Russian Finance Ministry Backs Relaxation Of Tax Evasion Penalties

by Tatiana Smolenskaya, Tax-News.com, Moscow

24 August 2009

It has been reported that the Russian Finance Ministry has expressed its support for proposals submitted to the State Duma which would adjust the thresholds above which tax evasion by individuals and companies would be treated as a criminal offence.

The Moscow Times revealed that the Ministry had published a note on its website regarding the proposals, which were submitted to the lower house by politicians from the United Russia Party in July.

Currently, criminal sanctions are imposed on individuals and companies deemed to have failed to provide the required information, or to have knowingly provided false information, and to have evaded 'large' or 'very large' amounts of tax; the legislation put forward by the United Russia deputies would revise the thresholds upwards, in the initial instance of tax evasion.

In addition, exemption from criminal sanctions would be afforded to delinquent taxpayers who opt to settle their tax liabilities during a designated period prior to their case coming to court.

The support reportedly expressed by the Russian authorities for more lenient measures stands in stark contrast to the government's treatment of the British Council, which has found itself -- albeit likely for political reasons, following the souring of diplomatic relations that was sparked by the poisoning of Alexander Litvinenko -- at the sticky end of tax evasion allegations in 2008, regarding its activities in the country in 2004-06.

However, the non-profit cultural organisation recently scored a victory in the country's courts, when Moscow's Ninth Arbitration Court dismissed the majority of the RUB200m (USD6.3m) back tax claims being faced by the body.

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