The Russian Tax Summit, supported by Pepeliaev Group
On 12 December 2012, there was a discussion of short-term trends in Russian tax policy at a tax summit organised by news agency RIA Novosti and the Moscow News newspaper with the support of Pepeliaev Group. Those taking part included representatives of the Russian Finance Ministry, the CEOs of major companies, lawyers, economists and experts.
The summit was dedicated to the development of the Russian tax system between 2013 and 2015, and to major legislative amendments in 2012-2013. In 2012, the Russian federal government approved the Key Trends in Tax Policy for the next three years (2013-2015). This policy document allows companies to forecast how the tax system will develop, and allows companies’ lawyers to plan their professional development taking account of the challenges they will face and the demands on their time. The government announced that the existing tax burden will be maintained, to which end the representatives of business do not rule out new taxes and duties coming into existence, adeptly camouflaged by public officials under the guise of different types of contributions, charges and payments. “The trend of abolishing some tax benefits for business is now clearly signposted,” states Dmitry Fadeev, the deputy president of the Chamber of Commerce’s expert council to improve tax legislation. To back up his words, he quotes the document ‘The Key Trends in Tax Policy for the Next Seven Years’, in which the Finance Ministry proposes tax that benefits be gradually overhauled.
A special roundtable, led by Pepeliaev Group partner Sergey Savseris, was devoted to companies’ tax strategy. The tax strategy discussion featured the representatives of major companies in the retail, real estate, telecommunications and transport sectors among others. The essence of a tax strategy lies in paying taxes under current legislation without overpaying and without pursuing tax optimisation with excessive zeal. The experts were unanimous in the view that each company needs a document entitled ‘tax strategy’ which serves as internal guidelines for the company and answers the questions of how it should lawfully distribute its tax burden and how it should interact with the federal state budget. Pepeliaev Group partner Anton Nikiforov spoke on how the tax authorities and courts evaluate an unjustified tax benefit and how to ensure that there is the necessary evidence base if official bodies raise claims.
“The tax agency has already started to dot the i’s and cross the t’s when it audits taxpayers,” believes Sergey Pepeliaev, managing partner of Pepeliaev Group. The statistical data backs up his view: in 2000, there were tax audits of 1,350,000 legal entities and the average level of additional tax assessed per audit was RUB 188,000, while 34,000 tax audits in 2012 brought in an average of RUB 550,000 per audit. A factor of no little importance behind this reduction in the number of unjustified tax audits has been, in Mr Pepeliaev’s opinion, the development of court practice allowing for costs on legal representation to be recovered. For example, in the ‘Aelita Software Corporation’ case (Resolution No. 16067/11 of the Presidium of the Russian Supreme Commercial (‘Arbitration’) Court dated 15 March 2012) record court costs of almost RUB 3 million were recovered from the tax authority.
Moreover, in 2012, taxpayers won a series of cases in which they received high awards of court costs.
Those taking part in the summit agreed that taxes will go up in future, despite government officials asserting the opposite line. “It is now that business must push the issue of reducing the tax burden. Now our country has favourable conditions for supplying raw materials. It is now that we really need to make life easier for manufacturers. Otherwise, there will be medium-sized businesses in the country. Either it will die out, or it will relocate elsewhere,” maintain Marina Zaikova, who chairs the expert council’s Russian Business Committee.