Russia's Duma mulls scrapping VAT for press amid crisis

MOSCOW, February 12 (RIA Novosti) - Russia's parliament is considering a proposal to cancel VAT charges for the press in a bid to ensure its independence amid the ongoing financial crisis, a business daily said on Thursday.

The proposal by the ruling pro-Kremlin United Russia party on scrapping value added tax for the production and spread of newspapers and magazines is being discussed as part of a draft law on ensuring of the media's economic independence, Kommersant said.

United Russia member Boris Reznik told the paper the draft law "must be adopted without delay," as it could "considerably lessen the burden of financial problems for the Russian media."

However, an unnamed Finance Ministry official told the daily that "the issue is irrelevant considering the current economic situation in the country."

The chief of the Journalists' Union, Mikhail Fedotov, welcomed the idea, but said "guarantees of independence are not only confined to tax breaks," the newspaper reported.

Reznik said however that the government was unlikely to agree to completely cancel VAT for the press.

He said lawmakers and the Finance Ministry were currently discussing the possibility of reducing VAT from the current 18% to at least 5% for the press. Reznik said he was positive a compromise would be achieved, and the lower house would pass the law during its spring session, the paper reported.

Russian media were exempt from paying VAT in 1996 under a law on state support for media and the publishing business. The state levied a 10% rate on the media in 2002. The media community has lobbied for a reduction to 10% since the current common 18% rate was introduced in 2005.