Transcript of the beginning of the meeting:

Vladimir Putin: Mr Mishustin, allow me to begin by asking you the usual questions: how smoothly is your work progressing? How much have you collected and how does it compare to this year’s tax collection plan?

I would also like to hear about your progress in writing off delinquent taxes, I mean primarily those that are the result of legal and regulatory confusion rather than due to a taxpayer’s own unwise actions. I have asked you to consider how we can strip this process of as much red tape as possible, so that people won’t have to visit dozens of courts and public offices. Let us begin with the second part if you don’t mind.

Mikhail Mishustin: Mr Putin, your instructions are almost fulfilled, as far as the preparations are concerned. We have drafted many necessary changes to the legislation and had them approved by the Finance Ministry, the President’s State-Legal Directorate as well as the State Duma budget subcommittee. The voting is scheduled for November 2. These preparations cover transport, land, property, and individual income tax debt accumulated before 2009. We have already developed a procedure for the tax service – people won’t have to visit any offices, courts or tax inspectors. It will be done automatically. We have prepared all the necessary resolutions and measures. Once the State Duma votes for these amendments, we expect to complete this job in the first quarter of next year.

We will write off a total of 36 billion roubles from 33 million Russian nationals. You said earlier that the tax debt accumulated, among other reasons, because certain registration agencies failed to unregister old taxes that had been cancelled and that the tax service had consequently lost the right to collect those amounts or impose penalties. I hope this will help people avoid future misunderstandings and mistakes in dealing with the tax service and other state agencies.

Vladimir Putin: The procedure needs to be as user friendly as possible. You have cited the number – 33 million people. If you just consider this figure – well, much will depend on how the lawmakers arrange the write-off procedure upon your recommendations.

Mikhail Mishustin: This process – the procedure we have developed – will help people avoid visiting the tax service in person. We’ll do as we say.

Vladimir Putin: Will you please speak about the performance results now.

Mikhail Mishustin: Mr Putin, this year has seen a steady increase in tax revenue to the budgets at all levels. We have summarised our nine month results: as of today, the federal budget has received 3.334 trillion roubles, a 42% increase from 2010. Profit tax accounted for 25% of total tax revenue to the consolidated budget. As for other taxes, revenue has increased as well, including individual profit tax which is linked to oil prices, as well as the VAT (up 37%).

Vladimir Putin: Do you mean a 42% increase?

Mikhail Mishustin: Yes. 42% is the rise on …

Vladimir Putin: The previous year.

Mikhail Mishustin:  Right. The increase in tax inflow to the federal budget compared with last year. As for federal revenue, it grew 43% compared with last year.

I would also like to say a few words about some trends including a decrease in tax arrears. This trend has continued into 2011, with taxes in arrears decreasing by about 3 billion roubles, or 8%, since the beginning of the year.

Also, we have seen a decrease in the number of taxpayer complaints, from 44,000 to 40,000, or down 10% over nine months. It is also very important that the amounts disputed by taxpayers have become smaller. The number of corporate lawsuits against the tax services has decreased by 10,000, or 18%. If these trends persist, we believe the main macroeconomic targets and other indicators set in the federal budget will be met. With the revenue administered by the Federal Tax Service, the government will be able to balance this year’s budget.

Vladimir Putin: What are your estimates with regard to meeting this year’s plan? I know it is early to discuss this, but maybe you could give me an approximation.

Mikhail Mishustin: Mr Putin, macroeconomic estimates have changed depending on oil prices as well as on other factors, and we have carefully evaluated each of the measurements. We believe we’ll meet this goal and even provide a small surplus – if all the trends I described continue in the fourth quarter.

Vladimir Putin: How big will the surplus be? Approximately, in percentage?

Mikhail Mishustin: Speaking about the federal budget (the current version with macroeconomic targets unchanged), I would say around 3%. But if certain changes are made (a draft has been submitted to the State Duma), the surplus will be smaller. I am talking about the biggest budgetary adjustment that can be made.

Vladimir Putin: You mean the adjustment based on the positive forecast. So, its 3% based on previous estimates.

Mikhail Mishustin: Compared with the previous year, the year 2010, I believe this federal budget will be at least 35% bigger.

