Effective Handling of Tax Disputes in Russia

1. Effective Handling of Tax Disputesin Russia Seungjin Lee ALRUD Law Firm (Moscow)

2. Regulator’s approach to tax audits Russia’s tax authority is reshaping its approach from formalistic to professional one

3. Regulator’s approach to tax audits Typical process of conducting a tax audit DESK AUDIT (3 months) Informal contact with taxpayer Request for clarification of declared tax Payment of tax arrears (but no imposition of penalty) FIELD ADUIT (2 – 6 months) • Additional events • Request of documents or information to the taxpayer / taxpayer’s business partners • Interview, interrogation, seizure of documents, inventory tracking, engagement of outside experts, etc. Payment of tax arrears and imposition of penalty Post-audit paperwork takes about 2-3 months for finalization of an audit decision to be delivered to the auditee.

4. Key areas of tax audits Special attention to: What is checked:

5. Tax disputes resolution: process Pre-trial administrative procedure is prerequisite for filing a motion to court Administrative appeal* against Motion to court • Audit decision by way of filing an appeal addressed to tax authority, which rendered the disputed decision, within 1 month from the date such decision is issued. • Neither entry into force nor enforcement will take place • But no effect on injunctive measures taken by tax authority • Audit decision in full force by way of filing a petition addressed to tax authority superior than one, which rendered the disputed decision, within 1 year from the date such decision is issued. • No effect on enforcement procedure and injunctive measures • 3 months of limitation period from the date of acceptance of the administrative appeal / petition • Commercial (Arbitrazh) courts except for tax disputes arising out of individual’s income tax, which are tried before the courts of general jurisdiction • Fast-trackprocedure: 3 months - 1st instance / 1 year - final decision • 4 instances (1st, 2nd, cassation, supervisory) *No more than 1 month of assessment (up to 2 months)

6. Behavioral strategy As per RfI, respond fast, but delay submitting requested documents against a request for information, tax officers’ calls for interrogations, tax committee, etc. During interrogation, do not say what is beyond the area of competence. It is ok to say “I do not own such information“ Claim the right of making corrections to drafted protocols/minutes to avoid dangerous wordings or distortions

7. Recommendations How to cope with a new tax environment?

8. Contact details: ALRUD Law Firm Skakovayast., 17, bld. 2, 6th fl. Moscow, Russia, 125040 Т: +7 495 234 96 92 F: +7 495 956 37 18 E: info@alrud.com Seungjin Lee | Attorney seungjin.lee@alrud.com