Russia - 154 on the List of 178 Most Corrupt Countries

[Admin]

Transparency International today published its 2010 list of the most corrupt countries. Of 178 countries ranked, the US places # 22 on the list. Russia placed 154 (tied with numerous others) - and Ukraine was slightly better (meaning, less corrupt) ranked at 134 on the list.

The least corrupt country, according to this ranking, is Denmark and the most corrupt is Somalia.

See the entire list here -- http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results

- Dan

[Eduard]

Ukraine less corupt than Russia? That's interesting... not my experience. If Russia is 154 I'd place Ukraine at 155. Just my opinion.

[possum]

When will these list makers get a clue that no one is buying their crock?. Putting some of those countries ahead of others is like saying the Moon is brighter than the Sun.. I remember not so long ago reading a list that put Zimbabwe ahead of both Russia and Ukraine.. I'm getting a visual of a bunch of fat cats sitting around smoking cigars and compiling lists of countries in order of acceptance for their business model.

[possum]

Russia and Ukraine could do away with corruption entirely and still make the "top 10" on that list.. Political stereotypes are just as hard to break as cultural stereotypes..

[Lily]

I believe that this is not about political stereotypes, but the developers of the ranking just used certain factors and criteria calculating the risk.

Also, I wonder, what would it take to Russia and Ukraine in order to get rid of corruption?

[Eduard]

Also, I wonder, what would it take to Russia and Ukraine in order to get rid of corruption?

A very large meteor would probably do it... 
But on a serious note, It's also very sad to see how corrupt politicians here, in the US allowed this country to deteriorate almost to the point of no return. As I never imagined to see the fall of the Soviet Union in my life time, I am now amazed to see the USA electing a near-Marxist president and going down the drain. But I guess this is the fate of all great civilizations, and corruption is the main cause of their demise.

[ECOCKS]

A very large meteor would probably do it... 
But on a serious note, It's also very sad to see how corrupt politicians here, in the US allowed this country to deteriorate almost to the point of no return. As I never imagined to see the fall of the Soviet Union in my life time, I am now amazed to see the USA electing a near-Marxist president and going down the drain. But I guess this is the fate of all great civilizations, and corruption is the main cause of their demise.

Sort of ironic, our politicians (US) are largely inept, even when dabbling in corruption.

[possum]

I believe that this is not about political stereotypes, but the developers of the ranking just used certain factors and criteria calculating the risk.

Also, I wonder, what would it take to Russia and Ukraine in order to get rid of corruption?

An impossible and unnecessary task.. What they should try to do is have it restricted to the highest levels of government, as it is in Canada and the US, so that ordinary citizens don't have to deal with it on a daily basis, and things will start getting better..

[Shadow]

The makers of the list are accurate in caling it the perceived corruption.
Perception does not mean factual, but how it is viewed.
I did not read the criteria, but I just wonder which criteria of perception are used.

If the criteria are interviewing local people and asking them a srt of questions, I am not suprprised at the results.

[tim 360]

Pretty close to the Wall Street Journal and Heritage rankings.  If you have millions to invest you might have less risk investing in a less corrupt country.

http://www.heritage.org/Index/Country/russia

[possum]

The makers of the list are accurate in caling it the perceived corruption.
Perception does not mean factual, but how it is viewed.
I did not read the criteria, but I just wonder which criteria of perception are used.

If the criteria are interviewing local people and asking them a srt of questions, I am not suprprised at the results.

I wonder if one of the criteria is the number of anti-corruption investigations and corruption-related firings, because there have been a ton of those in the last year or so, it seems..

[Rubicon]

The makers of the list are accurate in caling it the perceived corruption.
Perception does not mean factual, but how it is viewed.
I did not read the criteria, but I just wonder which criteria of perception are used.

If the criteria are interviewing local people and asking them a srt of questions, I am not suprprised at the results.

it is not perceived, it is very real.  Ikea will no longer grow their business in Russia because of officials who try to bribe them constantly, and shut down power or have bogus inspections to shut down their business because Ikea refuses to pay bribes. 

