Ernst & Young Face Tax Claim

Ernst & Young, one of the world's largest auditors, said Wednesday that it was contesting a multimillion-dollar back tax claim.

Tax authorities asked the company to pay $16.5 million in back taxes in December, accusing it of funneling undeclared profits from its Russian operations to its Cyprus-based parent company in 2004, Kommersant reported.

Ernst & Young filed a court appeal over the claim Monday.

Alexander Ivlev, a partner with Ernst & Young, confirmed the lawsuit Wednesday but said the company would not be able to comment on the details of the matter until the case was over.

"Tax disputes between companies and tax authorities are not unusual, and we are cooperating with the investigation by the tax authorities," Ivlev said in e-mailed statement. "We trust in the ability of the arbitration court to resolve in a fair manner any differences we have with the tax authorities," he said.

Kommersant, citing court papers, said the authorities were seeking 390 million rubles, claiming 151.26 million in unpaid taxes on revenue, 116.6 million rubles in value-added tax and 128 million rubles in fines.

In 2004 tax returns, Ernst & Young said it posted 10.5 million rubles in revenue, but tax inspectors claimed that the amount fell short by 630.3 million rubles. The company said the amount under dispute represented payments for services rendered by Ernst & Young Limited, its Cyprus-registered parent company.