16.06.09

Outsourcing has long had  the reputation with Russia’s tax inspectors of being a tax evasion scheme although  many law-abidding corporations have found the practice usefull.

A Russian court recently ruled, again, that transferring employees to other organizations cuts costs by optimizing staff management. It was ruled that  taxpaying companies’ contracts are feasible, economically viable, and have a business purpose, all the criteria needed to be valid in Russia for tax purposes.

Arguments made by tax specialists  that the nature of the work performed by the employees had not changed and that they have not carried out any other duties besides the reciprocal service they provide for the taxpaying corporation, were dismissed. The court recognized the arrangement as legitimate because, since the workers’ transfer, their wages had increased and the outsourcing firm had other clients besides the firm named in the suit.

Consequently, the outsourcing arrangement was profitable and optimizing business proceses with the effective use of a qualified staff. Taken from the Ural District FAS Decree N F09-2370/09-C2, April 28, 2009.

Translated by Alinga Consulting Group.

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Source: Российский налоговый портал