Russia To Show No Mercy To Tax Evaders

by Tatiana Smolenska, Tax-News.com, Moscow

25 November 2003

The Russian government has sought to tighten the screws on Russia’s reluctant taxpayers following Yukos chief Mikhail Khodorkovsky’s arrest and imprisonment for alleged tax evasion, by closing a loophole which allows non-payers to escape punishment if they agree to settle their debts.

Previously, the tax authorities were happy to invoke the ‘active repentence’ clause of the legal code in order to collect extra revenues from indebted taxpayers, and also avoid the costly process of initiating criminal proceedings and building a case against the accused.

However, amendments passed by the lower house of the Russian parliament, the State Duma, last Friday, will impose severe fines and a possible prison sentence of six years (reduced from seven) on the managers of firms which have evaded tax payments of more than $75,000 over three years.

This is the latest move in the campaign by the Putin administration to assert its authority over the country’s wealthy taxpayers, and could well have a bearing on the outcome of the Khodorkovsky case.

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