In the first ever amnesty, which ran until December 2007, individuals and self-employed entrepreneurs paid 13% tax on 28.19 billion rubles ($1.12 billion) in previously untaxed income earned prior to January 1, 2006. Those who took part in the amnesty will now be exempt from any legal action by tax and law enforcement agencies.
The government introduced the controversial move to try and halt capital flight and encourage inflow into Russia. Individuals were free to decide on how much of their income to declare with every 13 rubles paid to the treasury legalizing 100 rubles in earnings.
No restrictions were set on the minimum or maximum amount that could be declared and the simplified procedure allowed individuals to make a "declaration payment" on income earned since 2001 and then pay 13% of the declared sum. Russia has a flat tax rate of 13%.
The amnesty did not extend to those already convicted of tax evasion and tax related crimes, although it was designed to assist individuals currently being investigated or tried for tax-related offenses.
Experts had suggested that those involved in economic crimes, such as money laundering, currency and customs violations, would not take part in the scheme.
Vadim Zaripov, a tax expert at the Pepelyayev, Goltsblat and Partners law firm, said the recent tax amnesty was the first for private individuals in Russia.
A similar amnesty for businessmen proposed by President Boris Yeltsin 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 materialized.
