On November 19, 2007 the Ninth Arbitration Appeal Court proclaimed the operative part of the Resolution on the results of considering OJSC NWT’s appeal against the Decision of the Arbitration Court of Moscow dated July 2, 2007 on OJSC NWT’s suit against the Interregional Inspection Office of the Federal Tax Service for the Largest Taxpayers No. 7 for invalidating the tax authority’s decision to bring the taxpayer to tax liability.

The Arbitration Appeal Court satisfied OJSC NWT’s appeal in full, finding it unjustified to increase taxes by 141 million rubles (32% of the total amount of tax claims) on settlements with OJSC Rostelecom for the passage of national and international traffic.

Thus, taking into account that in accordance with the Decision of the Arbitration Court of Moscow dated July 2, 2007 most of the tax claims were found to be unjustified (see the Press Release of August 3, 2007), North-West Telecom procured that practically all increases in taxes, penalty interest and fines for the years 2003-2004 were found to be unjustified.

Summary of the suit:

On December 11, 2006 North-West Telecom received the decision of the Interregional Inspection Office of the Federal Tax Service for the Largest Taxpayers No. 7 on the results of the scheduled on-site inspection of the Company for the years 2003 - 2004.

The tax inspection at OJSC North-West Telecom was carried out from August 2, 2006 till November 9, 2006. Based on the inspection results, the Interregional Inspection Office sent OJSC North-West Telecom the decision to bring the Company to tax liability. The amount of tax claims was equal to 437 million rubles.

On August 2, the Arbitration Court partially satisfied OJSC North-West Telecom’s suit, finding it unjustified to increase taxes by 296 million rubles (68% of the total amount of tax claims).