Tax Regulation Using A Single Agricultural Tax


State regulation of the effectiveness of agro-industrial organizations through taxation is an objective form of state intervention in the economy. The Russian practice of a single agricultural tax (SAT) application has shown that some aspects of this mode contain serious problems that require attention. As the main hypothesis, it is proved that the tax regime, operating in Russia in the form of the single tax for producers of agricultural output, demands improvement of theoretic-methodical approaches of its application as preferential. The analysis of the current state of the taxation of agriculture in Russia has been carried out, an assessment of tax payments of a single SAT in dynamics across Russia has been given. The assessment of the SAT efficiency application in the agrarian sector is executed. The effect of inflation of costs at application of release from the VAT in the special tax modes is proved. In this case the economic maintenance of a value added tax as indirect tax and the mechanism of its payment in the budget is distorted. The system problems and contradictions of the single tax for producers of agricultural output requiring the solution at the state level as a result are revealed and proved. A model for the modernization of the single agricultural tax has been proposed to level out the economic conditions and stimulate innovative processes.

Keywords: Max exemptionssingle agricultural tax (SAT)tax regulation of the agricultural sectoragricultural support


The taxation system is an important instrument of state regulation and support of the agrarian sector. The Russian agricultural tax policy is directed towards the operating taxes reduction, decrease in level of rates and taxable base expansion. The role of agriculture is captured by the term ‘‘multifunctionality’’ (Casamatta, Rausser, & Simon, 2011).

The efficiency of agriculture is defined by natural and climatic conditions. They affect productivity of crops and level of costs of the organization of agricultural activity implementation. In the taxation of agriculture differentiation depending on the developing climatic conditions is necessary. It will provide equal conditions of managing. Taxes directly influence the outputs, investment activity, high-quality growth of economy. Therefore regulation of the taxation system is the main function of the state in the agrarian policy.

The main ways of tax impact on agricultural producers are privileges on taxes. For agricultural producers, the crucial criterion of optimized tax payments is to achieve maximum volume of resources for further ensuring profit markup from economic activity. However, the existing tax system practically doesn't consider the specifics of agriculture. The taxation special mode for agricultural producers doesn't capture the specifics of activity in a branch sector. The methodical basis of this mode is insufficiently developed. Issues of agricultural taxation have received rather extended attention in scientific literature. Despite a significant amount of scientific publications, there is a need of the analysis and assessment of SAT application practice as an instrument of tax regulation.

The analysis of the international practice of agricultural producers taxation has proved, "sparing" tax regime allows agriculture to function abroad successfully for the account of either tax benefits, or application of the special tax modes (Tikhonova, 2016).

Features of the taxation in agriculture in the European countries are defined by the status of the taxpayer. And in agriculture of the EU family farms dominate, at the same time the number of the legal agricultural entities is very insignificant (Mielczarek, 2017). The similar tendency has also been developing in Russia in recent years.

Analysis of key financial indicators for the last 4 years has shown unfavorable trend of faster growth in production costs to revenue and, as a consequence, income reduce of agricultural production. More clearly, this trend – decline in profits and growth in a number of unprofitable agricultural enterprises can be traced in the figure 2. The conclusion was that existing system of granting tariff preferences of a general tax system for agriculture did not fully meet its function; it had a limited effect and insignificant volumes.

The general support for agriculture in Russia makes 0.8 % of GDP in 2015-17, that is three times lower than in the mid-nineties. It is connected with the GDP growth and the decrease in the agricultural sector’s share of GDP. (OECD, 2018). Introduction of special system of the taxation for agricultural producers provides considerable decrease in a tax burden of taxpayers and is one of main types of the state support of agriculture in the Russia and other CIS countries. Malis (2017) determines a special tax regime (SAT) as the main tax tool for stimulation of agricultural producers. It is a compulsory measure of tax reforming. The single agricultural tax reduces a tax burden in the agrarian sector, and simplifies tax accounting and the reporting.

