McDonalds has reportedly become the latest company suspected of tax offences
by the Russian tax authorities after tax inspectors landed the global fast
food chain's Russian arm with a multi-million dollar back tax bill.
Citing court documents, Russian daily Kommersant reported that McDonalds stands
accused of buying various products such as meat and packaging materials from
unlicensed companies, in contravention of Russian tax laws.
The company has also been accused of improperly obtaining value-added tax relief
on milk and meat purchases, and selling items including milkshakes and ice creams
at the discounted 10% rate of VAT, without possessing the necessary health certificates.
In August, McDonalds received a bill for back taxes of more than $6 million,
according to the court papers seen by Kommersant. The company has said that
all its products comply with European quality standards, but has declined to
comment on the specifics of the tax case while the court considers the tax authority's
claims.
Reports in the national and international media suggest that McDonalds is not
the only company in the food and beverages sector to have been targeted by the
Russian tax authorities in recent weeks. Sun InBev, part of the Belgian brewer
InBev was reportedly raided by tax police last month in connection with allegations
of tax evasion, and Nidan, a manufacturer of fruit juices, has been accused
of illegally classifying its products as baby food to gain tax deductions.
This pattern suggests that the Federal Tax Service may be carrying out a coordinated
crackdown against food and drink companies in order to raise rates of compliance
in the area of tax deductions and VAT. However, in a country where legal boundaries
are often unclear, these seemingly arbitrary tax investigations have been a
frequent feature of the administration of President Putin, and have been used
in the past to send a warning to companies and business people that may have
fallen out of favour with the government just where power lies in Russia, with the
case of Yukos being the prime example.