IKEA suspected of largest tax fraud in Russia
MOSCOW, October 26 (RAPSI) – Russia’s Investigative Committee has launched a criminal investigation into alleged tax fraud by IKEA during sales of shares in IKEA MOS, the company's Russian subsidiary, according to a law enforcement source.
The investigation has allegedly been launched over unpaid taxes exceeding 32 billion rubles ($516 million).
Employees of IKEA MOS, acting on behalf of seller and buyer, have allegedly sold 99.9992% of the company’s shares to IKEA Einrichtungs GmBH (Germany) under the price of about 35 billion rubles ($564 million), which is five times lower than the company’s real market value.
German division of IKEA has allegedly used lack of mechanism for obligatory tax registration and did not register in Russia where it has its own representation, deciding to save on taxes in Russia.
Earlier IKEA claimed that it had paid its taxes in Germany in accordance with the Avoidance of Double Taxation Agreement. However, investigators revealed that amount of taxes paid by IKEA in Germany regarding this deal reaches about 8 million rubles (€200,000), which is 4,000 times lower than the amount that IKEA would’ve had to pay in Russia.
Interestingly, if market value of IKEA’s sold properties in Russia is indeed five times higher than the price used for calculating tax in Germany, IKEA could profit more from paying taxes in Russia because profit tax rate in Germany is higher than in Russia and tax itself is calculated in rubles under 2011 conversion rate.
IKEA MOS owns fourteen “MEGA” trade centers in Russia.