Open Joint Stock Company Gazprom

OAO GAZPROMNOTES TO THE IAS CONSOLIDATED FINANCIAL STATEMENTS(In millions of Russian Roubles in terms of the equivalent purchasing power of the Rouble asof 31 December 2001)17 PROFIT TAXThe Group accrues current profit tax at the rate of 35% and 43% on profits from non-banking andbanking activities, correspondingly, computed in accordance with the Russian tax legislation. The taxrates applied were enacted on 1 January 2001.Profit before profit tax for financial reporting purposes is reconciled to profit tax expense asfollows:31 December2001 2000Profit before profit tax and minority interest 201,294 183,195Theoretical tax charge at a statutory rate thereon (70,453) (54,958)Tax effect of items which are not deductible or assessable for taxation purposes:Non-temporary element of net monetary gains (80,379) (54,058)Non-deductible expenses (33,220) (47,154)Statutory tax concessions 11,919 23,465Other non-temporary differences (9,004) (6,340)Inflation effect on deferred profit tax balance at beginning of year 6,458 6,251Effect of increase in taxable base due to statutory revaluation _ 274,756Effect of change in tax rate (10,512) 16,643Profit tax (expense) benefit (185,191) 158,605The non-temporary impact of monetary gains reflects the effect of inflation on the theoretical taxcharge with respect to non-monetary items of a non-temporary nature (primarily social assets andequity).Profit tax expense in the consolidated statement of operations is stated net of RR 825 and RR974 of tax attributable to gains arising on treasury share transactions for the year ended 31 December2001 and 2000, respectively (see Note 4).In August 2001 the Profit tax chapter of the Tax Code was enacted, which introduced a new profittax rate of 24%. This rate will become effective starting from 1 January 2002.Differences between the recognition criteria in Russian statutory taxation regulations and IASgive rise to certain temporary differences between the carrying value of certain assets and liabilities forfinancial reporting purposes and for profit tax purposes. The tax effect of the movement on thesetemporary differences is recorded at the rate of 24%, as appropriate.F-67