Siberian Producer of Precious Metals Receives Bill For Unaccounted Gold

Siberian Producer of Precious Metals Receives Bill For Unaccounted Gold


The Federal Tax Service is trying to sue the Krasnoyarsk non-ferrous metals plant, OAO Krastsvetmet, named after Vladimir Gulidov for billions of rubles. The Tax Service believes that the plant underpaid about 2 billion rubles to the budget by enacting dubious schemes. Krastsvetmet also faces various penalties for almost 700 million rubles.

Enquiries and investigations have been going on for years. As a result of the on-site check in 2017, the Federal Tax Service made claims. And the questionable operations themselves date back to 2012-2014. In the opinion of tax authorities, Krastsvetmet has groundlessly claimed VAT deduction on relationship with a jewelry company from St. Petersburg which is currently bankrupt. If we delve into the legal background of the case as seen by the Federal Tax Service, the plant purchased gold in bullions from this company. In its turn, the latter purchased them through a chain of limited liability partnerships and evaded the VAT by means of this cunning plan. And now, demands to pay it off are made to the Krasnoyarsk plant, which claims in its turn that it is not aware of any tricky schemes and it purchased precious metal legally. The trial court agreed with it, but the appeal and review courts supported the tax authorities. The legal proceedings are still going on.

At the court hearings, the representatives of the plant make emphasis on the fact that the scheme of "cleaning" gold from VAT was invented by the jewelry company and claims can be made only against it. Under this scheme, a total of 42 tonnes of gold and 58 tonnes of silver were purchased by businessmen from St. Petersburg. However, Krastsvetmet bought only 10 tonnes of gold. This proves that the plant did not organize or control this scheme. The Federal Tax Service claims the opposite. One of the main evidence of the tax authorities in court is that Krastsvetmet has access to many counterparties for the supply of precious metal but it has organized the work to maintain detailed analytical accounting for the shipment of precious metal only from this particular jewelry maker. This signifies a special relationship with it. In addition, tax officials point out that the bullions were purchased at an unbelievably low price. As one of the major operators on the Russian market, Krastsvetmet was supposed to understand that it was buying "unreliable" gold.

Now the case is pending before the Moscow Arbitration Court. The latter was expected to pass the final judgment last week. However, the hearing was postponed until the end of February. "Both the price paid and the circumstances of the dispute have practically no parallel,” said Arkady Bryzgalin, the head of the Taxes and Financial Law group of companies, said in an interview wtih “I think when claims from the tax authorities arise in connection with a relationship between a taxpayer and fly-by-night companies, the fate of a huge number of tax disputes will depend on the decision of the court. Unfortunately, this issue is still very common.”

Krasnoyarsk non-ferrous metals plant is one of the world's largest precious metals refineries. It processes almost all platinum mined in Russia, more than half of gold and silver. The Krasnoyarsk territory owns the plant. It is one of the few enterprises that did not undergo privatization. Under any governor, the territory's top officials believed that the plant is the goose that lays golden eggs, so it would be foolish to pass it in someone else's hands. Krastsvetmet is among the largest taxpayers in the Krasnoyarsk territory (although it is not on the Top Ten list).

It should be added that the Krasnoyarsk territory is also a leader in gold mining in Russia. The region produces over 60 tonnes of gold per year. The largest companies operating in the region are Polyus, Sovrudnik and the Vasilyevsky mine. In addition, there are  a significant number of small mining partnerships working in placer mines. In 2019, gold production at the main deposits of the Krasnoyarsk territory increased slightly. Specifically, the growth at the Olimpiadninsky and Blagodatnoye deposits in the North-Yenisei district was 1%.