YUKOS' response to the Tax Ministry
Posted: 15 January 2004
YUKOS Oil Company has sent to the Tax Ministry objections against
the Act of Tax Audit provided to YUKOS on December 29, 2003 that
accuses YUKOS of designing an unlawful (as the Tax Ministry maintains)
tax minimization scheme.
In the objections against the Act that YUKOS sent to the Tax Ministry,
YUKOS is demanding that the Tax Ministry adopt a resolution that
all charges of tax wrongdoing alleged in the Act be dropped without
any penalties for the Company.
YUKOS' position is that the allegations of the audit presented
in the Act clearly conflict with the Constitution of the Russian
Federation, the legal position of the Constitutional Court of the
Russian Federation and various provisions of the Tax Code. In YUKOS'
opinion the Act of Tax Audit is conspicuously biased and accusatory.
The Act of the Tax Audit contains an unlawful and unproven opinion
that the company can be made liable for payment of taxes calculated
independently by tax authorities on the basis of economic activity
results of many independent organizations.
The Act contains illegitimate and incorrect allegations regarding
the related party status of YUKOS and several business entities
which have resulted in an unprecedented attempt to directly charge
YUKOS, the taxpayer being audited, with increased tax payments that
various organizations allegedly failed to pay.
The audit was conducted with numerous procedural irregularities.
YUKOS was not given access to all documents supporting the charges,
the findings related to the allegedly related parties were not attached
to the Act, and non-disclosure rules of the Tax Code were grossly
violated. Also, there can be no application of a penalty to YUKOS
because of the statute of limitation.
Such egregious and groundless tax claims that make one company
liable for the activities of a host of unrelated parties have no
precedents in Russian practice.
In YUKOS' opinion the deliberately unlawful claims leveled against
the Company not only compromise the government agencies, but also
make highly questionable the sheer possibility of fair business
in Russia. YUKOS considers the actions of the Tax Ministry as an
unconscionable attempt to create a fictitious threat regarding the
Company's financial stability and thereby put pressure on its shareholders,
creditors, employees and partners.
YUKOS as a large and diligent Russian taxpayer, whose activity
has never before been questioned by tax authorities on substantial
issues, rejects all tax evasion charges. In case a resolution should
be made to collect the alleged increased taxes and phantom penalty
from YUKOS, YUKOS will immediately appeal such resolution in court
as absolutely unlawful and groundless.
For more information see www.yukos.com.
Posted by Richard Price,
Editor Pipeline Magazine
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