Russian Amnesty Disclosers To Pay 13% Tax Rate

by Tatiana Smolenskaya, Tax-News.com, Moscow

03 January 2006

Russian Economy Minister German Gref has revealed that money disclosed to the authorities under the government's planned amnesty on undeclared assets will likely be taxed at a tax rate of 13%.

In November, Deputy Finance Minister Sergei Shatalov indicated that the government had considered lowering the penalty rate to 7%, but Gref told reporters recently that the income tax repatriation bill currently stipulates a tax rate of 13% on declared monies, and that this was unlikely to change.

The government had initially hoped to commence the tax amnesty on January 1, 2006, but Shatalov announced in November that the scheme could be delayed for six months while lawmakers fine-tune the necessary legislation. The bill on income repatriation must be submitted to the cabinet by March 1, 2006.

Under recent revisions to the bill, the declaration process would be simpler, meaning that the origin of the newly declared income would not have to be disclosed, and there will no longer be a requirement for money to be paid into a Russian bank account.

However, the amnesty would only offer immunity from prosecution for possible violations of tax law, and individuals coming forward under the scheme may still be liable for prosecution for violating foreign exchange laws and the Criminal Code.

In an effort to encourage participation in the amnesty, Shatalov has warned taxpayers that penalties for tax crimes after the closure of the scheme will be "very tough".

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