Philip Morris Izhora has won the case against the St Petersburg tax inspection in the region’s federal arbitrage, reports the Russian business newspaper Vedomosti.

The Izhora plant, PM’s biggest cigarette making facility in Russia, claimed in court that when levying US 14 million of profit tax payments for six months of 2004, the tax agency had misinterpreted the tax break previously given to the company by the regional government, and the payment should be refunded. The regional tax inspection, however, persisted in appealing against the judgement. On 21 October, the appeal was rejected by the Federal Arbitration court that found PM’s protest well grounded. Now the tax authorities have just one instance to appeal to, the Higher Court of Arbitration, although legal experts say they have but poor chances of success. This is the second victory won by a tobacco company in a Russian court, reminds Vedomosti. On 22 September St Petersburg’s regional arbitrage allowed the appeal of JTI-Petro against the earlier ruling on recovering US$ 15 million in back taxes. The back tax claims had been raised against JTI’s subsidiary Petro, Russia’s biggest cigarette maker, by the tax service for the year 2001, after the probe carried out in St Petersburg in November and December 2004. JTI submitted a detailed explanation of the calculation of tax assessments, still, the court ruled in favour of the tax agency in March 2005. The company then took the case to the court of appeal and finally got a favourable decision which was perceived as a very positive message by the industry. It was, however, the second sizeable claim filed by the tax bodies against JTI companies. JTI Marketing and Sales has been slapped US$ 79 million for an alleged tax evasion of 2000. JT has been fighting the case in court, but, as things now stand, is very likely to lose the case. (vt)