RusAgro is another massive Russian agricultural sector player also under investigation in this regard, as reported by Reuters.
The Russian Federal Tax Service said it is probing alleged tax violations in agricultural holdings across 13 regions.
The tax officials indicated the inspections were in relation to suspected avoidance of value-added tax (VAT) payments in trade between suppliers and domestic grain buyers.
The Cherkizovo Group said inspections were made at its facilities, as per a statement to Reuters.
“[The] Cherkizovo Group confirms that law enforcement representatives are currently present at some of the company’s regional branches.
“[The] Cherkizovo Group... always pays all of its taxes and levies in full and in a timely fashion.”
In a published statement, the Russian tax authorities said an assessment will be made about the degree to which the largest milling, livestock-raising and feed and grain processing plants, as well as other processing plants, have been involved in an illegal scheme to reduce their tax obligations.
The officials reported they had identified “five sites of unscrupulous suppliers, whose activities are aimed at creating conditions for the legalization of VAT, declared as part of tax deductions by processors of the grain market.”
In September 2017, the Cherkizovo Group was accused by Russia’s tax officials of illegally understating tax rates and the siphoning off $5m to an offshore company. The group denied the allegations, and claimed that any discrepancies were simply due to a technical issue.
In a statement sent to FeedNavigator at the time, the Cherkizovo Group said it strictly complies with all legislative, fiscal and regulatory requirements. In relation to that 2017 probe, the company stated then that “a technical dispute recently arose between the tax authorities and Group management over changes in the practice and application of tax rates for the payment of dividends. These changes were not explained to the Group management in a timely way. The Group’s auditors also did not alert the management to these new requirements on time.
“As soon as the Group was informed of the new requirements, applied retroactively, Cherkizovo Group immediately paid the assesses taxes and penalties on all paid-out dividends for the entire period in question and fulfilled all of its obligations to the Russian budget.
“At present, the management of the Group is actively working with the fiscal and regulatory authorities, providing them with all necessary documents and all information. The Group’s management is applying all possible efforts to quickly resolve this technical issue.”