Russian Union of Right holders, collecting private copying levy in Russia, can lose its authority

Russian Union of Right holders (RSP) is authorised by Russian State to collect private copying levy on an exclusive basis – so called accreditation. RSP takes 1% from price of taxable equipment and media. Russian business ombudsman Boris Titov proposed to give such exclusive authority to collect private copying levy to relevant state authority – Federal Custom Service (FCS) or Federal Tax Service (FTS).

Actually it was idea of internet ombudsman Dmitry Marinichev, his report contains this idea. This report will be included in business ombudsman’s report and presented to Russian president. As Marinichev believes in a case if levy collected by fiscal authorities it would permit to make it a tax and regulate it by Russian tax code. If private copying levy would be a simple tax, it would be much easier to collect it and allocate among the right holders, it would also improve market competition. In order to implement this proposition it is necessary to exclude article 1245 of Russian Civil code (Remuneration for free reproduction of phonograms and audiovisual works for private purposes). After abolishing article 1245 the authority to collect private copying levy is to be granted to relevant state body – FCS or FTS.

Marinichev also proposes other alternative, in a case if implementation of his proposition is impossible. As a second option he proposes to change governmental degree #829 “About remuneration for free reproduction of phonograms and audiovisual works for private purposes” and in accordance with these changes include relevant amendments in Russian Tax Code – include private copying levy in expenditure “for purposes of tax base calculation for profit tax” and include private copying levy in expenditures listed in article 264 (Taxes, Impositions, Duties). After that it is necessary to determine period, procedure and terms for payment of (already) tax (former private copying levy) and cut the rate to 0.5% instead of 1%. The single list of taxable equipment would be determined and reviewed annually together by union of distributors (who imports and distributes taxable equipment and media) and union of manufacturers (who manufactures taxable equipment and media).

But the most interesting thing is position of RSP (who collects private copying levy) CEO Andrey Krichevsky. He believes it is not typical model for administrating of tax (!) payments in behalf of certain category of persons and it was admitted as inconsistent with principles of Russian tax and budget law. Does it mean he believes and he is sure that private copying levy is a tax? It should be mentioned, according to Krichevsky, almost in all countries, where private copying levy is provided, such levy is collected by non-profitable collective management organisations. The model of broad collective management (it means accreditation) is applied de-jure and de-facto since 1960 in Netherlands, Germany, Italy, Canada, USA, Hungary, Poland and in other countries what confirms effectiveness of this model.