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Mishustin, allow me to begin by asking you the usual questions: how smoothly is your work progressing? How much have you collected and how does it compare to this year’s tax collection plan?

I would also like to hear about your progress in writing off delinquent taxes, I mean primarily those that are the result of legal and regulatory confusion rather than due to a taxpayer’s own unwise actions. I have asked you to consider how we can strip this process of as much red tape as possible, so that people won’t have to visit dozens of courts and public offices. Let us begin with the second part if you don’t mind.

Mikhail Mishustin: Mr Putin, your instructions are almost fulfilled, as far as the preparations are concerned. We have drafted many necessary changes to the legislation and had them approved by the Finance Ministry, the President’s State-Legal Directorate as well as the State Duma budget subcommittee. The voting is scheduled for November 2. These preparations cover transport, land, property, and individual income tax debt accumulated before 2009. We have already developed a procedure for the tax service – people won’t have to visit any offices, courts or tax inspectors. It will be done automatically. We have prepared all the necessary resolutions and measures. Once the State Duma votes for these amendments, we expect to complete this job in the first quarter of next year.

We will write off a total of 36 billion roubles from 33 million Russian nationals. You said earlier that the tax debt accumulated, among other reasons, because certain registration agencies failed to unregister old taxes that had been cancelled and that the tax service had consequently lost the right to collect those amounts or impose penalties. I hope this will help people avoid future misunderstandings and mistakes in dealing with the tax service and other state agencies.

Vladimir Putin: The procedure needs to be as user friendly as possible. You have cited the number – 33 million people. If you just consider this figure – well, much will depend on how the lawmakers arrange the write-off procedure upon your recommendations.

Mikhail Mishustin: This process – the procedure we have developed – will help people avoid visiting the tax service in person. We’ll do as we say.

Vladimir Putin: Will you please speak about the performance results now.

Mikhail Mishustin: Mr Putin, this year has seen a steady increase in tax revenue to the budgets at all levels. We have summarised our nine month results: as of today, the federal budget has received 3.334 trillion roubles, a 42% increase from 2010. Profit tax accounted for 25% of total tax revenue to the consolidated budget. As for other taxes, revenue has increased as well, including individual profit tax which is linked to oil prices, as well as the VAT (up 37%).

Vladimir Putin: Do you mean a 42% increase?

Mikhail Mishustin: Yes. 42% is the rise on …

Vladimir Putin: The previous year.

Mikhail Mishustin:  Right. The increase in tax inflow to the federal budget compared with last year. As for federal revenue, it grew 43% compared with last year.

I would also like to say a few words about some trends including a decrease in tax arrears. This trend has continued into 2011, with taxes in arrears decreasing by about 3 billion roubles, or 8%, since the beginning of the year.

Also, we have seen a decrease in the number of taxpayer complaints, from 44,000 to 40,000, or down 10% over nine months. It is also very important that the amounts disputed by taxpayers have become smaller. The number of corporate lawsuits against the tax services has decreased by 10,000, or 18%. If these trends persist, we believe the main macroeconomic targets and other indicators set in the federal budget will be met. With the revenue administered by the Federal Tax Service, the government will be able to balance this year’s budget.

Vladimir Putin: What are your estimates with regard to meeting this year’s plan? I know it is early to discuss this, but maybe you could give me an approximation.

Mikhail Mishustin: Mr Putin, macroeconomic estimates have changed depending on oil prices as well as on other factors, and we have carefully evaluated each of the measurements. We believe we’ll meet this goal and even provide a small surplus – if all the trends I described continue in the fourth quarter.

Vladimir Putin: How big will the surplus be? Approximately, in percentage?

Mikhail Mishustin: Speaking about the federal budget (the current version with macroeconomic targets unchanged), I would say around 3%. But if certain changes are made (a draft has been submitted to the State Duma), the surplus will be smaller. I am talking about the biggest budgetary adjustment that can be made.

Vladimir Putin: You mean the adjustment based on the positive forecast. So, its 3% based on previous estimates.

Mikhail Mishustin: Compared with the previous year, the year 2010, I believe this federal budget will be at least 35% bigger.

Vladimir Putin: Good.

Vladimir Putin: Good.