Kremlin Turns Up The Heat On Yukos Over Tax Avoidance Scheme

by Tatiana Smolenska, Tax-News.com, Moscow

31 December 2003

It emerged from reports on Tuesday that Russian oil giant Yukos has been formally charged by the Tax Ministry with non-payment of over $3 billion in unpaid taxes.

In a leaked statement which appeared yesterday, the ministry accused the firm in an investigation report submitted to Yukos earlier this week of actively employing tax evasion schemes in the year 2000 to avoid paying some 98 billion rubles ($3.35 billion) in taxes.

Though the firm offered little comment in reaction to the move, it has strenuously denied that it took part in illegal tax avoidance activity and insisted that it has used only legal measures to reduce its tax liability.

However, since former Yukos chief executive Mikhail Khodorkovsky was arrested and imprisoned in October for large scale tax crimes, there is widespread belief that the government wishes to flex its muscles in response to the growing political influence wielded by the nation’s oil barons.

The move was the first formal action taken by the government against Yukos, though it was not entirely unexpected given the Tax Ministry’s belief expressed in a letter to the Prosecutor General’s office that the firm may owe as much as 150 billion rubles in tax.

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