Corporate Tax 2010 - BMR Advisors

Pepeliaev, Goltsblat & Partners
Russia
Russia
We described the anti-avoidance provisions of Russian
legislation in questions 1.1-6.6 above.
2) An anti-avoidance doctrine has been formed in court now for
several years (for a long time Russian courts applied the
concept of a bona fide taxpayer). It was summarised in
Plenary Ruling No. 53 of the Russian Supreme Arbitration
Court that introduced the term “unsubstantiated tax benefit”.
We described how anti-avoidance doctrine has been applied to VAT
in question 2.4. However, Ruling No. 53 replaced the concept of a
bona fide taxpayer and is applied in regard to all taxes. The Ruling
is based primarily on two doctrines: (a) the doctrine of the
prevalence of substance over form; and (b) the doctrine of business
purposes.
The Court ruled that:
1) officials should prove the circumstances serving as the basis
for the adoption of their decision;
2) tax benefits can be recognised as unreasonable, in particular
in cases where: (a) transactions are not performed for tax
purposes in accordance with their economic sense; and (b)
the transactions were not attributable to substantiated
economic or other factors (purposes of a business nature);
3) tax benefits per se cannot be considered an independent
business purpose, although a benefit may accompany
transactions that have a real business purpose, as the
taxpayer is free to achieve the desired economic result at the
minimum tax cost; and
4) the fact that a taxpayer’s contracting party violated its tax
obligations does not constitute proof that the tax benefit is
unreasonable.
The legislator has not introduced provisions that would force the
taxpayer to disclose a tax avoidance scheme. In practice, if a
taxpayer applies a tax avoidance scheme, the Tax Office should
prove this fact (in general taxpayers disagree with the claims of the
Tax Office and the dispute is referred to a court), and if the Tax
Office succeeds, the taxpayer has to pay the tax, interest and a
penalty (20% of the unpaid tax).
As mentioned above, the plans of the Ministry of Finance consist
of:
a) an updating of the transfer pricing rules (see question 3.7
above); and
b) the introduction of rules on consolidated taxpayers.
These rules aim to resolve domestic (within Russia) transfer pricing
issues.
Rustem Ahmetshin
Pepeliaev, Goltsblat & Partners
Krasnopresnenskaya nab. 12
Entrance 7, 15th floor, 17th floor
World Trade Center-II, Moscow 123610
Russia
Tel: +7 495 967 0007
Fax: +7 495 967 0008
Email: r.ahmetshin@pgplaw.ru
URL: www.pgplaw.ru
R. Ahmetshin focuses on tax law, including tax advice and tax
litigation.
R. Ahmetshin has extensive experience in providing advice to clients
on a wide range of taxation, tax assessment and tax payment issues;
in particular, resolution of complicated issues of enforcing VAT and
profit tax legislation, application of VAT and profit tax allowances,
export VAT refunds, excise tax assessment and payment, mineral
resource taxation, etc.
He has actively participated in comprehensive consulting projects,
provided tax support for multinational M&As and large-scale
investment projects.
He provides regular advice to major Russian and foreign-owned
companies that have various ownership forms and capital structures
and operate in such economic sectors as FMCG production, food
industry, trade, automotive industry, telecommunications, extractive
industry, oil and gas sector, metal industry, power sector, etc.
Rustem Ahmetshin has an impressive track record of tax cases he
has successfully handled in arbitration courts, general jurisdiction
courts, the Arbitration Tribunal at the Russian Chamber of
Commerce and Industry and the Constitutional Court of the Russian
Federation.
He has participated in drafting amendments to the tax legislation
and authored numerous publications on urgent tax issues.
Pepeliaev, Goltsblat & Partners is the largest full-service law firm operating in Russia today. The firm has more than
160 attorneys based in two offices in Moscow and St. Petersburg. The main practice areas of the firm include: legal
support for investment projects in Russia; tax advice and tax litigation; corporate; commercial / M&A; antimonopoly
regulation; land, real estate and construction; commercial dispute resolution; intellectual property; employment law;
banking; customs and foreign trade regulation; administrative and legal support for business and criminal defence for
business.
Being one of the first national law firms to provide comprehensive legal support for FDI projects by multinational clients
in Russia (setting up industrial production, FMCG manufacturing, retail chains, etc.) and continuous post-investment
and operational support for the largest multinational companies operating in Russia, we have accumulated great
practical experience based on a deep understanding of all the nuances of Russia’s legal realities, social, economic and
political processes, local culture, and the mentality and expectations of investors.
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