#35 - JRL 2008-72 - JRL Home
Ernst & Young receives $16 mln back tax claim in Russia
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MOSCOW, April 9 (RIA Novosti) - Ernst & Young has received a back tax claim
for over 390 million rubles ($16 million) in Russia, following a similar claim
pressed against PricewaterhouseCoopers, business daily Kommersant reported on
Wednesday.
On April 7, Ernst & Young submitted a statement to a Moscow arbitration court
challenging a tax inspectorate decision of December 29, 2007 to charge the
company with a back tax claim for 2004, Kommersant said.
According to Kommersant, Ernst & Young Vneshaudit, a Russian subsidiary of
the company that is one of the Big Four international auditing firms, along with
PricewaterhouseCoopers, Deloitte & Touche and KPMG, arguably transferred most of
its revenues to its parent company registered in Cyprus.
The claims were filed immediately after a court upheld similar tax charges
against PricewaterhouseCoopers. Tax authorities say both companies breached the
terms of their license agreements.
In its tax declaration for 2004, Ernst & Young Audit posted a profit of 10.5
million rubles (about $400,000) while tax authorities established that the
company had underrated it by 630.3 million rubles ($24 million).
The company said the sum was for the payment of services rendered by its
parent company in Cyprus as personnel had been involved in the audits of Russian
clients. However, the tax authorities said the company's claim that payment had
been made to consultants outside of Russia was ungrounded.
In a similar case, a court ruled that the Russian subsidiary of
PricewaterhouseCoopers had underrated its tax base by over 500 million rubles
(about $15 million) in 2002 by transferring money to the Dutch
PricewaterhouseCoopers Russia B.V. for services provided by foreign specialists
to Russian clients.
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