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. Last Updated: 07/27/2016

The Moscow Times Publisher Wins Case Against Tax Ruling

The Moscow city arbitration court on Wednesday upheld an earlier court decision striking down a $9 million tax bill presented to the parent company of The Moscow Times.

Moscow tax inspectorate No. 29, which brought the initial claim against Independent Media, said Wednesday their office would appeal the case to the federal arbitration court.

But even as they vowed to appeal, tax officials said chances for a court victory look slim.

"They [arbitration judges] did not take our side right from the beginning. And in higher courts of law, decisions are rarely reversed," said Vladimir Balabin, a lawyer for the tax inspectorate.

The inspectorate's case against Independent Media - which puts out Russian editions of magazines such as Cosmopolitan, Playboy and Good Housekeeping as well as The Moscow Times - was based on an assessment that articles in Cosmopolitan and other magazines contained hidden advertising. Advertising publications are subject to higher taxation under Russian law.

In non-advertising publications, ads cannot account for more than 40 percent of an issue's content.

However, tax inspectors declared that up to 70 percent of some issues contained ads.

Inspectors included all articles mentioning commercial products.

Independent Media management welcomed the appeals-court decision to uphold the December ruling.

"I'm obviously delighted with the decision. It once more proved that we were right before, something I always knew," Independent Media CEO Derk Sauer said Wednesday.

Sauer said he was puzzled over the tax inspectorate's persistence.

"It is really a clear-cut issue," he said.

"We pay all our taxes. We are behaving extremely well. And we have always followed tax authorities' instructions. It is obvious that we are doing nothing wrong."