Not all authors consider that application of a single agricultural tax positively affects a financial condition of taxpayers. Though it is an attractive tax regime, but for the last five years the number of the enterprises paying this tax was reduced by 30% because of bankruptcy (Kuleshova, Lapina, & Sobchenko, 2016). Some authors investigate the influence of SAT on the local budgets income level and prove that revenues from the SAT increase from year to year, thereby strengthening a financial basis and independence of local budgets (Klukovitch & Dodohian, 2017). Finally, we find that the tax abolition did not increase farmers' net income significantly (Wang & Shen, 2014).

The Russian researches also confirm the idea of inexpediency of special tax regime application for agricultural producers as they are forced to compensate a considerable difference between the VAT from realization and the entering VAT (Sukhanova & Aliev, 2018). Besides the system of the taxation doesn’t consider the specifics of a branch and a real financial position of taxpayers enough. As a result transformations in the sphere of the taxation don't yield desirable result. However Botasheva (2018) allocates with the main advantage of a single agricultural tax release from the status of the payer of the VAT. The insufficient study of preferential terms of agricultural taxation demands methodological justifications in assessment of the applied privileges and introduction of recommendations for the agrarian sector organizations tax payments.

Problem Statement

The formation of optimum tax system is based on dependence between production, the taxation and formation of revenues of the state. Therefore, the main objective of this research was assessment of theoretic-methodical foundation of tax policy realization in the sphere of regulation of rural economics.

The complex analysis of the agrarian sector taxation is necessary for the purpose of administrative decisions on tax risks which have significant effect on results of financial and economic activity, efficiency of the agricultural organizations production activity. The existing tax system doesn't consider the specifics of agriculture, it is focused on withdrawal of the received income that deprives the producers of the internal sources of development. The operating special mode of the taxation doesn't take into account the types of activities in a branch section. Scientific-methodical basis of this mode still remain insufficiently developed. There is a need of the analysis and assessment of the taxation special mode application practice in the form of SAT and development of measures for its improvement in the Russian operating tax system.

Research Questions

The study examines the current system of taxation of agriculture in Russia, presents two modes of taxation, summerizes the types of tax benefits for agricultural producers. The research is based on disclosure of the following questions:

3.1. Taxes in the mechanism of the state financial support of the agrarian sector. Need of state regulation of agricultural branch, including the use of tax tools is proved.

3.2. Assessment of the taxation of the agricultural organizations of Russia at two tax modes: special tax regime in the form of SAT and the general (traditional) regime of the taxation. On the basis of comparison of the tax modes it is important to estimate efficiency of SAT application from a position of financial performance activity of the agrarian sector organizations in total.

3.3. Comparison of the tax accounting features for SAT influencing tax base in the Russian tax system.

3.4. Assessment of a privilege influence on a value added tax in the special tax modes.

The research shows that remission of the VAT of direct producers and intermediaries within the special tax modes at the current Russian legislation has effect of inflation of costs, complicates administration of this tax on the movement of goods to the end user, promotes a capital modulation from the sphere of production in intermediary activity, reduces receipts of the VAT in the budget.

Purpose of the Study

The research objective is to make an assessment of the Russian single tax application practice for agricultural producers. For the purpose of the study, an analysis of the current state of taxation of agriculture in Russia has been carried out, an assessment of the tax payments of SAT in the dynamics in Russia has been given. Tax and financial indicators of the certain agricultural organizations for comparison purposes of features in the Russian tax system of the accepted tax accounting for a single agricultural tax are analyzed. The system problems and contradictions of the single tax for producers of agricultural output requiring the solution at the state level as a result are revealed and proved. For the purpose of research, to propose a model for the modernization of a single agricultural tax to level out the economic conditions and stimulate innovative processes.

Research Methods

The methodology of the research is based on a combination of abstract and theoretical, logical, monographic, economical and statistical analyses, general scientific and private methods. The official data of Federal State Statistics Service, Federal Tax Service, annual reports and documents of accounting and tax accounting of the agricultural organizations, materials which are contained in monographs by scientists-economists, articles and periodicals, resources of the information and telecommunication Internet and also author's calculations have formed a basis of the research.

