Mezhregiongaz has fully fulfilled its obligations regarding the early payment, in four years instead of six, of its restructured tax debt of RUR 8.1 billion.

Following the payment, the Interregional Tax Inspection N2 (largest tax payers) of the tax Ministry of the Russian Federation decided, in accordance with the Russian government decree N1002 of 3 October 1999, to write off the rest of Mezhregiongaz's fines and late payment fees of RUR 5.45 billion.

The first half of Mezhregiongaz's fines and late payment fees were written off in July 2003, since the company was implementing its restructured tax debt payment on time.

Reference:

Mezhregiongaz is a wholly owned subsidiary of Gazprom.

From 1997 to 1999 a considerable part of consumers in Russia were paying for the natural gas supplied by means of mutual settlements, stocks, bonds and other money substitutes. This was the reason why the company was not able to make payments to the federal budget in full. For example, Mezhregiongaz paid only 33.4% of its total obligations to the federal budget in 1999.

The tax ministry of the Russian Federation made a decision to restructure Mezhregiongaz's debt on 5 October 2000. At the time the company's tax debt was RUR 8.1 billion, and fines and late payment fees amounted to RUR 10.9 billion.

The approved schedule of the restructured debt payment obliged the company to pay the amounts due on taxes in six years' time, and the amounts due on fines and late payment fees in four years' time.

In accordance with the Russian government decree N1002 of 3 October 1999, the company had the right to have its fines and late payment fees written off in case it paid the tax debt in four years' time.

Mezhregiongaz decided to pay the whole amount of the restructured tax debt ahead of schedule, in four years' time, and as a result, the Interregional Tax Inspection N2 (largest tax payers) of the tax Ministry of the Russian Federation decided, to write off the whole amount Mezhregiongaz's fines and late payment fees.

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