Tax Potential of the Republic of Crimea

The entry of the Republic of Crimea into the Russian Federation created problems of the republic’s adaptation to the budget and tax legislation of Russia. Most of these problems have already been resolved, but a number of questions still remain. The application of the Russian tax legislation in Crimea initially led to a fall in the regional budget’s own revenues, but gradually the situation began to improve. In order to develop business in the territory of the Republic of Crimea, it was necessary to apply a flexible tax mechanism, including the creation of a free economic zone and varying tax rates for special tax regimes, and this task is being consistently solved. The main objective of the present time is to reduce the shadow economy through tax administration as well as to introduce a tax on professional income and a mechanism for registering real estate. The proposed abolition of the single imputed income tax, making up a substantial income for local authorities, cannot be offset by a patent tax form or other sources. It is necessary to change the budget legislation on the distribution of tax revenues between local budgets according to both basic taxes and special tax regimes—even in the face of increased personal income tax revenues as a result of growth in the tax base and the inclusion of separate divisions in regional taxpayers.