Tax Authorities have tightened their requirements regarding the accuracy of information about the address (location) of a legal ENTITY

Pepeliaev Group advises that the tax authorities have adopted a new practice for supervising compliance with the Law on the state registration of legal entities

Recently, legal entities have been receiving an increased number of notices from tax authorities requiring that accurate information about the address should be provided. This issue is especially relevant for legal entities whose actual address is not the same as the address entered in the Unified State Register of Legal Entities, as well as for lessees of premises in large multifunctional business centres. This practice is new; it is the opposite of the previous practice of tax authorities formally assessing information about the actual addresses of legal entities. Previously, the tax authorities did not carry out any field audits at companies’ actual addresses.

Such notices are sent on a massive scale, which, together with the official information published on the Federal Tax Service’s website (nalog.ru)^[1], suggests that state bodies have intensified their work aimed at identifying shell companies and finding inaccurate information in the Unified State Register of Legal Entities concerning all legal entities.

Relying in their activities on the general recommendations of the Russian Federal Tax Service and on judicial practice, the regional tax authorities often choose quite a formal approach without going into the details of each specific case. In practice, this leads to entries being made in the Unified State Register of Legal Entities in relation to a number of companies stating that the address (location) of such companies is incorrect, which creates obstacles for them to legally pursue their business activities.

Implications for companies

If a company is not located at the address specified in the Unified State Register of Legal Entities or if there is a delay in sending a response to the relevant notice from a tax authority, this can entail significantly adverse implications for such company, for example, issues with servicing banks (the likelihood is high that banking transactions will be refused if the Unified State Register of Legal Entities features an entry that the address is inaccurate); issues with state-owned companies (it cannot be excluded that participation in tenders may be refused); the relevant company may be struck off from the Unified State Register of Legal Entities at the initiative of the tax authority, etc.

In order to mitigate any adverse implications, we recommend the following:

• contacting the counterparty (the lessor), which provides the premises located at the address entered in the Unified State Register of Legal Entities, to determine the procedure for interacting with the relevant tax inspectorate;
• clarifying whether any information exists in relation to other lessees located in the same building as the company in question, in terms of an entry having been made in the Unified State Register of Legal Entities that their address is inaccurate;
• finding out whether employees of the tax authority have contacted the lessor in connection with the premises that the lessor is leasing out; and
• checking whether the term of the lease agreement/agreement for the use of the premises has expired and, if necessary, take measures to extend/renew it for another term.

Help from your advisers

Pepeliaev Group’s lawyers will readily provide the necessary legal support on all issues relating to the entry into the State Register of Legal Entities of information about a legal entity, and to any claims from the tax authorities in connection with inaccurate entries having been made in the State Register of Legal Entities in relation to the relevant company.