The same request was placed by the OJSC MGTS leadership to the Mayor of Moscow, Mr. Yu. Luzhkov.

At the present moment (as of 1 January 2002), the telephone communication services are sales-taxed on general terms. The Company's leadership believes that the status of the OJSC MGTS services is decidedly analogous to that of the public utilities services which are legislatively withdrawn from taxation. In OJSC MGTS' view, imposing the sales tax on the telephone services provided to the physical persons is of discriminatory nature. Moreover, since the telephone communication services are deemed socially significant and vitally important, OJSC MGTS makes them available to residential subscribers at minimal tariffs. Additional taxation has hereat a negative bearing on the earnings of the low-income sections of the population.

Earlier, while the Moscow Law "On the Sales Tax" of 17 March 1999 was in operation (in the wording of the Law of the city of Moscow, No 19 of 14 July 2000), the Company WAS NOT A PAYER OF THE TAX owing to the exemption of the capital-city's telephone network services from taxation. That decision was passed by the legislators of Moscow at the OJSC MGTS solicitation.