Yukos Tax Claim Reduced

by Tatiana Smolenskaya, Tax-News.com, Moscow

15 August 2006

Beleaguered Russian oil company Yukos won a small victory in court last week after having a claim for back tax reduced by about 13%.

The Ninth Moscow Arbitration Appeal Court ruling delivered on Friday partially upheld a motion by the company's lawyers against a $13.2 billion claim for back taxes by the Federal Tax Service issued in June, reducing the claim to around $11.6 billion.

However, the decision is unlikely to help the company recover from a bankruptcy ruling and could strengthen the claim of its other creditors, particularly Rosneft, which are hoping to scoop up the firm's remaining production assets.

Rosneft currently holds about $4.5 billion worth of claims in the company, and next month will reportedly seek to add an additional $8.5 billion to these claims, making it Yukos's largest creditor.

Earlier this month, a panel of three judges at the Moscow Court of Arbitration assigned Yukos assets in Russia to a court-appointed manager who has a year to auction them to pay creditors.

However, Yukos's overseas operations and assets, which are run from offices in London and elsewhere in Europe, could continue to function.

According to a report by the Russian News and Information Agency, the Prosecutor General's Office has said that Yukos secured a loan worth over $4.5 billion from Yukos Capital SARL, a Luxembourg-based subsidiary and major creditor, through affiliated legal entities.

The report claimed that former Yukos officials have constructed a scheme to buy and sell oil through trading companies under their control, known as Fargoil and Ratibor.

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