All companies should exercise due diligence when selecting business partners. Simply depending on the integrity and reliability of a company can often lead to a number of negative consequences.

Russian legislation states that companies are obliged to exercise due diligence when conducting business. Unfair practice on the part of a counterparty can lead to a company being refused VAT tax deduction and the recognition of the corresponding expense as not exercising due diligence to the required degree.

Not undertaking the counterparty verification procedure may be considered by the tax authorities as a deliberate action aimed at obtaining an unjustified tax benefit for which the company is liable under tax legislation.

Preliminary solvency verification significantly reduces the risk of entering into a contract with an unscrupulous counterparty, avoiding overdue receivables and claims from the tax authorities.

Information is collated and analysed to assess the reliability and solvency of a counterparty. In addition to studying data from publicly available sources, it is also necessary to request information from the counterparty itself in order to assess whether this information tallies with the information from official government agencies.

In addition, an analysis should be conducted of the financial state of the company based on accounting data for the last 3-5 years and information obtained about any arbitration disputes which the counterparty is or was involved in and about any open enforcement proceedings in respect of the counterparty.

Our services

We provide you with complete and accurate information about the solvency and reliability of your counterparties, helping you to minimise financial and tax risks. VALEN provides a wide range of services for verifying the solvency of counterparties:

  • Analysis of counterparty financial and accounting documentation;
  • Preparation of a report on the solvency of the counterparty with a credit.