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. Last Updated: 07/27/2016

Sidanko to Honor Tax Debts But Complains Bill Is Inflated

Oil company Sidanko, recently punished for defaulting on tax payments, said Tuesday that it would honor its debts to the federal government, though it complained that its bill was twice what it should be.

A spokesman for the Sidanko holding, Russia's fourth-largest oil concern, said the company would make good the 737 million rubles ($117 million) by Wednesday, the deadline set by a government desperate for tax revenues.

The government has already reduced access to oil export pipelines for Sidanko by one third, but said it would reverse its decision if the oil firm paid up.

"We cannot confirm the tax figures demanded by the tax service, but are obliged by former agreements to fully honor our current debts ... by tomorrow [Wednesday]," Sidanko spokesman Denis Davydov said.

But he complained the government had interpreted complex tax laws in such a way as to almost double Sidanko's total tax bill, and added that the reduction of export capacity available to the company would merely serve to hurt the government, as well as the oil sector.

"Such measures are mutually disadvantageous for both the company and the government because exports are practically the only source of 'real cash' and tax payments are also dependent on exports," Davydov said.

"After cutting the exports of any company, the government can hardly count on regular payments of taxes to the budget because hard currency income from exports is basicallythe only stable income for oil companies," he added.

The government slapped export capacity cuts on Sidanko on Monday after it failed to pay off tax debts.

Sidanko was one of a number of oil companies that hit out last month at the government's crisis package, after the authorities dropped oil levy cuts to make up for tax breaks rejected by parliament.

The government is bearing down on tax defaulters in an effort to improve a feeble revenue collection record.