PwC Can Appeal Russian Tax Ruling

The Wall Street Journal today reported that PricewaterhouseCoopers has won the right to appeal its tax-fraud case related to now-bankrupt Russian oil giant OAO Yukos. Russia’s Federal Arbitration Court for the Moscow District ruled the auditor can appeal a tax-evasion ruling against it. PwC is accused of actively helping Yukos evade Russian corporate taxes between 2002 and 2004, actions which the country’s top prosecutors allege led directly to the back-tax claims that forced Yukos into bankruptcy and eventual nationalization. This is good news for PwC, which could have lost its auditing license were the charges upheld. Already, the audit giant was forced to withdraw its opinions on Yukos’ financial statements under official pressure and threat of back-tax charges of its own. PwC has announced that as part of the court’s decision, it will appeal the back-tax charge as well.

This ruling is good news for the accounting industry as a whole, which this decade alone has seen a spate of tax fraud and evasion charges, an options backdating scandal, the collapse of a “Big Five” firm, and the introduction of sweeping legislation reforming public company financial reporting.

Source:PWC Wins Right to Appeal Ruling on Russian Tax Case,” Wall Street Journal, June 24, 2008