Moscow Court Rules In Favour Of British Council In Tax Case

by Tatiana Smolenskaya, Tax-News.com, Moscow

21 October 2008

Moscow’s commercial court has ruled that the majority of tax claims filed against the British Council for 2004-2006 were unlawful.

The claims were filed as the Russian Government allegedly tried to force the closure of some of the British Council’s regional offices.

The British Council, a non-profit cultural organisation, received a tax bill in Moscow in May 2008 in respect of British Council activity in 2004-06, which was the result of a tax inspection that took place during 2007. However, it has always disputed the claim and argued that it is in full compliance with the Russian tax code.

The accusations are believed to have been sparked after Russia refused to extradite the main suspect in the Alexander Litvinenko case to Britain for questioning as requested.

The British Council has stated its satisfaction with the Court’s decision, whilst Russia denies the moves made against them were part of a harassment campaign.

“The British Council can confirm that the outcome of the court hearing in Moscow today indicated a reduction in the tax bill. The details are complex and we are reviewing the judgment with our lawyers,” the organisation stated following last Friday’s verdict.

“The British Council is registered for and pays tax in Russia and has complied with all requests of the tax authorities in respect of its activities. We work globally on a not-for-profit basis,” the Council added.

The exact nature and amount of the back tax claims remain under wraps.

The issues have made the already tenuous relationship between Britain and Russia even more difficult. The UK said it wishes to improve ties with Moscow and a new ambassador will be arriving this month.

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