Tax law and tax disputes
Projects
- drafting documentation with regard to the transfer prices applied by group companies when intra-group services are provided, in particular: organising the transportation and freight of vessels and other transportation-related services;
- assessing whether it was reasonable for foreign sea vessels to be transferred under the Russian flag with a view to obtaining the opportunity to use tax benefits granted to ship owners by the Russian Tax Code;
- in conjunction with Uzbek lawyers, preparing opinion analysing the tax consequences of the operations of a unit of the company located in Uzbekistan.
Our Real Estate Practice's lawyers represented clients in court proceedings against the government of Moscow Region. The matter in dispute was a failure to include seven shopping malls in the cadastral register for taxation purposes based on their cadastral value. Our lawyers successfully challenged the unfair tax amounts assessed on these real estate items.
Pepeliaev Group’s lawyers represented a client to which a tax authority had assessed additional profit tax on several grounds based on the results of a field tax audit. In doing so, the tax authority did not recognise a court decision which had been previously handed down in favour of the company, insisting that it had a right to specify additional grounds and ignore the previous court decision. Our lawyers managed to defend the client’s position on this point. The court stated that the tax authority should in any case comply with the previous decision of the court. And therefore the court has defended one of the fundamental principles of law that all state authorities should comply with court decisions. The total amount in dispute exceeded RUB 90 million.
Our lawyers successfully provided support during two field tax audits of a famous producer of confectionery. The objections drawn up by our lawyers and a discussion of them with the tax authority allowed litigation to be avoided. In the first case we managed to convince the tax authority that there was no justification for its conclusions that there was a reduced price for products sold for export. In the second case the objections were accepted with regard to conclusions that the taxpayer had overstated the expenses on payment for intra-group services from foreign companies of the group.
Pepeliaev Group’s lawyers conducted legal due diligence of the company's tax and accounting reporting documents and identified potential tax risks, offering recommendations for mitigating them. This allowed significant claims from the tax authorities to be avoided when a field tax audit was conducted.
Our lawyers provided legal assistance to a leading global car manufacturer in the context of building a car assembly plant in St Petersburg. The project involved negotiations with the representatives of regional state authorities on issues related to obtaining the status of a strategic investor, and providing support to the client in negotiations with the Russian Ministry of Economic Development and Trade, the Federal Customs Service, and other bodies. In addition, our lawyers provided support to the client when entering into an investment agreement, selecting a land plot, and provided advice on employment matters when putting the completed plant into operation.
Pepeliaev Group’s lawyers provided advice to the client on issues associated with changing the methods of tax accounting for income and expenses based on the current double taxation treaty with the USA. To successfully complete this project, our lawyers actively consulted the Russian Ministry of Finance. This resulted in amendments being made to the treaty based on our research and formulations. In addition we developed the optimal legal form for the current structure.
Pepeliaev Group's lawyers provided legal support when a set of documents had been drawn up at the request of the tax authority for VAT to be recovered from the state budget.
Within the framework of a state contact with the Russian Ministry of Energy, Pepeliaev Group’s lawyers provided services that involved a legal analysis of the draft of a PSA for the use of mineral resources of the Khvalynskoye field. Our lawyers participated in negotiations with the investor representing the Russian government; they provided recommendations on the wording of the PSA, and expert support to the government's representatives to ensure that the project was as favourable as possible for the Russian Federation, and that the state's interests were protected. In the course of the project, we analysed the PSA’s terms and conditions from the standpoint of whether they were in line with the current legislation on PSAs, the legislation on mineral resources, and the tax regime on the use of mineral resources taking into account the specifics of international status of the Caspian Sea, etc.
While continuing to develop the draft of the PSA, our lawyers were holding negotiations with the Russian Ministry of Energy, the Ministry of Natural Resources and the Environment, the Ministry of Finance, and other ministries and the investor’s members. In addition the lawyers were solving various legal issues relating to the legislation on PSAs, the use of mineral resources, environmental protection, and others. Our lawyers also developed amendments to the inter-governmental Agreement between the Russian Federation and Kazakhstan. This PSA was only the fourth in Russia. For this project, Pepeliaev Group won the 'European Tax Transaction of the Year in the Energy Sector' category at the ITR European Tax Awards.
Pepeliaev Group’s lawyers have developed a draft Order of the Russian Ministry of Finance on entering into bilateral and multilateral transfer pricing agreements with foreign competent authorities based on international practice and the procedure existing in Russia for entering into unilateral pricing agreements. The project is unique because, until now, it was not possible in Russia to enter into bilateral or multilateral pricing agreements with foreign competent authorities since there was no procedure for signing such agreements. Owing to the work performed by our lawyers, Russian taxpayers will be able to use the benefits of pricing agreements in domestic transactions as well as in cases where foreign trade transactions are concluded. Therefore, the tax consequences of transactions between foreign investors and Russian companies will be more predictable.
Pepeliaev Group's lawyers accomplished a project to assess the tax implications for Gazprom Export LLC in connection with its participation in 44 CFCs registered in 18 jurisdictions. Our experts prepared a memo containing conclusions on the CFC’s entitlement to apply an exemption from the taxation of profit in Russia; we issued recommendations on how to calculate the CFCs’ financial figures and apply exemptions; drafted sample documents and instructions required to fill in the notifications of membership in foreign companies and of CFCs; assessed whether the company was entitled to an exemption from the taxation of the CFCs’ profits; and calculated the CFCs' profits in order to pay tax in Russia. Pepeliaev Group's lawyers have already developed business process roadmaps for the companies to comply with Russian legislation on CFCs.
Pepeliaev Group’s specialists provided comprehensive support in a bankruptcy case representing former executives and the founder of the debtor. Thanks to the efforts of our lawyers the debtor was liquidated, the executives and the founder were released from secondary liability of RUB 650 million despite the fact that they had been found criminally liable for tax evasion.
Pepeliaev Group's specialists successfully challenged a fiscal authority's assessment that the interest under credit agreements entered into with borrowers constituted additional income of the client bank when bankruptcy proceedings were under way involving such borrowers, over the period between the supervision procedure being initiated and the receivership proceedings being initiated. Moreover, our lawyers managed to prove that: there were no grounds for the tax authority to deny the bank a set-off of the profit tax withheld when the income was paid that had been received abroad; and there were no grounds to assess VAT on the value of the sold vehicles the bank received by foreclosing on the pledged property of borrowers who were individuals.