Russian Deputies Approve Tax Amnesty Bill

by Tatiana Smolenskaya, Tax-News.com, Moscow

07 July 2006

Russia's lower house of parliament, the State Duma, approved a tax amnesty bill in the first of three readings on Wednesday.

Those declaring monies to the authorities under the amnesty will escape prosecution in return for paying a 13% tax on the previously hidden assets. Incomes declared during the amnesty will be exempt from penalties for personal income tax evasion and evasion of unified social tax payments, a payroll tax transferred to pension, social insurance and health insurance funds.

The Duma’s budget and taxes committee has recommended that amendments should be added in the second reading of the bill to include exemption from custom and foreign exchange law violations.

The amnesty is scheduled to run until April 1, 2007. However, amnesty will only be granted on incomes earned before January 1, 2005 under the current version of the bill. No restrictions are planned on the minimum or maximum size of declared sums.

Opponents of the bill, including Communist deputies, have criticised the proposals for forgiving those who "stole money from the nation's pocket".

However, President Vladimir Putin is hoping that the scheme will result in the repatriation of at least some of the $160 billion in capital which has fled the country since the collapse of the Soviet Union in the early 1990s.

Needing the support of 226 deputies to pass the first reading, the bill received 355 votes, with 60 voting against the proposal and one deputy abstaining.

To become law, the bill must be approved in three readings by the State Duma and in one reading by the Federation Council, the upper house, before being signed by the president.

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