Court Rules Yukos Must Pay $1.5bn Tax Bill

by Tatiana Smolenskaya, Tax-News.com, Moscow

20 November 2006

The Moscow Arbitration Court ruled last week that defunct Russian oil company Yukos may have to pay an additional 42 billion rubles (US$1.57 billion) in back taxes and fines relating to the 2004 tax year.

The ruling boosts the embattled company's total tax bill for 2004 to about 354 billion rubles.

In further bad news for the company, the ruling also added to its list of creditors, with the inclusion of claims from oil companies Ulyanovsknefteprodukt (owed 21.7 million rubles), Tomsknefteprodukt (41.6 million rubles), and Ecoproekt (6.2 million rubles).

Yukos now owes more than 60 creditors about $25 billion.

Meanwhile, the break-up of the bankrupt company's assets will begin in earnest next month, after the Russian Federal Property Fund announced that an auction will be held on December 12 for the assets of its East Siberian Oil & Gas Company. Further auctions will be held in January 2007, and state-owned oil giant Rosneft is expected to acquire Yukos's main production assets.

Yukos was driven into the ground by a series of multi-billion dollar claims for back taxes, which eventually totalled about $28 billion. The company was declared bankrupt in August despite claiming that it could survive by restructuring its business and benefiting from high oil prices. A subsequent appeal against the bankruptcy ruling was rejected.

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