Russian Tax Police Chief Calls For Tougher Laws On Corporate Tax Evasion

by Tatiana Smolensky, Tax-News.com, Moscow

27 March 2002

In a recent interview the head of the Russian Tax Police, Mikhail Fradkov, called for new legislation on penalties for systematic corporate tax evasion.

Speaking last week, the Tax Police chief welcomed the fact that the force now has the necessary legislative base to carry out its duties, but said that he would like to see criminal legislation on the prosecution of tax evaders tightened, citing 'active repentance' provisions as a flaw in the current system.

When questioned by the Nezavisimaya Gazeta regarding the fact that currently only around one in four cases of tax evasion uncovered by his department goes to trial, Mr Fradkov responded that:

'Almost a third of the cases are closed in connection with so-called active repentance and complete reimbursement of damages.'

The Tax Police Chief revealed that he has submitted proposals to the government on changes to the Criminal Code geared towards increasing accountability for tax evasion. He stressed that this was not intended to target minor, and first-time offenders, but to attack large companies and wealthy individuals practicing systematic tax evasion.

'Those who evade paying taxes on a large or especially large scale should not take advantage of such a 'privilege',' he told the newspaper, referring to the active repentance provisions contained within existing tax laws. He continued:

'Whoever plans and commits these crimes is actually creating competitive advantages for himself, using the most varied schemes for deceiving the state. As a result there appears an entire tangle of criminal acts against which we are concentrating our main efforts.'

Mr Fradkov also admitted that corruption within the Tax Police has traditionally been a problem, but said that one of the new tasks facing the force has been to investigate incidents of corruption within the organisation itself. 'We are devoting the most careful attention to the purity of our own ranks and do not make a secret of it,' he concluded.

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