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Russia’s flagship companies to pay $US 60 BLN in taxes?

The new Russian parliament could consider a law forcing some Russian tycoons to pay more than $US 60 BLN in tax. The proposed bill could affect more than 200 of Russia's largest companies. Privatized in the 1990s, they provided huge windfall profits to th

1990s in Russia was a time of endless cues and empty shelves for some, but clandestine deals and overnight fortunes for others. It was a time when Russia’s state-owned enterprises were often sold off at knock-down prices, giving rise to the first generation of Russian robber barons.

Widely considered unfair, the privatization’s results have survived several attempts to be revised. And now there is another one.

Back in the mid 1990s, Russian businessmen were involved in one of Russia’s most controversial privatization schemes. They offered loans to the cash-starved government that they knew would never be returned. In exchange, they were allowed to buy out the country’s most valuable companies often at a fraction of their market value.

A billionaire himself, Aleksander Lebedev wants the oligarchs to pay back 20 per cent of surplus profits they acquired over the past decade. He says this retroactive tax could help bring reconciliation between the oligarchs and society and provide additional funds for the state budget. However, when it comes to the draft’s prospects of passing the parliament, he’s cautious.

While the Kremlin has become more demanding toward big business in recent years, the government has so far refrained from revisiting privatization deals. At his recent meeting with Russia’s richest businessmen Vladimir Putin indicated the state would forget the sins of the past decade.

But even after the meeting, the issue still hasn’t been put to rest. If the new tax proposal is accepted, analysts say it could bring more than $US 60 BLN to the state coffers.

But it could also undermine many Russian blue chip companies. Among the beneficiaries of the scheme were Vladimir Potanin, an owner of Norilsk Nickel, and Roman Abramovish, a former co-owner of the Sibneft oil company. Both businessmen still enjoy friendly ties with the Kremlin.

While the big business has so far refused to comment on the tax proposal, some industry sources indicate that the oligarchs may be willing to share some of the profits with the state.

In his interview with the UK’s Financial Times, the head of Russia’s largest aluminum company RUSAL, Oleg Deripaska, said he’s ready to transfer it back to the state at any moment.

“If the state says we need to give it up, we'll give it up. I don't separate myself from the state. I have no other interests,” Mr Deripaska said.