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Russian tax service demands $140 million from IKEA – media

The Swedish furniture-making giant exited Russia amid Western sanctions, but it still has assets in the country

The Russian Federal Tax Service has filed a legal complaint with the Arbitration Court of Moscow Region against a local subsidiary of Swedish furniture manufacturer IKEA, the business daily Kommersant reported this week, citing court documents.

According to the report, the tax authority is seeking 12.9 billion rubles ($142 million) from the subsidiary, Ikea Torg LLC. The case appeared in the database of arbitration cases on January 30, but no further details have been made public.

While the Swedish furniture giant stopped its business in Russia amid Western sanctions placed on Moscow over the Ukraine conflict last year and sold off its factories, it still owns assets in the country. According to the state real estate register, Ikea Torg owns a warehouse in the village of Yesipovo outside of Moscow. The facility used to serve as a distribution center for IKEA’s retail outlets and online store.

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The warehouse is valued at more than 34 billion rubles ($374 million). According to a Kommersant source, IKEA did not want to sell the property but instead sought to rent it out for up to three years. In early 2023, online marketplace Yandex.Market reportedly posted job listings with the Yesipovo facility indicated as the place of work, but the company later denied claims that it had rented the premises. After IKEA’s exit, Yandex.Market purchased all remaining IKEA products in Russia for resale.

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According to Alexander Grinko, a tax dispute resolution expert at Marillion Group, the tax authority’s complaint may not, however, be related to the activities of Ikea Torg or the Yesipovo warehouse, but to any other Russia-based IKEA subsidiary, even one that is no longer operating. He noted that Russian tax law sometimes allows the tax authorities to collect debts from interdependent companies through court rulings. Yulia Korneva, a senior lawyer at K&P Group, added that because Ikea Torg’s ultimate beneficiary is its Swedish parent, the subsidiary could be held liable for any taxes owed by IKEA’s other structures in Russia.

The Federal Tax Service did not respond to requests for comment about the court filing. Ingka Group, the Swedish company that managed IKEA stores and Mega shopping centers in Russia, also did not comment.

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February 04, 2024 at 12:15PM
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