International experience demonstrates the priority for funding of agriculture. Principles of taxation of agricultural producers in EAEU countries have a common basis, i.e. the level of tax burden for this category of economic agents is significantly lower than other sectors of the economy (through special preferential tax regimes or the use of tax incentives (Vilkova & Krasavin, 2011). The relationship of net farm income and gross profit with taxes collected was analysed with coefficient estimates of direct and indirect tax indices (Sayin et al., 2017). In our research the total amount of tax payments has included contributions to off-budget social funds, besides the taxes established to Tax Codes of the Russian Federation. It is proved that the agricultural organizations contributions to off-budget social funds make more than 90 % in prime cost.

To analyze the economic contents and consequences of various tax regimes in the agricultural sector and their economic efficiency, it is necessary to use the basic approaches of system analysis, including structuralist, reproduction, as well as genetic and institutional. Theoretical and methodological bases of the research include both works of scientists and standard and legal documents.

The economical and statistical methods are used to assess the influence of the changes that has happened in the Russian tax law for the agrarian enterprises; and also we use a method of the comparative analysis and expert estimates in the research. Besides specific methods, general scientific approaches are used: dialectics, abstraction, deduction, induction, analysis and synthesis. Our research has collected the actual information about application of various taxation modes by the agricultural enterprises provided by the Russian Tax Code (Ernst & Young, 2000).


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At a single agricultural tax write-off of the VAT for costs of production causes further increase in disparity of the prices of agricultural production. Therefore, application of the special tax modes at the existing tax law exempts producers and their intermediaries from payment of the VAT and has effect of inflation of costs. If there are a few such participants in a technological chain of advance of goods, the production price increase for the end user (population) makes up to 18–23 % that is confirmed by our calculations using the data of the enterprises of agro-industrial complex (Netchaev, Tupakova, Bocharova, & Khatuov, 2009). In general, even the example of only one special regime (UAT) allows to come to conclusion that the use of other preferential regimes exempted from VAT has methodological problems that need to be improved within the Russian tax system.


At present, creating favorable conditions for economic development of branch becomes a main goal of tax policy in agriculture of Russia. At the same time, decrease in uncertainty in the taxation system for the agricultural producers has to become the main direction. Essential factor is the year cycle of the production of agricultural output, seasonality and the irregularity of income receipt, rather large volumes of work in progress. Application of SAT with preferential terms in Russia is used only to decrease tax base. Release from the VAT not only increases expenses in the case of SAT, but also reduces the actual profit of the organization, following the results of a year.

The research has revealed that higher rates of a gain of operating costs and write-off of a loss at the organizations taxpayers reduce rates of a gain of the estimated tax amount that demonstrates inefficiency and lack of address incentives. Since 2019, payers of SAT are payers of the VAT. They have the right to fulfill tax obligations for the VAT according to the order provided by chapter 21, article 145, item 1 Tax Code of the Russian Federation. If scales of activity exceed the established criterion, the organization becomes the payer of the VAT without fail. The changes eliminate methodological violations of an order of calculation and payment of the VAT that will allow the organizations applying the special modes of the taxation to be more competitive and not to underestimate profit. At the same time we suggest to use half a year for the tax period on the VAT for agricultural producers. As dates of receipt and payments of the VAT don't coincide, the producer has an opportunity temporarily on a grant basis to dispose of money during the tax period (half a year) in the amount of the added VAT.

As for the main taxes paid by agricultural producers it is recommended to establish calendar year – half a year, as the tax period and the reporting period. The obligations transfer on income tax for the end of the calendar year will allow to increase considerably financial stability both certain economic subjects, and branch in general. Improving institutional transformations and the taxation system for agricultural producers will make it possible to create competitive efficient food production in Russia.


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09 March 2020

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Tyupakova, N. N., Ermakova*, E. A., Bocharova, O. F. B., & Gureeva, O. V. (2020). Tax Regulation Using A Single Agricultural Tax. In S. I. Ashmarina, & V. V. Mantulenko (Eds.), Global Challenges and Prospects of the Modern Economic Development, vol 79. European Proceedings of Social and Behavioural Sciences (pp. 122-132). European Publisher.