Putin Urges Tax Service To Stop ‘Terrorizing’ Businesses

by Tatiana Smolenskaya, Tax-News.com, Moscow

26 April 2005

In his annual state of the nation address to parliament, Russian President Vladimir Putin urged the tax authorities to cease menacing the business community with claims for back taxes, in a message designed to reassure foreign businesses that their contribution to the Russian economy is welcomed by the government.

"That money must work in the Russian economy," Putin told parliament.

He went on to add that the "tax authorities have no rights to terrorize business".

"We should stimulate the return of capital earned by our people to our national economy," he added.

President Putin suggested that tax officials should focus their investigative energies more on checking current tax bills than on chasing companies for years of back-taxes.

However, he declared that the pace of economic reform and democratisation of Russia will be dictated by the leadership as it sees fit.

"Russia...will decide for itself the pace, terms and conditions of moving toward democracy," he announced.

The Russian leader has also assured BP chairman Lord Browne of Madingley that the oil producer's £3.6 billion investment in the country is safe, after the British firm's Russian unit, TNK, was saddled with a back tax bill approaching $1 billion.

"We made no mistake when we supported the decision [by BP to invest] that was taken two years ago," Putin remarked.

"Let me express my hope that your business will continue to develop in the same manner," he added.

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