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Russian mining company Polymetal International has lost its battle with the Kazakhstan authorities and will now face a USD14m corporation tax bill together with an additional fine which will increase the total amount due to approximately USD19m.
In a statement Polymetal said: “On November 5th, 2012 the Kostanay regional court (Kazakhstan) issued a ruling on the tax dispute between JSC Varvarinskoye, a subsidiary of the Group, and the Kazakh tax authorities. Additional corporate profit tax of approximately USD14m has been charged to JSC Varvarinskoye.”
“An additional fine will be charged at the maximum amount of 50% of the initial amount which will increase the total amount to be paid to approximately USD19m.”
According to Polymetal, the dispute "reflected varying opinions of the Group and the tax authorities" on the tax deductibility of non-cash foreign exchange losses and of transportation, treatment and refining charges. Polymetal says that it is reviewing its legal options and may challenge the tax authority's decision.
Polymetal warned that it has not set aside any provision for the fine in its financial statements for the period up to June 30, 2012, and that the fine will be incorporated into financial statements for FY2012.
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