Russian PM Critical Of Fine Handed Out To Yukos

by Tatiana Smolenska, Tax-News.com, Moscow

13 January 2004

The Prime Minster of Russia, Mikhail Kasyanov, has expressed disapproval over the government’s handling of the Yukos affair and argued against the current policy of handing out retrospective fines for firms who have used tax loopholes in the past.

In an investigation report released last month, the Tax Ministry accused Yukos of actively employing tax evasion schemes in the year 2000 to avoid paying some 98 billion rubles ($3.35 billion) in taxes.

However, in comments made to Russian newspaper Vedmosti, Kasyanov argues that strictly speaking the firm was using legitimate means to lessen its tax burden. "The Tax Code didn't prohibit Yukos and other companies from conducting transactions in domestic tax havens," he noted.

"If legal activities to optimize tax payments are declared illegal retroactively, then I see this as negative," observed Kasyanov, adding: "If actions were allowed by the law, we should today be guided by the letter of that law and not by ideas of fairness," he said.

Many Russian energy firms are said to have exploited tax breaks offered by governments in the outlying regions of the Russian Federation in recent years, although these concessionary tax regimes have now been outlawed by new legislation effective from January 1st, as the Kremlin attempts to assert its authority over the oil sector.

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