Russia » Economics

Does Anyone Pay Taxes These Days?

Nobody is interested in public exposure and punishment of evil infringers in Russia.
Auditors of the Russian Accounts Chamber have to waste their time to conduct systematic checkups. Well, that is their duty. In the course of their routine occupation however, they are able to discover some quite fascinating falsifications. One could probably write an entire book to describe such stories in tedious details. As soon as auditors finish their paperwork they send their results to the State Duma, to the Main Office of the Public Prosecutor, to the government. As time goes by, nothing happens.
It is not surprising therefore, that newsmakers of the Accounts Chamber are eager to inform Russian citizens of the upcoming checkups, since they will most likely cause major resonance among the masses. Vecheslav Smirnov, head of the Communication Department of the Accounts Chamber with other state services has announced during a press conference that such popular distilleries as Moscow's "Kristall" and Samara's "Rodnik" are next among those scheduled for a checkup. Holidays are coming. Who ever celebrates without vodka??? Well, this time consumers have nothing to worry about. Even if the Chamber had legal rights to shutdown those distilleries for the annual checkup, the actual amount of vodka in stores and under the table will remain unchanged.
Official representatives of the Accounts Chamber started making their appearance more obvious in order to remind peaceful citizens of their existence. In 2004 the Chamber along with the Ministry of Internal Affairs plans to conduct its service at the Ministry of Health, check efficiency of the Federal law regarding "Russia's pension fund" as well as the law concerning "mandatory medical insurance". This is understood. When state and capital are clashing, it appears to be the most appropriate time for the Accounts Chamber to realize its full potential and remind everyone of those previously uncovered facts.
 It has recently been publicly proclaimed that members of the Ministry of Internal Affairs are harvesting a thought of issuing a court order regarding Russian oil companies such as "Sibneft" and "RosNeft".
The case with "SibNeft" appears to be more or less clear. Sergey Stepashin, a current head of the Accounts Chamber had actively investigated the company's business back when he was Prime-Minister. However, after "SibNeft"'s major shareholder Roman Abromovich got rid of his Russian assets and began investing in England's football club "Chelsea", Stepashin did not waste an opportunity to bring some interesting facts to the attention of  Russia's Security Services. So far, nothing has been done in regards to such matter.
So what were those cynical perpetrations of Tax legislation, most properly termed "minimization of taxation" among businessmen?
According to those facts obtained by auditors of the Accounts Chamber, "SibNeft" for instance, has been selling its oil through an entire chain of relatively small companies located in tax-free zones. Their main headquarter mainly consisted of invalids. Such fact allowed for decrease of profit tax to 50%. They paid a minimal price for oil—only 1300 rubles per cubic ton (only this amount was taxed). Afterward, they resold this oil for twice or three times as much as the initial cost. "UKOS" was no exception. In fact, it continues to lead such game even today, without Hodorkovski.
Everyone is perfectly aware of the existence of such schemes. This is the way almost every privately owned company in Russia does its business. This has a lot to do with deliberately unclear laws. At the time, Russian government was mainly preoccupied with the creation of a new socio-economic class of entrepreneurs. The government provided its help to those beginning entrepreneurs by changing and/or misrepresenting certain laws. Today, Hodorkovski and Lebedev are in prison for getting too excited and too much involved in this game of "entrepreneurship."
Interestingly, American oil company Exxon Mobil has recently been fined by the Alabama Court for $12 billion. And for what? For deliberately lowering its tariffs and taxes. As it can clearly be seen from the above example, same things tend to happen in the West.
As far as those uncovered facts of the Accounts Chamber are concerned, they have all been getting dusty somewhere on the shelves of the Ministry of Internal Affairs. Nobody cared about them. Russia’s government services were also aware of the "UKOS"'s dirty business and nobody uttered a word. Tax police had even attempted to provide all of that information to mass media. Media refused the offer while being afraid of possible trickery. That would have been the end to such an enchanting story. Today however, time has finally come to put an end to oligarchs.   

Artyam Akhtirov

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