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. Last Updated: 07/27/2016

Tax Service Turns Focus on Ford

MTFord's Russian plant is reportedly facing $10 million in back tax claims.
Tax authorities are slapping Ford's St. Petersburg plant with back tax claims of more than $10 million for the 2001-2003 period and are inspecting the automaker for 2004, Russian media reported on Friday.

Ford declined to comment on the reports, saying only that two courts had thrown out previous tax claims.

The tax authorities have since filed an appeal with the Arbitration Court of the Northwest Federal District, an unidentified official with the Federal Tax Service in the Leningrad region told Vedomosti.

Another source told the newspaper the tax claims against Ford totaled 300 million rubles ($10.6 million).

Investors have been jittery ever since the Yukos oil major was crushed by a $28 billion back tax bill. A barrage of tax claims has since hit a number of other companies, including TNK-BP, the Volgotanker shipping company and cigarette giant Japan Tobacco International.

In his state-of-the-nation address in April, President Vladimir Putin singled out overzealous tax collectors who "terrorized" businesses.

Henrik Nenzen, president of Ford for Russia and the CIS, played down the reports of new tax woes.

"There has been a discussion with tax authorities going on for a couple of years now," Nenzen said by telephone Friday.

"Two courts have ruled in our favor, so we are not worried. ... We think we have done everything right."

Nenzen refused to provide any details about the claims.

Ford became the first foreign carmaker to build its cars in Russia when it opened its St. Petersburg plant in 2002. The automaker promised 50 percent of its parts would be manufactured domestically by 2007 in return for the right to obtain its foreign-made components duty-free.

As a major investor in the Leningrad region, Ford was also awarded a break on profit tax by regional authorities, Vedomosti reported. That tax break has since been revoked, the paper said.

Alexander Blyoskin, head of the profit tax department at the Federal Tax Service of the Leningrad region, confirmed that a profit tax break was at the heart of the dispute.

Blyoskin declined to give the size of the tax claim, saying only that it was "absolutely not" as high as 300 million rubles and "insignificant" for a company the size of Ford.

He also said that the tax authorities were prepared to go all the way to the Supreme Arbitration Court, if need be. "I am confident that we are right," he said.

Both Vedomosti and Kommersant said Friday that the tax authorities had presented the plant with a $10 million tax bill. If faced with such a tax bill, Ford would see virtually all of its net profit for last year, which Vedomosti put at 332 million rubles ($11.7 million), wiped out.

From 2000 to 2004, the Leningrad region lost 6.1 billion rubles ($216 million) by giving tax breaks, but it attracted 15.7 billion rubles ($555 million) in new investment, Kommersant reported.