Russia's Federal Tax Service and Investigative Committee urge tax and investigative authorities to be more rigorous in seeking out tax evaders

16.08.2017

Legal update No 606

Goltsblat BLP advises of Federal Tax Service (FTS) Letter No. ЕД-4-2/13650@, dated 13 July 2017 (http://www.consultant.ru/document/cons_doc_LAW_220597/). In it, the FTS and Investigative Committee make methodological recommendations for tax and law-enforcement authorities in identifying and proving wilful non-payment of taxes and levies.

The document highlights the need for greater cooperation between the authorities and contains specific recommendations for revealing and proving intent on the part of a taxpayer’s officials not to pay taxes.

Long-standing practices shaped by the tax and law-enforcement authorities in this field have culminated in these recommendations, which also show how the government’s approach to controlling tax payments is changing. As a flashback, in April 2017, the FTS published a Letter on Due Care Criteria1, while the Russian President signed a Tax Abuse Law in July 20172.

If these recommendations are implemented in practice, the result will be a leap in the number of fiscal liability cases under Art. 122.3 of the Russian Tax Code (wilful non-payment of taxes) prescribing a fine of 40% (now used quite rarely). Tax crime cases are also expected to multiply.

These drastic changes in the government’s approach to controlling tax payments mean good faith taxpayers need to:

  • control calculation and payment of taxes, as well as tax audits, more tightly;
  • improve procedures for selecting contracting parties and their enforcement;
  • brief employees on what to do if they are summoned for questioning;
  • choose, well in advance, a team of advocates well versed in taxation, criminal proceedings and the subtleties of search and detect operations.

With its wealth of experience in representing clients in tax disputes and white collar crime cases, Goltsblat BLP's Tax Crime Defence Group is well-positioned to provide comprehensive legal support.

Should you have any questions or require additional information, please contact Alexander Erasov, Head of Tax Dispute Resolution Group, +7 495 287 44 44, Alexander.Erasov@gblplaw.com;

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1Letter No. ЕД-5-9/547@, dated 23 March 2017 (https://www.nalog.ru/html/sites/www.new.nalog.ru/docs/ed_5_9_547.pdf), as we wrote earlier (http://gblplaw.com/news/legal/86105/).

2Federal Law No. 163-FZ, dated 18 July 2017, as we advised quite recently (http://gblplaw.com/news/legal/91166/).

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