Putin Keen To Limit Powers Of Tax Investigators

by Tatiana Smolenskaya, Tax-News.com, Moscow

09 February 2005

According to reports, Russian President Vladimir Putin has called upon Deputy Prime Minister Alexander Zhukov to proceed with the drafting of new proposals limiting the investigative powers of the Russian tax authorities.

Reuters reported that Putin and Zhukov discussed the issue of “putting some order into the tax administration system,” during a government meeting, with the Deputy Prime Minister asked by Putin to “prepare suggestions” as to how this could be achieved.

This seems to indicate a change of tack by the Kremlin, after the tax investigation and subsequent dismantling of oil giant Yukos was widely interpreted as a statement of intent against the political ambitions of its former chief executive, Mikhail Khordokovsky and other oligarchs.

Putin's comments also suggest that the President has acknowledged the over-exuberance of the Russian tax authorities in their investigation of Yukos, and other firms such as mobile telephone operator Vimpelcom. These probes have rocked the confidence of foreign investors with a stake in the Russian system.

Zhukov reportedly acknowledged this during an interview with the Wall Street Journal at the World Economic Forum in Davos last month, when it emerged that the Russian government was considering changes that could limit the broad latitude afforded to tax inspectors in company back tax investigations.

It emerged at the time that these changes could involve curbing the ability of tax investigators to extend probes over long periods, the elimination of repeat audits for the same tax year and the curtailing of requests for large volumes of documents from taxpayers at short notice.

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