The tax load in Russia is actually much, much higher than the flat tax if you take into account things like:
1) Back-breaking tariffs on all imported 'luxury' items like computers.
2) The 'unofficial' tax of about 20% (so I'm told) payable to the FSB to actually conduct business in Russia.
3) On the spot 'fines' from police more determined to rob you than to fight crime.
P.S. I'd just like to take this opportunity to publicly state that I hope the entire Moscow Militsia (police) develop testicular cancer. Evil, mean bastards every one. Rob the people they are charged with protecting.
I know few guys who are not like that and who actually fight crime. But they are overshadowed by overly corrupted minority (I know other guys among them who sell drugs for example).
Things in Russia are not that simple and you exaggerate the problems. In general, you just have to know the right people to conduct business there. C'est la vie.
I really don't think I exaggerated by much. I lived in Russia for eight months, and never encountered any Militsia engaging in crime fighting. Seriously, not once. Instead, I only saw them persecuting minorities, robbing people and getting drunk. My least favorite experience involved an encounter with blackout-drunk OMON special forces exiting the all night grocer with another bottle of vodka, toting submachine guns and wailing on us at 2AM on Tverskaya. The silver lining was when they decided, after some debate, against planting heroin on us to extract a bribe from my friend's rich parents. It was definitely a growth experience to be assaulted at gunpoint and threatened with permanent imprisonment. That was 6 years ago. I understand that economic conditions have improved with the price of oil but... have things changed so much?
That being said, I do realize that not EVERY Russian cop is corrupt. I actually met a few who seemed decent. But based on my experience I believe the corruption rate is well above 90%, and it is plainly true that very little crimefighting occurs.
As to the problems in Russia regarding taxes... if you think I'm exaggerating, you probably don't do much business in Russia. "Knowing the right people" doesn't mean you don't pay the FSB tax, it just means you get better bang for the buck. Even minor oligarchs have their packages seized and 150% tariffs imposed. Whats more, the overwhelming corruption is the reason you need to 'know people' to conduct business. Having to know someone special to carry out basic activities critical to freedom is the definition of corruption.
As to complexity: Yes, things are very complex when you have to purchase basic government services, in a country with the world's fastest declining population where half the young men are busily drinking themselves to death.
I'm not trying to knock Russia. I care deeply about the welfare of the Russian people. What I stated is simple reality. It shows the overwhelming strength of the Russian people that they manage in such an environment. And Las Vegas has nothing on Moscow. Anyway, it sounds like you're upper crust and don't much face the problems that typical Russians do. When you can't afford access to basic services, the whole outlook changes.
Things have changed. Such encounters were very common 10 years ago, less so 6 years ago, there's nothing like this now, I think that the most of those OMON guys are either dead or in prison.
The level of corruption is still very high, but things are getting better. Slowly. Because those who care do something to change the status quo. The problems like those can't be solved quickly.
By trying to undermine his opinion you only ended up reinforcing it.
1) 20% "business tax" or knowing the right people. Can be interpreted as paying someone 20% of X to put me in contact with the right people. The point is getting business done should be transparent and only the buyer and seller need to exchange any money. Paying 10 guys in between is not how normal business gets done.
2) I feel very strongly about police corruption. Even if it is only a small powerful minority. The fact is the rest of them know there is a problem but won't do anything to stop it. Which means they are part of the problem. And if they are overshadowing then it is institutional corruption. And once they are that embedded than numbers don't matter because every part of it is rotten.
I hear about this 20% tax from people who never ever been to Russia. What the fuck ? Where did you get this data from ? What 20% FSB business tax are you talking about ? I'm Russian, I live here in Russia and doing business for three years, I pay 13% flat tax, nothing more. One can even choose to pay 6% off the gross income.
Taxation complexities may become effective when you start making more than $1.5MM in annual revenue or if you are doing some business with natural resources (oil, gas). Till then you are treated as small business. I believe this a regular business rule for almost every western country.
I don't deny existance of curruption in Russia. It really is and very huge. But as long as you are within the averages it does not reach you. I never paid any bribes, I don't want to get caught on doing this and lose everything.
I got the data from people operating businesses on a large scale, that span Russia. It might have been 15%, actually. Its been six years. But I've spent eight months in Russian, learning my terrible Russian. I'm not just making this up.
Do you know anyone like that? This was Moscow, and this was payment to the FSB for 'protection.' Nobody much argued with this at the time, it seemed. It was better to be able to pay the FSB than to have to decide which Krysha to pay.
I'm surprised you find this strange or controversial. How much business have you done at a high level there?
That being said, it sounds like things have improved dramatically. Thats great, and shows how disconnected I am.
Paying "protection" fees to Krysha (as you named it) was common in mid 90th when government was weak and criminals ruled Russia. Now criminals pay to gov if they don't want to follow Khadarkovsky/Ukos story (thank mr. Putin). I'm not in Moscow (yet do visit it regularily), but I still cannot imagine paying to FSB or to Militia or whatever if you are doing legal business. The thing is most multi-billion businesses started in Russia in 90th are still being ruled by criminals and one way or another are illegal or involved in money washing.
I have friends who are doing business for more than 10 years (mostly in telecommunication and software industry), no one pays for "protection".
The others most corrupted spheres in Russia, beside natural resources, are land estate and development business, mostly because there are huge money rolling around. Avoid this three and nobody will "care" about you or your business :)
Criminal "protection" "taxes" were common 15 years ago and even then it was nothing like "20%" for everybody, it varied greatly from place to place and from business to business and depended on who you know and where are you from.
Small-to-medium businesses are free from anything like that by now AFAIK.
To conduct a "serious" business in most fields you still have to know the right people though, if you don't want it to be taken from you.
Not everybody, I was talking about people operating large enterprises. When you talk about knowing the right people, I think you are describing this 'tax.'
As to variance: it was my understanding that the FSB was much more even in its pricing than the chaos and gangs before it.
Most big companies I know just hire a right person who knows a few FSB generals and create their very own "defense" departments to solve these problems. They pay only salaries to people who know what to do. No bribes or "taxes" whatsoever.
1) Back-breaking tariffs on all imported 'luxury' items like computers.
2) The 'unofficial' tax of about 20% (so I'm told) payable to the FSB to actually conduct business in Russia.
3) On the spot 'fines' from police more determined to rob you than to fight crime.
P.S. I'd just like to take this opportunity to publicly state that I hope the entire Moscow Militsia (police) develop testicular cancer. Evil, mean bastards every one. Rob the people they are charged with protecting.