Repetition is Mother of Reassessment

Kommersant reports that the Supreme Court is set to issue a ruling on the circumstances under which a follow-up tax audit of a business is justified. Two years after the initial audit, a higher tax authority decided to re-examine the company's activities for the same period. However, while the first audit resulted in additional tax charges of approximately 35 million roubles, the second one exceeded 477 million roubles. Following a claim by the company, commercial courts found no legal basis for the follow-up audit and declared it unlawful. Now, upon an appeal by the tax authorities, the case will be reviewed by the Supreme Court, and its ruling is bound to have implications for businesses across Russia.

Eduard Giulbasarov, Partner at FBK Legal, stated:

‘A follow-up audit cannot be conducted as a form of “self-control” or with the aim to charge additional taxes; doing so would violate the principle of good faith in tax administration’.