Taxpayer or Witness: Status Conflict

Pravo.ru reports there are instances in tax inspections where the same individual is summoned both as a witness and a taxpayer to clarify their business activities. In its recent ruling, the Constitutional Court directed that these concepts be distinguished. While an individual's failure to appear in response to a summons constitutes a fine of up to 1,000 roubles, the risks for companies are more severe. Top managers and beneficial owners are often summoned as witnesses, and their non-appearance is treated as a refusal to cooperate. The Pravo.ru article examines case No. 2a-4011/2024.

Commenting on tax audits and the case in particular, Alexei Nesterenko elaborates:

On the one hand, tax authorities have limited means of gathering information and are compelled to resort to witness testimony. On the other hand, the status of a witness presupposes procedural neutrality, whereas the audited party is inherently interested in the outcome of the case.

In a letter dated 17 July 2013 (No. AS-4-2/12837@), the Federal Tax Service provided clear guidance: only parties with no interest in the outcome of the case may serve as witnesses. Officials of an entity may be summoned under article 31, paragraph 1, subparagraph 4 of the Tax Code to provide clarifications regarding its activities. Nevertheless, courts do not always recognise a conflict of interest in such disputes, often highlighting that the FTS document was issued merely as a recommendation.

It is possible that the Constitutional Court's position will set an important precedent, establishing that testimony from individuals affiliated with the audited party—whether the taxpayer themselves, a top manager, or the chief accountant—will no longer be treated as testimony from independent witnesses. The statements of such individuals should instead be regarded as the position of the audited organisation.