Finance Ministry cannot make Gazprom pay more taxes

Over the past two months the Russian Finance Ministry has been trying to find a way to make Gazprom pay more taxes. However, the Russian gas giant is not going to increase its share in the country's budget revenues enjoying its exclusive economic importance, the Izvestia newspaper reported. On June 18 Gazprom posted its financial statements for 2002 prepared in accordance with Russian accounting standards. According to the document, the holding's profit tax and other similar obligatory payments were 33.17m rubles ($1.1m) last year, while in 2001 they were 72.53m rubles ($2.4m). Having cut its tax payments Gazprom in fact has confirmed statements of Finance Minister Alexey Kudrin who claims that the country's largest company is trying to avoid taxes. According to the Finance Ministry, over the past two years the gas sector has decreased its tax payments by more than half. That is why the ministry has suggested that the annual tax burden on the gas sector should be increases by 17bn rubles ($560m). The Russian government will not be able to form the budget without Gazprom, which provides about 20 percent of the total revenues of the federal budget. To improve the situation the ministry has decided to cancel the excise tax and increase the tax on production of natural resources. The tax on gas production was initially planned to be 193 rubles ($6.3) for every 1,000 cubic meters, against the current 32 rubles ($1.05). The State Duma suggested that the tax should be 107 rubles ($3.5). Later however, deputies recommended that this tax should be raised to only 70 rubles ($2.3). The Finance Ministry has supported the first variant. Meanwhile, Gazprom authorities have many times declared that they would completely cut profit taxes should the tax on gas production be increased.

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