Soros Foundation denies tax evasion charge

A branch of the Soros Foundation in Kazakhstan has strongly denied charges of tax evasion by the authorities, describing the allegations as politically motivated. "It seems that the Kazakh government wants to close down the foundation," Dariusz Zietek, head of the Soros Foundation-Kazakhstan (SFK), told IRIN from the commercial capital, Almaty, on Thursday. "The whole story is politically motivated." His remarks follow this week's announcement by Kazakh financial officials that a criminal investigation had been opened against the acclaimed foundation funded by billionaire American financier George Soros, which has been active in Central Asia's largest nation since 1993. Kazakh officials maintain the Soros Foundation failed to pay some US $400,000 in back taxes it owned since 2001, plus some $200,000 in penalties. But according to Zietek, the taxes in question remain a source of debate, although they actually paid the bill in full before an appeal was lodged this autumn. According to the Soros official, under Kazakh tax law, the SFK did not pay these taxes earlier because of repeated assurances by former government officials that the foundation was exempt from such taxation as an "international organisation". "When they changed the tax code in 2001, we had meetings with senior government officials in [the political capital] Astana and were assured at that time that the foundation was not obliged to pay the social tax, a tax levied on all employees," he said. "We had to pay income tax and VAT, but not the social tax," he maintained. Following a failed appeal, however, and payment of some $600,000 to the authorities in October, it came as a complete surprise when Kazakh authorities began making further demands. "It's not enough," Zietek claimed the financial police as saying. They then wanted to investigate whether the SFK had tried to avoid paying its taxes in the past. Defending the foundation's position, he noted that every month they had submitted a tax declaration to the local authorities and since 2001 had never once heard they needed to pay any additional taxes. "Everything was correct. Everything was stamped. So why suddenly did they decide that we had to pay the 'social' tax?" he asked. That's a good question and one that could have serious implications for the SFK's future. According to a statement by the foundation on Monday, in November the Soros foundations network, of which the SFK is a part, sought assurances from Kazakh President Nursultan Nazarbayev that the criminal investigation into the matter would cease and that the SFK would be allowed to continue to operate. "There has been no response from the president. If this harassment by the financial police continues, the SFK will have no choice but to close," the statement warned. But Zietek added this was not the first difficult encounter it had had with the government, describing the past year as quite "challenging". Although the SFK had actively worked to promote the health, education and welfare of the Kazakh people, spending over $50 million on projects over a broad range of areas, its focus on freedom of expression, access to information and programmes on local governance, as well as a proposed programme next year to root out corruption in the former communist state, might have been too much for the authorities. Under the so-called revenue watch programme, the SFK would monitor all revenue in the oil-rich nation and provide an alternative point of view to the government as to how it should be managed and spent, Zietek explained. Earlier this year, the Soros Foundation was forced to close its operations in neighbouring Uzbekistan after the authorities there refused to extend its registration, accusing it of trying to discredit the government's policies. In 1998, the foundation was forced out of Belarus, allegedly for using funds to finance the Belarusian opposition.