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. Last Updated: 07/27/2016

JTI's Appeal of Tax Bill Thrown Out by Court

The Moscow Arbitration Court on Thursday rejected an appeal by a Russian subsidiary of Japan Tobacco Inc. against a 2.4 billion ruble ($86 million) back tax claim for 2000.

The company said it would take the case to the next level.

Tax authorities levied the bill on the Russian unit of the world's No. 3 cigarette maker last year in the country's largest claim against a tobacco company.

"We still, more than ever, do not understand this decision," Rick Caufield, director general of JTI Marketing & Sales, said in a statement. "In our view, the tax authorities have made errors in the interpretation of the facts and of the law."

Tax authorities maintain that the company's books do not reflect all deals carried out between JTI and Petro, its St. Petersburg-based tobacco factory, Interfax reported Thursday.

Russia's No. 4 tobacco company, with sales last year of an estimated $1 billion, JTI operates two factories in Russia. The cigarette maker's brands include Camel, Winston, Salem and local brands, such as Peter I and Russky Stil.

"We intend to vigorously present our arguments and protect the company's interests at the Cassation Court, where we expect our case to be heard fairly and objectively," JTI's Moscow office said in a statement.

The claim against JTI, which is two-thirds owned by the Japanese Finance Ministry and is publicly traded, comes at a time when investors are jittery over the towering tax claims against oil major Yukos.

"The decision by the Cassation Court is more or less final," said Igor Shikov, corporate tax attorney at the law firm CMS Hasche Sigle.

No date for the Cassation Court hearing has been set, JTI's Moscow office said.