LEVYING VAT ON DESTINATION COUNTRY TO COST RUSSIA'S 2005 BUDGET $800 MILLION

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SOCHI, August 18 (RIA Novosti) - The decision to levy VAT on a destination country will cost the Russian 2005 budget $800 million, President Vladimir Putin told a press conference in Sochi.

"It is a serious figure even for Russia. We have to resolve the question instead of covering the missing revenue. We are forced to increase gas and electricity tariffs. We go for it deliberately but we are sure, it is the right decision", Mr. Putin said.

"It is no simple decision. The position of Ukraine on this question was clear, consistent and tough", the Russian leader noted.

Mr. Putin explained the decision by the positive development indices of the Russian and Ukrainian economies. Ukraine's economic performance is an indication that this decision will not only lead to the growth of trade but also favorably tell on the economic development of the Russian Federation and Ukraine, the Russian president said.

We must take the decision now that the state and development of the Russian economy are quite good, Vladimir Putin continued.

He noted that this decision is important for integration within the common economic space (it includes Russia, Ukraine, Belarus and Kazakhstan) and, in the future, for other countries of the former USSR.

In turn, Leonid Kuchma noted that Russia meets Ukraine halfway in taking the decision. He also stressed: "We must work according to the international standards, which intend collecting VAT on the country of destination".

Mr. Kuchma also said that Putin had informed of the decision the president of Kazakhstan and would inform the Belarussian president tonight.

President Kuchma told journalists that the high-level group to prepare common economic space documents will report on its progress by the September summit meeting, due in the Kazakh capital, Astana.

In turn, Vladimir Putin noted that at the Crimea summit they agreed that experts would continue work on forming and preparing the required package of 32 to 60 agreements.

"I hope that most of them will be adopted by the end of this year", Vladimir Putin said.

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