On April 7, Ernst & Young submitted a statement to a Moscow arbitration court challenging a tax inspectorate decision of December 29, 2007 to charge the company with a back tax claim for 2004, Kommersant said.
According to Kommersant, Ernst & Young Vneshaudit, a Russian subsidiary of the company that is one of the Big Four international auditing firms, along with PricewaterhouseCoopers, Deloitte & Touche and KPMG, arguably transferred most of its revenues to its parent company registered in Cyprus.
The claims were filed immediately after a court upheld similar tax charges against PricewaterhouseCoopers. Tax authorities say both companies breached the terms of their license agreements.
In its tax declaration for 2004, Ernst & Young Audit posted a profit of 10.5 million rubles (about $400,000) while tax authorities established that the company had underrated it by 630.3 million rubles ($24 million).
The company said the sum was for the payment of services rendered by its parent company in Cyprus as personnel had been involved in the audits of Russian clients. However, the tax authorities said the company's claim that payment had been made to consultants outside of Russia was ungrounded.
In a similar case, a court ruled that the Russian subsidiary of PricewaterhouseCoopers had underrated its tax base by over 500 million rubles (about $15 million) in 2002 by transferring money to the Dutch PricewaterhouseCoopers Russia B.V. for services provided by foreign specialists to Russian clients.
