Russian tax law has undergone many changes and improvements over the last 25 years. Most of these changes are in favor of the taxpayer and small business owner. The tax burden has been reduced significantly in recent years, and the process for paying, reporting, and monitoring taxes has been modernized and simplified. Russian taxes are imposed on different levels: federal, regional, and local, and a dispute can occur at any level.
The Tax Code of the Russian Federation
Depending on what type of company you have, you will be subject to the requirements of a particular tax system. Most small companies will fall under the simplified taxation system, but others may fall under the unified agricultural tax or patent tax system, based on their particular products and services. The following taxes and duties are currently levied in the Russian Federation at the federal level:
- Value added tax (VAT)
- Corporate profits tax
- Excise taxes
- Personal income tax
- Subsoil tax
- Water and bio tax
- State duty and several other taxes.
Some examples of taxes that are levied regionally are corporate property tax, transportation tax, and gambling tax, while local taxes include land tax, individual property tax, and the trade levies. As in other countries, the taxation system in Russia can be confusing for business owners, and they can easily find themselves in trouble with tax authorities.
Facing an Audit
When a tax authority—whether regional or federal—suspects your company has not paid sufficient taxes or you have not paid in a timely manner, they may conduct an audit of your finances. A tax authority may also conduct an audit randomly, with no suspicion of wrongdoing. When you are notified that you are going to be audited, you should be prepared. In general, the following may happen during a tax audit:
- You may be called into the tax authority’s chamber or you may be audited on-site.
- The authority may audit several taxes at once in an on-site audit.
- Usually, you may only be audited once for a tax in a particular time period.
- In most cases, the term of an on-site tax audit may not exceed two months. However, authorities may extend the period for up to six months under certain circumstances.
- There is a three-year statute of limitations for penalties for tax violations, although this term could be extended if the taxpayer purposely delays the proceedings.
- Tax authorities may demand payment of taxes from businesses for unpaid taxes, late interest payment, and other penalties, without a court decision.
- If the amount of a tax liability is considered a criminal offense and the taxpayer does not pay the taxes within two months of the due date, the file will be forwarded to the Russian Ministry of Internal Affairs for review.
Being the target of an audit can be a frightening process, even if you are certain you have done nothing wrong. If you disagree with the tax charges against you, you may file a dispute.
Disputing Claims of the Tax Authority
Taxpayers and their agents wishing to challenge a non-normative act of the Russian tax authorities must use a pre-trial administrative appeal procedure. A taxpayer may appeal any results of a tax audit within one month of the announcement of the decision if the results have not yet been enforced. For acts and audits that have been finalized, taxpayers have one year from the date they realized their rights were violated to file an appeal. This procedure does not apply to acts adopted directly by the Federal Tax Service. If you find yourself in a situation where you need to file an appeal, you will want an experienced Russian tax attorney on your side.
Jus Privatum Can Help With Taxes and More
The experienced business attorneys of Jus Privatum can assist with tax problems, but we can also address all of the legal concerns you may have with your business. From just getting started to resolving disputes, you want the proven skill of our attorneys in Russia. Contact us via the link on this page to get started. We look forward to hearing from you.