[possum]

Ikea can take their shoddy furniture and shove it up their butt for all I care.. It's a really bad example of corruption bringing down the quality of life.. Domestic companies/business suffer much worse because of corruption, particularly small businesses, and that's where the government should direct their anti-corruption efforts.. Large companies have developed mechanisms to cope with corruption, whereas smaller firms are virtually defenseless against the greed of local authorities.

[Boethius]

IKEA was also not paying taxes in Russia.  That caused some "clashes" with taxing authorities.

[Gator]

I gave my RW an ebook reader.  The price was about half of what she pay in Russia. 

Does Russia have a 100% import tax?  I think not, so this 100% tarriff reflects different forms of  corruption.   

[ECOCKS]

Al:

Cleaning the place up to get large, foreign companies in with their production and logistical jobs will have significant impacts on the economy. Neither side of the issue should be over-focused, it's a major problem which holds back jobs and economic development at many levels.

[mendeleyev]

With no disrespect intended, IKEA is not a deadbeat on taxes.

IKEA was earlier forced to twice build a bridge above the Leningradskoye Highway, near the Khimki shopping mall because of disputes between the city of Moscow and the Moscow Oblast over who owned that section of the road. The supposed tax dispute is over a bridge they were required to build, not just once, but twice.

Its the same bridge. Plans and permits were issued. IKEA built the bridge per city orders. After signing off on all the approvals, the city came back and said wait, the Moscow Oblast, not the city, owns that land so the bridge has to come down. The bridge was taken down.

The city then came right back and said "you must build a bridge." This time with Oblast approvals IKEA rebuilt the bridge on the same spot--with plans and approvals--and the understanding that Moscow would pick up the approximate one billion rubles cost for the reconstruction as IKEA, acting on city orders had already paid for the first bridge out of their own pockets. Moscow agreed.

Moscow changed it's mind, then saying that IKEA owes it that money as a "tax penalty" for building 2 bridges. Keep in mind that the bridge is on government property and not on private development land.

That was followed this past November with Moscow's demand that IKEA be responsible to build new speed change lanes on the Moscow Ring Road (MKAD) near its shopping mall in the southwest of Moscow. IKEA agreed as that is a very dangerous area with lots of accidents going in and out of the mall area, but noththeless IKEA is now asking themselves whether they wish to remain in Russia.

IKEA has been hounded by bribes and threats since coming to Russia. Does anyone remember the first Moscow IKEA store and the "taxes" demanded by inspectors from the Moscow mayor's office who had previously stamped "approved" on building and parking lot plans and final construction? When the grand opening was about to take place, the approvals were suddenly withdrawn and IKEA was forced to pay again--supposedly for designing the parking lot incorrectly--the same design that had been stamped approval and final approvals stamped again after construction was complete.

In fact, the anti-corruption bill Mr. Medvedev signed into law prohibiting surprise inspections from fire and health authorities used to extort companies was a direct result of IKEA's experience back to the opening of it's first Moscow store and then to the fiasco IKEA experienced with fire inspectors at the opening of the IKEA store in Novosibirsk.

The Novosibirsk experience was quite interesting. Land was leased from the city, building plans designed and approved, the construction completed--and approved. Then just days before the grand opening, city inspectors "discovered" that the mall had been built on the "wrong land." Naturally all could be swept under the table and forgotten--for a fee of course. Within hours of opening, IKEA had no option but to pay.

In particular as pointed out publically by the Moscow Times, IKEA has been forced to pay several times for the same electric bills over a multi year period to avoid the stores being shuttered.

Apparently President Medvedev is so embarrassed about the IKEA situation that in spite of IKEA's founder going public this past mid December about it's Russian operations, Mr Medvedev picked up the phone and spoke with IKEA founder Ingvar Kamprad, then last week (20 January 2011) the president signed a decree to award the Order of Friendship to Mr Kamprad, "for IKEA's great contribution to the development of Russian-Swedish trade, economic and investment relations."  

[Boethius]

Three per cent of all IKEA's sales are transferred to a private foundation, Intergo Foundation, based in the tax haven of Liechtenstein.  Those sales are technically made in the form of royalties, but are paid primarily for tax avoidance. 

