The Russian government approved in general a Finance Ministry proposal tax amnesty at a government session, a spokesman said Thursday. The proposal envisages a simplified scheme allowing individuals to declare incomes gained before January 1, 2005 and pay any outstanding taxes on undeclared incomes at a flat rate of 13%.

Finance Minister Alexei Kudrin told the session he was ready to discuss cutting the tax rate on undeclared incomes, adding that the move would encourage individuals to declare incomes.

The minister said incomes that would be deposited in Russian credit institutions from January 1 to July 1, 2006 would be exempted from any penalties under existing tax laws that may have applied for a failure to declare income in the past.

Kudrin said no limits would be set either on the level of funds in local and foreign currency, or on their further use, adding that an income declaration would not be considered a reason for opening money-laundering cases. However, the minister said individuals would only be exempted from penalties only under existing tax laws.

The minister said no special investigations would be launched into funds declared under the tax amnesty, adding that the plan did not envisage a tightening of tax legislation.

According to Kudrin, the government is stepping up efforts to ensure effective tax regulation and, in some cases, is easing the procedure of tax checks and making them shorter. "Sometimes we meet the business community half-way," Kudrin said.

However, the minister said the amnesty only applied to tax law.