Business Ombudsman Backs IKEA in Russia Tax Dispute

MOSCOW, May 28 (RAPSI) – Business ombudsman Boris Titov has sent a motion to Supreme Commercial Court Chairman Anton Ivanov supporting household goods retailer IKEA in a 500 million ruble ($16 million) tax dispute, the court said on Tuesday.

The dispute arose after additional profit and property taxes were levied on IKEA after tenants improved and renovated retail facilities which they leased in its Mega shopping malls. According to the tax inspectorate, the tenants’ expenditure on interior design and improving their retail premises should be considered as IKEA Mos profits, as the latter owns the building.

These facilities, however, must be restored to their original design after the lease contracts are up, said Irina Johansson, the head of the company’s PR service.

Titov said he is concerned about the initial commercial court rulings in favor of the tax authorities over the additional taxes, against which IKEA appealed. These rulings were in conflict with established regulation and law enforcement practices, he insisted.

“This case has caused serious concern in the business community because IKEA uses a standard business model that is widely applied for all major commercial property projects in Russia and common practice around the world,” he said.

In March, the court registered IKEA’s appeal against lower court rulings on the case. The cassation court in February upheld these rulings.

IKEA is the world’s largest furniture and household items retail chain. It operates 11 IKEA outlets and 13 Mega trade centers in Russia. The first IKEA store opened in Russia in 2000.

Leave a comment