[wicheese]

Three per cent of all IKEA's sales are transferred to a private foundation, Intergo Foundation, based in the tax haven of Liechtenstein.  Those sales are technically made in the form of royalties, but are paid primarily for tax avoidance. 

Balanced against the context of what Mendy wrote, I would say that any tax avoidance is really just an offset against the additional fees (bribes) the company encounters.  It's just one of the costs of corruption as official tax receipts dry up as people move their income underground because the cost of paying the taxes in addition to all the unofficial taxes just might drive you out-of-business.  In the end, it's the common people who suffer!

The shame is that the Kremlin has complete control in the country, so if they wanted to do something they really could, but instead they let it continue as a form of patronage in return for loyalty. 

[Boethius]

Tax avoidance occurs in Western industrialized nations as well, where corruption/bribes is a zero issue.  It became such a problem that most Western countries have specific anti avoidance provisions contained within their tax legislation.

[mendeleyev]

Three per cent of all IKEA's sales are transferred to a private foundation, Intergo Foundation, based in the tax haven of Liechtenstein.  Those sales are technically made in the form of royalties, but are paid primarily for tax avoidance.

My wife and I transfer to our church, to an organization called Orthodox Charities, the relief arm of the Fellowship of Orthodox Christians, Mission to Kyiv, the Salvation Army, and several others. I am only too happy to claim a little "tax avoidance" on our returns each year.

As long as Russian tax law does not prohibit such royalities, good for Ikea. Goodness knows that being required to pay the same utility bills multiple times from city to city, 3% is probably not enough of an offset.

If President Medvedev was about to throw IKEA founders in jail he wouldn't be handing out "Order of Friendship" awards.

[Boethius]

The contributions of you and your wife do not constitute tax avoidance.  There likely are even laws in the enabling tax legislation which permit you to claim a deduction, or tax credit, for those donations.

Corporate tax avoidance, through the use of tax haven countries, is often a target of tax authorities in the jurisdiction in which the tax to be paid is being avoided.  The IRS, for example, has been known to ignore the separate legal existence of corporate entities in tax haven jurisdictions, taxing them in the U.S.  Commonwealth countries often look to where the true "mind and management" of the tax haven corporation rests, as that determines where the corporation is actually resident, despite a particular legal form.  

I believe in IKEA's case, several jurisdictions have challenged the royalty structure.

I never stated IKEA, or any of its founders/directors/officers were being threatened with jail time.  However, if tax avoidance is widely reported in Russia, as it was (or I wouldn't know about it), I assume there is a reason for that (i.e. - in terms of serving the Russian government's, not IKEA's interests).

[XMan]

Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released by the Government Accountability Office (the investigative arm of Congress). (By the way, 68% of foreign corporations paid no taxes either.)

Zero.
ноль.

To me, this is corruption, because I certainly pay my fair share.
But then it seems the middle class pretty much shoulder the burden for everyone.

I haven't checked the list. 
I wonder where the USA falls.

[Boethius]

Those corporations may have made capital investments, for which they would be entitled to take either write offs or depreciation.  They may have distributed their profits to employees.  In each of these cases, there is no corruption in not paying tax. 

Many corporations also use sophisticated tax strategies to shift income to low tax jurisdictions.  That is a problem, but if a low tax jurisdiction has a treaty with the U.S., it is legal (though the strategies used may be challenged).

[SMS60]

Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released by the Government Accountability Office (the investigative arm of Congress). (By the way, 68% of foreign corporations paid no taxes either.)

Zero.
ноль.

To me, this is corruption, because I certainly pay my fair share.
But then it seems the middle class pretty much shoulder the burden for everyone.

I haven't checked the list. 
I wonder where the USA falls.

And now the rest of the story for the uniformed.

You are correct that most corporations don't pay taxes. Specifically S corps. But the taxes are paid by the shareholders or partners of the business on their individual returns. If I own 50% of a S corp and we have 500,000 net income for the year I pay taxes on 250,000 when I file my individual returns. So the taxes are paid indirectly.