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    Tax amnesty comes into force in Russia

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    A tax amnesty for individuals, designed to streamline relations between taxpayers and tax authorities and to curb capital flight, enters into force in Russia March 1.

    MOSCOW, March 1 (RIA Novosti) - A tax amnesty for individuals, designed to streamline relations between taxpayers and tax authorities and to curb capital flight, enters into force in Russia March 1.

    The amnesty gives individuals an opportunity to declare revenues they have not paid taxes on since 2001 through a simplified procedure, and to then make "declaration payment" worth 13% of the declared sum, which is the flat income tax rate in Russia.

    People will have until December 31, 2007 to declare revenues they received before January 1, 2006. They will face no tax-related charges after they make the declaration payment. No restrictions are planned on the minimum or maximum amount of declared sums.

    Finance Minister Alexei Kudrin has said the amnesty is well timed, as it will encourage Russians to legalize their revenues at home. Last year saw unprecedented capital inflows into the country, which stood at over $41 billion, compared with previous years, which were marked by dramatic capital flight.

    The amnesty will not extend to those already convicted for tax evasion and related crimes, although it will help individuals currently being investigated or tried for tax-related offenses.

    Experts have suggested that those guilty of related crimes, such as money laundering, currency and customs violations, will not venture to legalize their revenues under the amnesty, which does not cover such crimes, and the campaign will not bring big money to the state budget.

    Experts also warned the amnesty law did not provide for proper protection from possible prosecution from tax bodies after amnesty payment.

    Vadim Zaripov, a tax expert at Pepelyayev, Goltsblat and Partners law firm, said earlier it was the first tax amnesty for private individuals in Russia.

    The amnesty for entrepreneurs proposed by President Vladimir Putin in 1993 only resulted in "draconian" penalties for those who failed to pay taxes on time, Zaripov said. An amnesty for legal entities announced in 1996 ahead of the presidential elections never took place.

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