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Russia Said to Weigh Tax Overhaul to Pry $9 Billion From Shadows

  • Finance Ministry proposes cutting payroll tax, higher VAT rate
  • Government running widest deficit since 2010 amid recession

Russia’s government is discussing the most far-reaching measure yet to nudge businesses out of the shadow economy with a proposal to cut the payroll tax that employers pay on salaries.

The Finance Ministry has proposed lowering the levy while increasing the value-added tax, according to three officials who asked to remain unidentified because the deliberations aren’t public. One of the officials said the measure could help authorities collect about 30 percent of the amount of salaries companies pay in cash, which the Finance Ministry has estimated is costing the government as much as 2 trillion rubles ($30.7 billion) a year in lost taxes.