23.07.09

In a recent tax inspection, a company was found have "lacked financial stability" and to have paid its expenses with borrowed funds. The tax inspector concluded that this mean that the company did not have reasonable commercial justification for its transactions, a tax offense according to the tax inspection.

This interesting conclusion of the tax authorities was challenged in the Federal Arbitration Court and overturned. The court noted that acquisition of profit is a goal of business activity but may not be its mandatory result, thus the absence of profits may not be considered valid grounds for charging the business with non-business activity. This is according to ruling of the Federal Arbitration Court of Moscow region # КА-А40/5401-09 from June 17, 2009.

Translated by Alinga Consulting Group.

About Alinga Consulting Group

    Audit and Taxation     Legal     Accounting and Payroll

Questions? Ask Alinga's Experts!

Source: Российский налоговый портал