October 1st, 2011


Реакция международных профессиналов на дело Юкоса

Tax Disputes Week

Yukos decision should not materially affect the tax landscape

29 September 2011

Matthew Gilleard - ITR

A judgement from the European Court of Human Rights is critical of Russia’s treatment of oil company Yukos, but states that it was not politically motivated and that no misuse of Russian court proceedings has occurred. The implications are not expected to be far-reaching.

The two parties have been in dispute for some time, with Yukos arguing that $33 billion worth of tax charges issued against the company, which subsequently led to it going bankrupt, was levied based on political motivations.

Tensions also peaked in 2003 when Yukos owner Mikhail Khodorkovsky was arrested for tax fraud, again amid rumours of political motivations. Before that, in 2002, Yukos underwent a series of audits and was found guilty of tax fraud, including using an illegal tax evasion scheme.

The court found that while Russia was guilty of violating Yukos’s rights by proceeding with a claim for taxes owed for the fiscal year 2000 without giving the oil company sufficient time to prepare any documentation to defend their case, and also unfairly doubling later penalties, the remaining claims were entirely lawful and permissible.

“The European court recognised the legitimacy of the tax claims on Yukos and rejected the accusation of political motivation,” Andrei Fyodorov, Russian deputy justice minister, told reporters in Russia.

The tax charges against Yukos centre on a network of sham companies set up by the company in tax havens within the Russian Federation. These companies were legally owned by third parties, but for all intents and purposes were controlled by Yukos. The company then sold oil at less than market value to these companies, who in turn sold the oil on (at fair market value) and used tax schemes in their jurisdiction to avoid taxes on the subsequent profits. The profits themselves were then remitted to Yukos.

The court’s decision did not come as a surprise to advisers.

“The decision was not really surprising,” said Ruslan Vasutin, partner and head of tax at DLA Piper in St. Petersburg. “It’s a very good and very detailed summary and highlights the legalistic approach to tax matters, which follows the recent trend in Russian legal doctrines.”

While the dispute is clearly highly politicised, and has received much media attention, the implications for tax advice should not be too severe.

“I would say the decision is neutral to the tax practice,” said Vasutin. “This is by no means a storm in a teacup, but at the same time it shouldn’t materially impact the tax landscape.”

Vasutin pointed out that recent tax developments in Russia, such as new transfer pricing legislation, are more likely to be demanding the attention of advisers, though he also said the outcome of the dispute provides taxpayers with information which is “good to know”.

“The ruling is a good referral tool. It shows that you cannot be aggressive with tax planning,” said Vasutin.

The proceedings against Yukos were found not to be arbitrary or unfair, with the court saying the company’s debts arose from legitimate action initiated by the Russian government, aimed at countering tax evasion. However, the levying of penalties in Russia is based on selective processing.

“In Russia there is a selective process of implementing adverse penalties,” said Vasutin.

He added that while there are other companies using similar tax planning arrangements, this is not necessarily a cause for concern for them.

“Some other oil companies used these structures, but this ruling shouldn’t change anything. Those who could be targeted have already been targeted.
Смысл: ничего оно не изменило, все было ясно и ранее и всеьма предсказуемо - результат излишне агрессивной оптимизации налогов.