Contracts that can be found suspicious for tax authority

Mar, 06 2018

Federal tax service of Russia issued a letter explaining new rules of business checkups. The letter is based on recent legislation amendments establishing criteria for distinguishing tax optimization from violation of tax legislation.

 

Therefore, rules that were applicable for the last twelve years have become irrelevant now. Earlier, there were only common criteria for estimating tax evasion such as absence of business aims, operating with goods that were not actually produced, impossibility to make transactions reflected in tax reports.

 

Now tax authorities have specified particular cases that shall be deemed as suspicious:

 

  • Performance of the contract to decrease tax payments;
  • Absence of contract performance;
  • Non-reflection of revenues in tax declaration, or reflection of irrelevant information there;
  • Performance of the contract by a third party.

 

To avoid problems, we recommend indicating in contracts options that allow performance of obligations by a third party or refer to the law allowing such a performance.