Russia | How tax authorities will prove tax evasion

The Federal Tax Service published guidelines for tax inspections on how to prove tax evasion. They prepared them together with the Investigative Committee of the Russian Federation. Using concrete examples, the document provides criteria which indicate that a taxpayer intends to underpay taxes and recommends strategies for proving this intention by the tax and investigating authorities.

The methodological recommendations also provide a list of obligatory questions which should be addressed to managers and employees of a company with respect to the choice of counter-parties, procedure of contracts conclusion, accounting for inventories, etc.

According to the current tax legislation, intentional tax underpayment implies double penalties with respect to the taxpayer as well as criminal liability of its guilty officials.

Good news is that technical errors or miscalculations in the absence of intention to avoid tax payment are not subject to tax evasion treatment.

We strongly recommend that you use these guidelines when preparing for tax audits and other tax control measures. We will provide a more detailed analysis of this document and key arising recommendations in our next tax newsletter.
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Alex Stolarsky
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