Strauss Group Ltd. (TASE:STRS) will deposit NIS 13.3 million with the local tax authorities in Romania for tax assessments received by its Strauss Romania subsidiary. At the same time, the authorities have sent their findings to the Romanian prosecutor to consider "whether these findings indicate a criminal offense."
The tax authorities in Romania, where Strauss conducts coffee business, issued a NIS 12.5 million tax assessment for the company's local subsidiary in respect of 2009-2013, including interest and fines. A NIS 4 million additional tax assessment is expected, among other things for disallowing certain expenses, bringing the total additional tax bill to NIS 16.5 million.
Strauss Romania plans to deposit the liability from the assessments in May 2018 and is likely to receive a discount on interest and fines, thereby reducing its cumulative liability from the assessments to NIS 13.3 million.
The proceedings involving these assessments are taking place in a local court according to Romanian law. Strauss claims that according to the subsidiary's legal advisors, the referral of the matter to the state attorney is "a standard procedure taken by the Romanian tax authority in order to give the tax authorities a bargaining chip in discussions," i.e. in order to generate pressure to make the payment.
Strauss Romania is disputing the tax authority's stance. "Based on its professional advisors," the company believes it has "a good case against the Romanian tax authority's position," and therefore plans to appeal the assessment to a court and to rebuff the criminal allegations, if any are made. "The company's management believes that the provisions made in Strauss Romania's books are sufficient," it stated.
Strauss also emphasized that there would be no substantial effect on its profit and loss statement.
Strauss has two companies active in the local market in Southern and Central Europe - Strauss Romania and Strauss Adriatic - and also exports to Bulgaria, Moldova, Montenegro, Bosnia, Albania, Kosovo, and Macedonia. Strauss Coffee began its activity in Romania in 1994, first setting up a coffee factory. Strauss Coffee opened an office in Bucharest and established a marketing and distribution setup in the country. The company currently has 500 employees in South and Central Europe.
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2018
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