Russian Government Approves Tax Amnesty Plans

by Tatiana Smolenskaya, Tax-News.com, Moscow

15 August 2005

The Russian government has approved a plan for an amnesty on undeclared funds, which will begin in 2006.

Under plans drawn up by Finance Minister Alexey Kudrin, the tax amnesty will run from January 1 until July 31, 2006, and individuals will be able to deposit previously undeclared funds into domestic bank accounts without facing penalties or charges from the tax authorities. However, depositors will be required to pay income tax on declared funds at a rate of 13%.

Kudrin assured potential amnesty filers that declarations will not result in further investigations by other government agencies, except in instances where the authorities suspect funds are being used for terrorist financing.

Kudrin is refusing to speculate on how much undeclared money the amnesty scheme will draw back to Russia, and he acknowledged that the figure will depend on whether investors have had their faith restored in the Russian economic and legal system.

"There are no rules here, and everything will depend on how much general confidence business has in the government. I cannot give an independent appraisal to Russia's investment climate now,” he told reporters.

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