Cash “in an envelope” salaries are on the way out as Russia’s tax service continues its reforms

Cash “in an envelope” salaries are on the way out as Russia’s tax service continues its reforms
The payment of wages as cash in an envelope has fallen to 11%, according to VTsIOM, from previous highs of well over 50%, as tax reforms continue / wiki
By Cameron Jones in London August 20, 2021

Only 11% of Russians receive remuneration for their work in whole or in part "in an envelope", according to the results of a survey carried out by the state owned pollster, the Russian Public Opinion Research Centre (VTsIOM), and released on August 18.

Nine out of ten (86%) of Russians receive an official salary on which their employers pay taxes. In 2006, this figure was 71%, according to the pollster.

“The overwhelming majority of Russians surveyed (86%) reported that they received their entire salary officially, 6% answered that they received their entire salary unofficially, “in an envelope,” and 5% received part of their salary officially, and some in an envelope,” VTsIOM said.

The survey revealed that the share of “black” wages varied by sector: in construction and trade (16% each), general labourers (14%), small businesses (9%) and service workers (8%).

At the same time, 45% of the respondents were sympathetic to the payment of wages "in envelopes", while 46% of the respondents stated that they would not accept them. A third (34%) of survey participants admitted that they had received a black salary payment on at least one occasion.

The falling share of black salary payments is a consequence of the radical reforms the Federal Tax Service has been through in recent years that was overseen by now Prime Minister Mikhail Mishustin who was formerly the head of the FTS.

During his tenure the whole tax IT system was overhauled and myriad scams and schemes stamped out. In 2019 the tax take increased by 20% as a result, although the tax burden only increased by 2%.

The FTS is continuing its efforts to improve tax payments and in the last months dramatically tightened its control over Russians that control companies registered overseas with new and more specific requests for documents and interviews. The service is also focusing more actively on tax payments by small and medium-sized enterprises (SMEs), which are notorious for cheating on their taxes.

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