First Priority Of Business Is To Pay Tax, Says Russian Finance Minister

by Tatiana Smolenskaya, Tax-News.com, Moscow

21 April 2004

Russian Finance Minister Alexei Kudrin told businessmen at the recent Russian Economic Forum in London that a firm’s first priority when doing business in Russia is to fulfil its tax obligations to the state.

"First of all it is the honest paying of taxes...And it really is the priority," Kudrin told an audience of around 1,000 delegates at the two-day forum on Monday.

The Finance Minister explained that this was part of a quid pro quo arrangement with the government, which he argued had already played its part in helping business by initiating a programme of tax cuts.

Kudrin pointed out that one such measure was the reform of the social contributions tax system that will introduce a unified rate of 26% from a top rate of 35.6%. It is estimated that it will free up some $10 billion for firms to reinvest in their businesses.

It has also emerged from reports that the Russian leadership is contemplating a tax amnesty for the nation’s oligarchs on some of the substantial profits made during the privatisation of state industries.

However, Kudrin acknowledged that such a move may not sit well with much of the population, given the growing wealth gap between rich and poor.

“We have to pick a moment when the rules are absolutely clear so that legalising underground capital will not shock the public and society, and will not be revised,” the Times quoted him as observing.

Nevertheless, Kudrin stated his belief that this would be carried out at some point during the Putin presidency, probably within the next four years.

Recommended