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Taxes are the compulsory financial contribution by a person or body of persons towards the expenditure of a public authority.

Government taxes income, wealth or consumption to finance its expenditure on defense, social services, municipal services and others.

The main forms of taxes are direct and indirect taxes. Direct taxes are the major sources to generate tax revenue. Direct taxes are divided into individual income tax, which can be regressive and progressive, and corporation income tax. There are VAT, excise and customs duties are the forms of indirect taxes.

The major principles of a tax system that it should be equitable and reasonable shouldn't be costly and shouldn't contain a lot of allowances and exemptions. And then the incentive to avoid and to evade taxes would be less.

In Russia The Federal Tax Service is a new organization, but its role is very important, because the private sector is developing fast. The Russia Government is trying to lower the tax burden and to simplify the tax system. There are plans to reduce profit tax and VAT.