Russian Tax Amnesty Bill Awaits Cabinet Approval

by Tatiana Smolenskaya, Tax-News.com, Moscow

15 March 2006

Deputy Finance Minister Sergei Shatalov has revealed that the bill which would give effect to an amnesty on undeclared offshore income has been submitted by the Finance Ministry to the government, and now awaits approval from the cabinet.

Shatalov told reporters on Friday that the bill has been approved by the Economic Development and Trade Ministry and the Justice Ministry and could be submitted to State Duma, the lower house of parliament, after one of the government's regular general meetings.

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.

Shatalov was reported as stating last month that the amnesty could go into effect one day after the amnesty law is passed, possibly in July, and will last until April 30, 2007. The law will apply to incomes received before January 1, 2005.

Those declaring monies to the authorities under the amnesty will escape prosecution in return for paying a 13% tax on the previously hidden assets. In an attempt to encourage participation in the scheme, a provision stipulating that newly declared money must be paid into a Russian bank account has been dropped.

However, the amnesty will only offer immunity from prosecution for possible violations of tax law, and individuals coming forward under the scheme may still be liable for prosecution for violating foreign exchange laws and the Criminal Code.

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

Reports indicate that both Russian and foreign citizens are expected to be allowed to declare their assets during the amnesty.

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