To replace the concept of "unreasonable tax benefits," a tax law standard has been introduced that restricts the rights of taxpayers to reduce taxes and tax bases.
Mainly, reductions are not allowed based on distorted information:
- about business operation items;
- about objects of taxation.
In addition to rules laid out in Part Two of the Tax Code of the Russian Federation, the taxpayer must act in compliance with two additional conditions:
- The main purpose of a transaction cannot be to avoid payment or extract a refund of taxes. Such transactions are often those used to cover up different transactions.
- Responsibility for the transaction is performed by a person who is a party to a contract signed with the taxpayer and/or a person obligated to execute the transaction as stipulated by contract or law.
This wording implies that it is mandatory to sign contracts with counterparties in writing (except for cases where responsibility for execution of the transaction is transferred under law).
What sorts of transactions would be considered fictitious? For example, if, in order to avoid foreclosure on a debtor's movable property, a trust management or contract of sale is created and certificates of transfer for the property are drawn up while the debtor, in fact, retains control over the property. Such a transaction will be deemed fictitious.
Or, for example, if the parties to a transaction wish to hide the amount of a large transaction by signing a contract for a smaller sum. Or, for example, an LLC participant concludes a contract donating part of his authorized capital share in the company to a third party in order to further sell the remaining part of the share, bypassing the rules on the preemptive right of other participants to buy the stake. Both deals are fictitious.
In Defense Of The Taxpayer
In each of the above cases, a reduction in the tax base and (or) the amount of the tax payable will be recognized as unlawful.
At the same time, the following common situations will not, themselves, create additional tax demands:
- if primary accounting documents are signed by an unidentified or unauthorized person;
- if the counterparty to the taxpayer violates legislation on taxes and fees;
- if the taxpayer can achieve the same results by making transactions in way not prohibited by law (for example, through an intermediary).
Note that although these changes to tax legislation are addressed directly to the tax authorities, broadening their powers in general, the duty to prove the taxpayer's guilt rests with the inspectors.
Diligence - The Norm Of Economic Life
With the current changes to legislation, taxpayers should remain diligent about their choice of counterparties; inspectors invariably call counterparties to attention.
The good news is that recent changes have made diligence easier.
The Federal Tax Service of Russia is making data on legal entities open source; data no longer constitutes a tax secret. This information will be publicly available for three years.
Information on organizations will be posted on the website of the Federal Tax Service of Russia for certain categories:
- the amount of tax debt;
- tax violations and penalty for committing them;
- special tax regimes used by taxpayers;
- participation of a taxpayer in a consolidated group of taxpayers;
- average number of employees of the organization for a calendar year;
- amounts of and expenses reported on financial statements for the calendar year;
- amounts of taxes and fees paid by the organization for the calendar year.
Making this information freely available will enable market participants to assess their risks and exercise due diligence in selecting business partners.
Diligence will not only mitigate tax risks, but will also economic risks.
Translated by Alinga Consulting Group.
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| ||Source: "Практическая бухгалтерия", 2017, N 8|| |