Russian Tax Police Aim To Pre-Empt Tax Crime

by Tatiana Smolenskaya, Tax-News.com, Moscow

14 February 2003

According to the Moscow Times, pre-emptive measures contained within Instruction No. 525, which was registered by the Justice Ministry at the end of January as part of the Russian government's campaign against tax evasion, have caused consternation amongst Russian taxpayers, and have been condemned by some as 'Orwellian' in nature.

The news service revealed on Thursday that the Tax Police have compiled a list of individuals and businesses who may warrant 'preventative action', in order to prevent them from committing a tax crime. Although the definition of such action is vague, it could range from increased scrutiny to the enlisting of a spouse or family member to persuade the would-be evader not to dodge their tax obligation, according to reports.

Although both the Tax Police and the Justice Ministry have stated that the provisions allowing pre-emptive action to be taken against known late filers and potential evaders have been in existence for years, and that the internal instruction just consolidates and clarifies the issue, lawyers have argued that the instruction violates Article 24 of the Constitution, which prohibits the collection and storage of private information.

'It gives the Tax Police long arms,' one senior lawyer mused to the Moscow Times this week.

There are also concerns that the provision may add to the burden of bureaucracy currently faced by small businesses in Russia.

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