Income Tax

TMK, as a global company with production facilities and trading offices geographically diversified and located in Russia and the CIS, the United States, and Europe, is exposed to tax burden charged to business in those countries. In both 2010 and 2009, the following main corporate income tax rates were in force in the countries where most of TMK’s production plants located: 20% in Russia, 35% (federal tax rate) in the United States, 16% in Romania.

In 2010, ТМК reported a pre-tax profit of U.S.$185 million as compared to a pre-tax loss of U.S.$427 million in 2009. As a result, in 2010 TMK recognised an income tax expense of U.S.$81 million versus an income tax benefit of U.S.$103 million in 2009. The effective income tax rate rise, to 44% in 2010 from 24% in 2009, was primarily due to an outstanding increase in income generated by the American division (it’s operating profit amounted to U.S.$150 million in 2010 as opposed to operating loss of U.S.$173 million in 2009) where corporate income tax rate is considerably higher than in the Russian division, as well as due to non-deductible expenses growth.

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