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. Last Updated: 07/27/2016

Tax Chief Puts Capital Flight At More Than $1Bln Monthly

Despite indicators showing that Russia's economy is strengthening, capital is still seeping out of the country illegally at a rate of at least $1 billion a month, the country's Tax Police chief said Tuesday.

Tax Police chief Mikhail Fradkov said much of the capital flight involved the laundering of money earned illegally, Interfax reported. Twenty Moscow banks audited last year by the Tax Police had transferred about $5 billion abroad via front companies, he said.

Fradkov estimated that between $1 billion and $1.5 billion leaves the country every month.

Independent economists have estimated that capital flight is up to $2 billion a month and say some of the money comes from legitimate businesses seeking to avoid taxes and protect their earnings from corrupt bureaucrats and political upheavals.

Fradkov said the Tax Police had opened more than 36,000 criminal cases last year, an increase of 20 percent in comparison with the previous year.

Russia's rampant tax evasion has shown little sign of abating despite two years of promising economic indicators.

The federal budget surplus last year amounted to 216 billion rubles ($7 billion), or 2.4 percent of GDP, which reached 9.1 trillion rubles ($298 billion), the Finance Ministry said.

According to preliminary estimates, federal budget revenues reached more than 1.592 trillion rubles last year, an increase by one-third compared to the original budget plan. The government used higher revenues to boost spending by 15 percent to nearly 1.376 trillion rubles.

The government said last week that industrial production grew 4.9 percent last year and tax revenues were 8 percent above target. The growth was welcome after protracted decline throughout the 1990s, but was lower than in 2000, and economists warn investment in infrastructure is needed to make it long-lasting.