Challenging the results of a field tax audit of a company

21 June 2022

Based on the audit results, the taxation authority investigated the company’s compliance with the requirements of tax legislation on cross-border transactions and with the requirements of article 54.1 of the Tax Code of Russia on transactions with 14 counterparties for the supply of various components for production purposes. Within pre-action dispute settlement procedures, lawyers of FBK Legal formed the body of evidence and the defence position on the following matters:

–        Tax classification of cross-border transactions;

–        Application of article 54.1 of the Tax Code of Russia for the transactions with 11 counterparties.

As a result of the work performed by our lawyers, the taxation authority withdrew its claims with regard to these transactions, which made it possible to avoid additional taxes of more than RUB 200 million.

For the remaining three entities, we managed to prove to the taxation authority that it was unacceptable to classify the transactions as unreal and committed in violation of clause 1 of article 54.1 of the Tax Code of Russia (entailing their mandatory classification as wilful misconduct and recovery of increased penalties), for which reason the additional taxes and penalties following the audit results were minimal. The company’s interests were successfully protected and the circumstances entailing criminal risks for the client were removed.
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