PwC Loses 2nd Appeal on Tax Claim

The Moscow District Arbitration Court rejected a second appeal by PricewaterhouseCoopers's Russian unit against a 380 million ruble ($16 million) back tax claim, a spokeswoman for the auditor said.

Investigators say the auditor illegally reduced the amount of tax liability in 2002 by falsely declaring the hiring of non-Russians.

The amount includes 260 million rubles ($11 million) in taxes that PwC allegedly failed to pay and 120 million rubles in penalties and fines, according to the spokeswoman, who said PwC had paid all the required taxes.

The Higher Arbitration Court in Moscow ordered a retrial in the tax case on July 11, 2007. PwC lost a hearing and first appeal in a new trial prior to today's decision. By law, the company can make its case again in the Higher Arbitration Court. The spokeswoman was unable to say whether the company would appeal to the Higher Arbitration Court.

In January, PwC lost a separate appeal against charges that it had prepared two diverging sets of audits for bankrupt oil firm Yukos. The auditor was ordered to pay a 16.8 million ruble fine in connection with the case, which PwC has said it plans to appeal.

PwC was Yukos's auditor at a time when the country's tax service claimed billions of dollars in unpaid taxes from the oil company. Yukos, once the country's largest company, was driven into bankruptcy by the claims and its assets were sold in liquidation sales.