The Belgian tax authorities are inspecting the financial reports of Smolensk Diamonds N.V., the Antwerp-based subsidiary of Russian diamond polishing company Kristall Production Corporation of Smolensk, according to Russia's Izvestia newspaper.
The tax officers have found “problems in the financial statements", Izvestia reports.
Kristall Production Corporation produced about 40 percent of Russia’s polished output last year, and is largest diamond manufacturer in the country.
The tax officers believe the subsidiary does not have the reserves needed to offset possible risks and losses, particularly $2 million owed by Yossi Kuzi Diamonds Ltd, the report says.
Smolensk Diamonds’ financial statements reveal its profits last year were just $381,000.
"According to the consolidated financial statements issued by Smolensk Diamonds N.V. and seen by Izvestia, the company’s tax debts since 2007 did not exceed US$53,000 (€40,000), but in 2011 the figure jumped to US$193,000 (€146,000)," the newspaper reports. "However, Kristall denies the existence of problems with tax authorities."
Raymond Cohen, CEO of Smolensk Diamonds, did not respond to the article, the newspaper reports.