MOSCOW — In its report for 2004 calculated according to the international accounting standards, Norilsk Nickel has indicated the risk of additional tax charges, penalties and sanctions that can run up to a considerable amount. As of December 31, 2004, Norilsk Nickel's unsettled tax lawsuits and tax risks were estimated at USD178m. At that, the company's top managers regard the possibility of unfavorable outcome as medium.

The company's report points out that the Russian tax system is at a relatively early development stage, and is therefore characterized by a great number of taxes, frequent changes and inconsistent application at the federal, regional and local levels. Many issues related to application of new legislation permit ambiguous interpretations and complicate the tax planning process.