Russian Cabinet Approves Plan To Rein In Tax Service

by Tatiana Smolenskaya, Tax-News.com, Moscow

02 May 2005

The Russian government last week approved draft proposals aimed at restraining the investigative powers of the tax service, as it attempts to build bridges with the domestic and foreign business community.

Following a cabinet meeting on Thursday, it emerged that Finance Minister Alexei Kudrin is thinking of creating a new, more senior tax body that would need to be consulted before tax investigators can launch repeat probes into a company's tax history.

Deputy Finance Minister, Sergei Shatalov has suggested that a commission could be set up that will authorise new tax inspections, which could be under the direct control of Kudrin.

Also in the draft are proposals to limit the length of investigations to two months, or three months if the firm under scrutiny has subsidiaries. Under current rules, company tax investigations can legally drag on for many months.

In addition, firms may get longer to pay any demands for back taxes, possibly up to one year from the current six month limit.

Kudrin has been requested to finalise the proposals by the middle of May so that amendments can be presented to parliament before the end of the Spring session.

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