VimpelCom's Back Tax Claim Cut

by Tatiana Smolenskaya, Tax-News.com, Moscow

10 July 2006

Vimpel-Communications (VimpelCom) has announced that it has received a final decision from the Russian tax inspectorate on back taxes owing for the years 2003 and 2004.

The decision states that the company owes an additional 1,809 million rubles in taxes (including 349 million rubles in fines and penalties), which is approximately US$67.4 million (including approximately US$13 million in fines and penalties).

However, VimpelCom will only actually pay approximately US$24.3 million of this claim, as a result of a counterclaim which argued that the company overpaid tax in 2003 and 2004 by US$29.8 million. In addition, the tax authorities have allowed the firm to use a US$13.5 million tax refund to offset the total back tax bill.

It means that the final tax claim will be substantially less than the US$70 million back tax bill for 2003 and 2004 served by the tax service last month. However, in a statement, VimpelCom said that it still disagrees with the tax claim, and will appeal its position in court, which could lead to a further decrease in the final claim.

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