The Russian Constitutional Court has broadened the range of possibilities to protect taxpayers' rights
On 31 March 2015 the Russian Constitutional Court published a resolution acknowledging taxpayers' rights to go to the Russian Supreme Court to challenge clarifications of the Russian Federal Tax Service (the “FTS”) which lead to more tax being paid.
Previously it was assumed that taxpayers could not challenge in the Supreme Court letters of the FTS to lower tax authorities because such letters are not subordinate regulatory acts.
JSC Gazprom Neft, a client of Pepeliaev Group, took issue with this practice. In a yet another letter the FTS demanded additional payments of mineral extraction tax. Having failed on formal grounds to receive protection in the Supreme Court, the company ventured to file a complaint to the Constitutional Court.
JSC Gazprom Neft's and Pepeliaev Group's lawyers drafted a legal position for the complaint. In particular, they stressed that the focus should be not on the form of a document but on how it affects the rights and obligations of a wide range of taxpayers.
Those who addressed the Constitutional Court were Ivan Khamenushko, Ph.D., senior partner at Pepeliaev Group, and Vadim Zaripov, head of Pepeliaev Group's analytical department.
The Constitutional Court upheld the claimant's position. Thanks to the Constitutional Court's principled position, taxpayers will benefit from a much broader range of opportunities to safeguard their rights.
Ivan Khamenushko pointed to why this decision is so important. “Instead of dealing with multiple disputes on tax authorities' individual decisions it will now be possible to challenge clarifications of the FTS which give rise to tax claims," he said. "This is the efficient judicial protection that the Russian Constitution guarantees”.
Vadim Zaripov notes: “Rather than waiting for tax authorities to come with an audit and assess additional taxes, businesses have been given the opportunity to be proactive in challenging clarifications of the FTS and to prevent tax risks in this way”.
In the opinion of Petr Popov, senior associate at Pepeliaev Group who was involved in drafting the complaint, the legal position of the Constitutional Court can be applied not only to letters from the FTS, but to other authorities' clarifications as well, if they are regulatory in nature.
It should be decided on a case-by-case basis whether a clarification is regulatory in nature. The Resolution also includes some other fine legal points which may be important for decision to be made on whether a particular authorities' clarification should be challenged.
Official clarifications can already be challenged based on the Resolution of the Constitutional Court. It should be noted that the Constitutional Court has ordered that a law be adopted regarding the procedure for challenging such clarifications taking into account the position set out in the Resolution.