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‘Inconsistent with expert data’: Russia’s tax service challenges ‘secretive’ World Bank Doing Business rating

‘Inconsistent with expert data’: Russia’s tax service challenges ‘secretive’ World Bank Doing Business rating
Russia's Federal Tax Service (FNS) has questioned data used by the World Bank in its assessment of the country for its Doing Business index, stating that the Bank’s data is very inconsistent with findings of independent experts.

The recently released rating placed Russia into 28th place among 190 countries. The country has improved its results compared to the previous year – when it came in 31st – but the new rating has raised a few questions at Russia’s tax service.

The FNS questioned accuracy of data used by the index’s creators – at least, in its fiscal part – stating that the World Bank’s figures are very different from the findings of independent experts.

“The rating’s findings are very inconsistent with the data from independent experts, as well as with the surveys, conducted by the Russian businesses,” FNS told RIA Novosti.

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For instance, the place of a country within the index is affected by the average time required for a business to file their tax reports. According to the World Bank data, it will take some 159 hours to do so in Russia next year, yet the FNS cited significantly lower figures. According to 1C Company – Russia’s leading provider of automated accounting software – it takes their clients 32 hours on average to file tax returns.

The FNS' own data – collected in accordance with the World Bank’s standards – shows even shorter times, merely 10 hours a year for a business to file a tax report.

Apart from that, the World Bank’s assessment did not take into account Russia’s efforts to facilitate the tax report filing process, as well as digitalization of registering businesses. Over 50 percent of new companies in the country are getting registered online, the FNS said.

Such inconsistencies “prompt questions about the raw data from the respondents,” the FNS stressed, adding that it had reached out to the World Bank for explanations, but received no answer so far.

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The exact source of the World Bank’s data also remains a mystery. It used data from 228 respondents – including from 22 on taxes – to create the index, yet the sources have been kept anonymous. While the majority of respondents are believed to be major consulting companies, lack of any data on the index sources hampers the potential efforts on further improving the taxation system, the FNS explained.

“The FNS has very positive experience in working with the World Bank and is well aware that its specialists have in-depth expertise and knowledge of the world's best practices. Yet, we regret the lack of meaningful professional dialogue and the secretiveness of the Doing Business team's representatives regarding the taxation,” the tax administration said.

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