Uralsvyazinform disagrees with the conclusions contained in the inspection statement and intends to submit its objections with regard to the statement’s rationale within legally specified time.

In the opinion of Tax Authority, the company underpaid RUR 567.7 million in taxes for the period of 2003-2004, and is also due RUR 122.1 million in fines and penalties. The claimed arrears are comprised of RUR 448.2 million underpaid for profit tax, and RUR 117.9 million for VAT.

According to the inspectors, the main part of the arrears (over 80%) consisted of uncollected revenues from long-distance services (traffic termination settlements), and claims in connection with certification of costs related to purchase of property, plant and equipment. It is worth noting that similar tax claims in connection with traffic termination have been presented to other companies inside Svyazinvest group (Dalsvyaz, Southern Telecommunications Company, Centertelecom, Rostelecom), who are currently challenging their respective cases in court. In companies’ standpoint, all attempts to reconsider operator-tooperator interconnection settlement schemes effective in 2003-2004’s should be considered unlawful.

In 2003-2004’s Uralsvyazinform contributed about RUR 7.8 billion in various taxes and dues. In case of Tax Authority’s decision to hold Uralsvyazinform liable for the claimed tax offence and collect the due taxes and penalties, Uralsvyazinform is free to protect its rights in the Court of Arbitration.