The decision of the Federal Tax Service of the Russian Federation to collect 150 million Russian rubles from subsidiary of Roshen Corporation (Kyiv) – Roshen LLC (Lipetsk) for dividends removed to Ukraine is not in line with the agreement on avoidance of double taxation signed by the Ukrainian and Russian governments on February 8, 1995.

According to the report of the corporation, a copy of which has been sent to Interfax-Ukraine, the Federal Tax Service of the Russian Federation for Lipetsk region conducted a tax audit of Roshen LLC (Lipetsk) for 2014-2015.

"As a result of the inspection, the bodies of the Federal Tax Service of the Russian Federation came to an unjustified conclusion that LLC Roshen during the payment of dividends to Ukraine did not have the right to apply the benefits established in the Agreement on Avoidance of Double Taxation of Income and Property and Prevention of Tax Evasion between the Government of the Russian Federation and the Government of Ukraine since February 8, 1995," Roshen said.

The corporation said that the tax claims by the Federal Tax Service of the Russian Federation were calculated, taking into account undistributed profit as of late 2016 (dividends were paid in 2014-2015).

"The Federal Tax Service of the Russian Federation actually demands to pay additional taxes from funds that were under control in Ukraine as of late 2016," Roshen said.

These claims are an attempt to recover additional taxes that were duly paid to the budget of Ukraine from Roshen Corporation.

Roshen Corporation is confident that the tax authorities of Ukraine will take into account the position and actions of their Russian counterparts on the actual denunciation of the agreement on avoiding double taxation between the government of the Russian Federation and the government of Ukraine since February 8, 1995 when taxing dividends paid by Ukrainian companies to their Russian beneficiaries.

"Roshen Corporation states that these claims by the Federal Tax Service are illegal and violate the international obligations of the Russian Federation in accordance with the above-mentioned agreement," Roshen said.

The corporation will use all available legal means to protect its violated interests and rights to prevent improper taxation of corporate profits by bodies of the Federal Tax Service to the detriment of the budget of Ukraine.

Roshen LLC (trading house) is a subsidiary company of Roshen Corporation, which dealt with sale of products made at the Lipetsk factory, and imported products of Ukrainian factories of the corporation to Russia (until July 2013). The activities of Roshen LLC were stopped, as well as the Lipetsk Confectionery Factory.