The regular VAT rate is currently standing at 18 percent; the reduced rate is 10 percent. The introduction of a flat rate seems highly feasible, and the experience of Ukraine, Kazakhstan and other countries that have abandoned the practice of reduced rates shows just how efficient such a measure can be.
A flat VAT tax will help in the creation of a non-discriminatory tax regime for all economic operators, the ministry says. But corporate taxpayers involved in the production of goods now taxable at the reduced rate of 10 percent will have to raise their prices by at least 5 percent after the tax is set at 15% for all.
The Finance Ministry is also contemplating cuts on the corporate profit tax. In 2007 and 2008, that tax could be reduced to 20 percent.
