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Rosneft Seeks Tax Debt Write-Off Worth $800m
Rosneft profits shed more than two fold in the first quarter. The reason was not operating activities of the company but rather restructuring of its tax debt worth $1.26 billion. The process is just at the very beginning and the state is expected to write off over $800 million in penalties. In 2004, the collapsed oil giant Yukos also approached the government seeking restructuring but faced the refusal.
Rosneft released yesterday its Q1 report under U.S. GAAP, having done it earlier than any other oil company of Russia. The revenues stepped up to $8.22 billion vs. $7.33 billion in the Q1’06, but net profits narrowed by more than two fold to $358 million on higher export duties and penalties accrued on the tax debt of RN-Yuganskneftegaz. The company accumulated that debt in 1999 to 2004, when its name was Yuganskneftegaz and when it was the production arm of Yukos. But the amount is being restructured now.
Rosneft was again added to the list of strategic enterprises in May 2007 and “acquired the right for tax debt restructuring.” The overall amount of restructured tax arrears reaches $1.26 billion, according to Rosneft report.
Rosneft hopes that the restructuring plan that will finally emerge before this year-end will accumulate all penalties accrued on the debt. As to the lower profits, tax authorities resumed charging penalties from some taxes, which resulted in the profits decline. Indeed, the aggregate amount of additionally accrued penalties stood at $831 million at the end of first quarter. In addition to their restructuring, Rosneft counts on getting ten years to pay the principal amount of Yuganskneftegaz debt.
www.kommersant.com
All the Article in Russian as of June 19, 2007
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