesty in the territory of Russia has very low chances of success. The main reason for the disappointing forecast lies in distrust of the government's decisions, which are allegedly aimed at improving the lives of citizens of the state. On the account of the government and Khrushchev's freezing of Stalin's bonds, and Pavlov's reform, which deprived the population of savings, and the monetization of benefits that has not yet disappeared. Guarantees that after a few years the authorities will radically change their decisions to the owners of amnestied capital, simply does not exist. The security of individuals will be preserved only until Putin becomes the incumbent president of the state. The amnesty of capital is not very attractive because the law enforcement apparatus of the country is more corrupt. If people start to declare at their own desire that they have large capitals, they will be the first to be under attack. The government is not in a position to provide a decent level of protection against scammers. There are high risks that amnestied capital may be banned in foreign jurisdictions.

The history of unsuccessful amnesties in Russia

Active discussion of de-doesurization in business and government circles does not change the fact that the law on amnesty of capital is not currently adopted and approved. Hard legal guarantees for people who decide to participate in the amnesty, no one can not provide. In the history of the state, there are already cases when the government had to face failures, just starting from poorly done work in the field of legislation. So, in 1993, after the adoption of the law on the conduct of a tax amnesty, there was no activity on the part of the population. People refused to be released from responsibility for non-payment of taxes by making all debts to the country's budget. The second wave of amnesties is an attempt to legalize real estate and incomes in 2002. The bill, which was supposed to confirm the plans of the state, was never adopted. The third stage is the credit amnesty and taxation that took place in 2007. The government of the country does not want to learn from mistakes and follow the successful experience of other countries.

What is not enough for a successful national amnesty?

The main drawback of the upcoming national amnesty is the inability of the state to provide security guarantees for each of its participants. Despite the fact that not a single draft law has been submitted to consideration, this factor has not been considered in detail in any of them. Financial stimulation, which expresses the order of payment of the tax (2.5% on the returned capital), is supported by the absence of judicial and administrative responsibilities. The problem is that payers will be forced to independently calculate this tax at a rate of 2.5%, which can cause some inconvenience.

Minor deficiencies

In each of the draft laws submitted for consideration there is no such item as the legalization of capital issued for a third party. There is no provision for entering data on real estate and other property in the third-person income declaration form. There is no clear list of articles according to which a person will be released from responsibility. There are no points concerning the persecution of people who have previously committed tax crimes.

A soft policy of cooperation is a chance to succeed

In a difficult economic situation, the government should have loyally approached people who intend to accept the terms of legalization. You can talk about removing the requirements for transferring their savings to the territory of Russia, which is now in a far from better position. As an option, it is worth considering the waiver of the fulfillment of tax and other obligations on capital. It would be reasonable to reject the requirements regarding the need to invest in the purchase of securities or in the economy of the state. According to preliminary estimates, legalization will be carried out in March. At the moment, the department is actively working and plans to eliminate all the actual shortcomings of the planned procedure.