Alrosa Charged With $56 Million Tax Shortfall
July 11, 05
An audit of Alrosa's financial results for the 2004-05 fiscal year shows the Russian diamond giant had a shortfall of 1.6 billion rubles ($56 million) in tax payments although Alrosa and the Ministry of Finance have denied the claims.
The audit showing the deficit was published by
The Audit Chamber said the shortfall was caused by a price lag between list prices and actual prices.
“The list prices for rough diamonds in the auditing period, approved by the Ministry of Finance, were substantially lower than market prices. In 2004, the diamonds were valued at about $1.45 billion according to list prices, whereas their sale value at the actual price exceeded $1.85 billion,” the chamber said in a statement.
Alrosa rejected the accusations of non-payment of taxes. “The Ministry of Finance's price list, which is the basis for accounting prices, and thus for the severance tax, has simply not had time to change fairly. However, this does not mean that Alrosa has underpaid its taxes to the state, since, as a result of high prices, the company's profit has increased, and thus the taxes from it have increased."
A Finance Ministry spokesman further explained that the prices set by the Ministry for Alrosa's diamonds "are valid only for State Diamond Depository (Gokhran) purchases, i.e., for the state treasury. Therefore, any overstatement of them results in budgetary losses. The Ministry of Finance is not interested in high prices for this type of purchase precisely in order to save budgetary funds."
There is a further shortfall of 600 million rubles due to an ongoing dispute over the division of powers between
Alrosa produces around 23 percent of the world's diamonds production.