"Don't Kill Small Business" reads a poster at a rally in Moscow to protest a court decision.
Photo: Sergey Mikheev
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Moscow Court Passes Decision Allowing Nationalization
A Moscow court has ruled to seize stakes in several fuel companies in Bashkortostan as penalty for tax evasion. This precedent may trigger property seizures at any firm that minimizes taxes even if the value of the confiscated stocks is higher than the tax arrears. Authorities have filed a similar claim against oil company Russneft.
The Moscow Court of Arbitration upheld a suit from tax officials, saying that Bashkirsky Kapital handed over stocks to a charity which later transferred them to Yuryuzan-Invest to evade taxes. The judges applied Article 169 of the Russian Civil Code and asked all stocks involved in the deal to be transferred to the state.
Tax authorities claim that Bashkirsky Kapital did not pay nearly 30 billion ruble in profits tax, which it had to do even transferring stocks to another firm. Bashkirsky Kapital wounded up its activities, leaving the taxes unpaid.
Bashkirsky Kapital owed the Russian budget more than 42 billion rubles. Stakes ranging between 13 and 16 percent in six fuel firms are worth an estimated 31 billion rubles. Tax authorities also contest four deals with the same stocks which split up controlling stakes to hand them from Bashkirsky Kapital to four investment firms. The Moscow Court of Arbitration ruled to seize the stocks from Yuryuzan-Invest, driving the total value of stocks returned to the state to over 62 billion rubles.
The stocks were ruled to be seized under Article 169 of the Civil Code which courts have so far been extremely weary to apply in tax cases. “The article allows recovering property in full despite the amount of the actual damage that a deal has caused,” says Alexey Popov, partner at the Yust law firm.
www.kommersant.com
All the Article in Russian as of July 11, 2007
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