27 May 2004 00:00
Yukos must pay Dollars 3.5bn tax bill
ByLine: By ARKADY OSTROVSKY
A Russian court yesterday upheld a demand from the tax ministry that Yukos,
the embattled oil company, should pay Dollars 3.5bn in back taxes for 2000 -
a move that indicates the conflict between the state and the company is
rapidly approaching its final stage.
Yukos said the decision was part of a politically motivated case against its
jailed shareholders and it would appeal. However few financial or political
analysts expect it to win.
The ruling puts additional pressure on Yukos shareholders, Mikhail
Khodorkovsky and Platon Lebedev, who face individual charges of tax evasion
and fraud.
The court's decisions coincided with President Vladimir Putin's
state of the national address in which he called for a reform of the tax
system to prevent abuse of tax-optimisation schemes and criminal tax evasion.
Yukos shares closed higher yesterday. Roland Nash, chief economist at
Renaissance Capital said: "The market wants to see the whole case
wrapped up as soon as possible. And this ruling is indicative of the
Kremlin's aim to do just that."
Analysts say the Kremlin's objective is to strip Mr Khodorkovsky and his
partners of shares in Yukos. "The question is how (the authorities) get
from a Dollars 3.5bn tax claim to taking the shares away," another
analyst said.
Under an earlier ruling, Yukos assets remain frozen. The group's
creditors have served default notices.
In order for Yukos to generate Dollars 3.5bn, the Russian authorities could
lift the freeze on its assets or force the company into bankruptcy.
If a court lifts the freeze on the sale of assets, Yukos could sell Dollars
3bn worth of shares in Sibneft - an oil company it attempted to merge with.
This would clear the way for the divorce of the two companies, allowing Roman
Abramovich, the owner of Sibneft, to proceed with a sale of his assets to a
foreign company.
"Everything is negotiable in Russia, including the rule of law and
private property rights," one analyst said.
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