Russia increases Yukos' tax bill

Yukos has had its tax bill for 2001 upped by Russia's tax ministry, a move that may push the beleaguered oil and gas giant closer to bankruptcy.

Russia now wants 120bn roubles ($4.1bn; £2.3bn) in unpaid taxes, compared with an earlier demand of 98bn roubles.

Yukos already has missed a deadline to pay back $3.4bn owed for the 2000 tax year and has been staving off attempts by the government to sell a key unit.

Company spokesman Hugo Erikssen called the increase "spurious".

No access

On Thursday, a court agreed to freeze the bank accounts of a number of Yukos subsidiaries, increasing the already intense pressure on a company that accounts for about 20% of Russia's oil output.

Without access to the funds, the company predicts that it is only a matter of weeks before it is unable to pay wages, suppliers and sub-contractors.

Yukos said that court's decision all but paralyses the company and is another attempt by the state to obstruct the payment of the outstanding tax bills.

Should the debt not be settled, the state is likely to seize control of, and subsequently sell off, key oil production unit Yuganskneftegas, analysts said.

The deadline for Yukos to pay back taxes for the 2000 financial year passed earlier this week.

Tick, tock

Many Russians believe the case against Yukos stems from a falling out between ex-chief Mikhail Khodorkovsky and the Kremlin.

Mr Khodorkovsky, who had started to become more active in political life, and a key business associate are on trial for fraud and tax evasion.

The struggle for control of Yukos has raised concerns that oil production will suffer, pushing up global crude prices.

While analysts are less than optimistic about the outlook for the company, they expect crude output to keep going.

"Yukos yesterday claimed that freezing its subsidiaries' accounts would completely paralyze operations and lead to a halt in production," said Cristopher Weafer of Alfa Bank.

"Though logically this would appear to be the case, we do not see any possibility for the authorities to allow any major interruption in the production or exports of the country's largest crude producer.

"The effects of a production halt on the country as a whole would be much too detrimental."

HERE