KGHM may have to make large reserves to cover tax liability

Copper miner KGHM Polska Miedź will make provisions worth zł. 44 million for its disputed tax payment in the second quarter, a company spokesman said on Thursday. Last year KGHM, which made a Q1 net profit of zł. 135 million, paid VAT on a 2000 sale of its treasuries. But since it questioned the payment, the firm booked the cash outflow in its balance sheet as debt owed by the state. "A tax office notified the company this week it had maintained its decision, so the company is required to make reserves for the liability," said Andrzej Kowalczyk, the head of KGHM's investor relations department. Kowalczyk said that the company would meet finance ministry officials and lodge an appeal in the Supreme Administrative Court. (Reuters) J.K.