YUKOS WILL PAY OFF ALL TAX DEBTS BY THE END OF JUNE 2006 - GERASCHENKO

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HONG KONG (XIANGANG), November 10 (RIA Novosti, Mark Zavadski) - Yukos oil company will be able to pay all its tax debts by the end of July of 2006, announced Chairman of Yukos Board of Directors victor Geraschenko.

In order to do so, he said, Yukos must be given enough time and freedom to conduct its production activities.

"If nobody interferes with the production activities of the company and the oil prices remain at current levels, Yukos will be able to pay off all its debts by the end of July, 2006," stated Mr. Geraschenko.

"It would be the best solution of the current situation," he believes.

"So far, we have been able to make agreements with officers of the court, and they allow us to continue production and pay salaries. Consequently, it enables the company to make due payments of taxes for 2004 and previous periods whenever possible," said Mr. Geraschenko.

"For example, by November 1, we have managed to eliminate our tax debt for the year 2000 in the amount of $3.4 billion," he underlined.

Mr. Geraschenko stated that he did not agree with the mechanism of taxation in relation to Yukos as "a repeated tax evader."

"The Russian tax authorities regards Yukos as repeated tax evader and, therefore, imposes double tax fines on the company. Yukos, though, cannot be considered a repeated tax evader because it acted in full concordance with contemporary legislation that allowed certain optimization of tax payments," he said.

"Besides, a company can be considered a repeated tax evader only if it had been previously caught by the authorities. In our case, Yukos has to pay the accumulated debts for all previous years for the first time," Mr. Geraschenko emphasized.

He also stated that the sale of Yuganskneftegaz does not mean the end of Yukos as a company, although it will seriously affect its business operations.

"Taking away Yuganskneftegaz is similar to cutting one's leg off or even one and a half leg. Yukos willsurvive, but will be a small company from then on," he said.

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