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. Last Updated: 07/27/2016

Newspaper: Putin Backs Plan to Clip Tax Police

President Vladimir Putin is backing a government proposal to curb aggressive tax probes in an attempt to soothe investor concern, Vedomosti reported Thursday.

Deputy Prime Minister Alexander Zhukov and Finance Minister Alexei Kudrin have drawn up amendments to the Tax Code that significantly limit the powers of tax authorities in their dealings with companies, the paper said.

The proposals -- which include limiting the duration of tax audits and avoiding repeat checks on companies -- have won Putin's approval, the paper said, citing unidentified government sources.

The amendments come on sharp criticism of the government last week. Facing the most difficult situation in the past 15 years, entrepreneurs are basing business decisions on a pessimistic scenario, Unified Energy Systems CEO Anatoly Chubais said.

Economic growth slowed to an estimated 6.9 percent last year, down from 7.3 percent in 2003. Growth in investment slowed to 10.9 percent, from 12.5 percent in 2003.

Analysts consistently cite the legal assault on oil major Yukos, which faces a towering bill of more than $20 billion in back taxes, as a major blow to investor confidence in Russia.

At first, many observers considered Yukos a one-off affair that could be traced back to Kremlin retribution for the political ambitions of Yukos founder Mikhail Khodorkovsky. However, the Yukos case has been followed by back tax claims on No. 2 mobile operator VimpelCom in December and on Japan Tobacco International this month.

Last week Chubais suggested that one-third of businesses in Russia have received back tax claims.

The changes suggested by Kudrin and Zhukov will be discussed by the Cabinet in February and could come into effect next year, Vedomosti reported.

The tax authorities received the news coolly. "I have seen the document. ... There is nothing revolutionary in these proposals," said Yelena Tolgskaya, spokeswoman for the Federal Tax Service. "Some of the provisions in the Tax Code need to be clarified and we agree to that. It does not give us heartburn."

Investors were more enthusiastic in their reaction. "The tax authorities in Russia have been acting with near impunity in recent times, and regulating their activities and providing business with rules is a very positive step," Aton wrote in a note to investors Thursday.

It is reassuring that the president is throwing his support behind the pro-business voices in the government, said Igor Yurgens, the former vice president of the Russian Union of Industrialists and Entrepreneurs and now the first vice president of Renaissance Capital.

"This way we get a mighty ally in the fight with tax authorities," he said. "Let the tree grow and bear more fruit rather than chop sprigs off a bush."

The initiatives are long overdue, said Sergei Borisov, president of OPORA, the umbrella organization for small and medium-sized enterprises. "It's sad that [such initiatives] are served up under the sauce of improving the country's international investment attractiveness," he said. "It would be more important to act in the interests of domestic businessmen who have for many years been under the yoke of permanent tax checks."

A spokeswoman for VimpelCom declined comment on the proposals before they are adopted.