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Pepeliaev Group's team has successfully wrapped up a tax dispute in favour of VimpelCom PJSC

Rustem Ahmetshin, a senior partner at Pepeliaev Group, and senior associate Alexander Kuznetsov represented VimpelCom PJSC in a dispute with the Russian Federal Tax Service which lasted for over three years and ended yesterday in the court of cassation.

In this case, the company was challenging a decision of the Federal Tax Service to schedule a transfer pricing audit because the deadline had expired for an audit to be held. State commercial courts of all levels did not agree with our client, so the company then applied to the Russian Constitutional Court. Here, it was held that the provision of the Russian Tax Code at issue in the case contradicted the Russian Constitution, so the case was ordered to be considered again (see Resolution No. 41-P dated 14 July 2023).

The review lasted for almost a year. The first instance court ruled against the company, but the Ninth State Commercial Court of Appeal set aside the lower court’s decision and upheld the client’s claim. On 3 September 2024, the court of cassation dismissed an appeal filed by the Federal Tax Service.

The dispute was complicated. Neither state commercial courts nor the Supreme Court agreed with our position, and we ended up reaching the Constitutional Court. More than three-and-a-half years had passed since the audit was scheduled. Over that period, we lost our challenge to the order of the Federal Tax Service that regulates the procedure for scheduling tax audits, in state commercial courts of four levels and then in the Supreme Court. However, in July 2023, after we had appealed to the Constitutional Court, it handed down a resolution stating that the provision of the Tax Code that the Federal Tax Service had used as a basis for scheduling the tax audit was unconstitutional, so the case of VimpelCom PJSC should be revised

This case is important because a decision of the Federal Tax Service to schedule a tax audit has been invalidated for the first time. Also for the first time additional taxes assessed following a transfer pricing audit have been declared unlawful by virtue of an error made in scheduling an audit.

Team:

Rustem Ahmetshin

Alexander Kuznetsov

Office:

Moscow

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