Tax Law and Tax Disputes​

The Russian tax law provisions are quite clearly regulated in the Tax Code of the Russian Federation. However, in practice, numerous problems tend to arise. The problems are, in part, brought about by conflicting rulings, gaps in the law, and inadequate court practice in numerous areas. In addition, implementation of new regulations often leads to  lack of legal security. For instance, the newly applied transfer pricing rules were recently amended. Namely, new thresholds were introduced for transactions to be recognized as controlled: 60 million RUB for transactions between resident company and non-resident company and 1 billion RUB for transactions among resident companies. The consequences may not be evaluated clearly as it does not mean that other forms of control will not be applied to such transactions.

Furthermore, in Russia there is a conflict between the interests of taxpayers and tax authorities. The former seeks to pay fewer taxes, while the latter hopes to see higher tax revenues. All in all, tax rates are quite moderate. For example, profit tax rate is 20%, VAT rate is 20% (instead of 18%, which is in force till 31th December, 2018), and income tax for residents is 13%. Dividends are taxable at the rate of 13%. In addition, in Russia there is still a large number of “black sheep”, i.e. firms that are set up for the sole purpose to dodge taxes. However, Russian tax authorities is quite successful in combating it.  . A summary review of Russian tax law is available on our website in the “Taxes in Russia” article in the Information section.

Another particular feature of Russian tax law and regulatory control over accounting is a pronounced formalism which leads to significant costs. Those who disregard this aspect place themselves at risk of their legal status taking a significant fall in tax authorities or even becoming involved in legal tax proceedings. However, the chances of success in these disputes with tax authorities are quite high. According to official statistics, 70-80% of such court cases are won by taxpayers.

Our lawyers and tax consultants provide clients advice on all Russian tax law issues and represent their interests in the initiated tax lawsuits. We are able to represent both the interests of your Russian subsidiaries and parent companies.

When companies are acquired, we are able to conduct due diligence of the target company in terms of its tax and financial standing (perform a tax analysis of the company). Our lawyers have worked for Russian tax authorities and understand tax officers’ way of thinking, thus allowing for the assessment of potential risks.