The government and the business community continue to develop a tax amnesty for business splitting. Earlier our experts have already analyzed the proposals of entrepreneurs, which affected the general parameters and mechanisms of the future amnesty. Alexey Stanchin, Senior Tax Consultant at Tax Compliance, commented for RBC on the new appeals of the business community concerning the lack of clear criteria for artificial splitting in the legislation. 

According to the expert, the initial difficulty lies in determining the principle approach that the legislator will choose to solve this problem. After the President's address on February 29, 2024, there were many questions about how the instructions can be interpreted. In particular, if we refer to the term «amnesty», it breaks down into two possible components: criminal and tax.

The criminal part is relatively transparent. If we take as a basis the Criminal Code of the Russian Federation and the positions of the Constitutional Court of the Russian Federation, the announced amnesty can be a mechanism that exempts certain categories of persons from criminal punishment or mitigates it (this is the term used by the Criminal Code). Thus, according to the position of the Constitutional Court of the Russian Federation «amnesty is an act of mercy, a manifestation of humanism, magnanimity of the state towards citizens who have violated the criminal law, and implies full or partial release of certain categories of persons from criminal liability and punishment».

From the point of view of tax regulation we can try to extrapolate the experience of similar state initiatives. For example, in 1993, by Presidential Decree, all legal entities and individuals had the right, without fear of sanctions, to openly declare unpaid taxes and tax payments and deposit them in the budget. Among the latest high-profile initiatives we can recall deoffshorization, the means of implementation of which was the completion and submission of a special declaration by the taxpayer.

So far, it follows from the President's address that amnesty may mean not only exemption (mitigation) from liability, but also the state's refusal to recalculate taxes for previous periods. However, what its final terms and parameters will look like is not clear yet. Unpleasant surprises may await business here.

The second equally important question left by the President's message is the procedure that will be able to ensure the implementation of the proposed mechanism. The President pointed to the «transition to normal, civilized work in white», it can be assumed that the amnesty will either follow after the taxpayer submits a legally significant application to the state body, or will be carried out in automatic mode, and then the issue of determining the subject composition (the circle of persons to whom it will apply) will be particularly acute.

It is also worth noting other questions hanging in the air. Does the announcement of the amnesty mean that all audits initiated before the amnesty cease to have further prospects for the tax authority, and all claims brought against companies suspected of splitting the business are automatically dropped? The answer to this question is not yet clear.

A separate criterion for obtaining amnesty is sometimes referred to as «forced» organization of the relevant form of doing business. In this case, based on the interpretation of the President's address, «splitting» is assessed as «sham» behavior. But if the authorities formally formulate such a criterion, such insoluble questions may arise, such as determining which taxpayers artificially created the situation with splitting, and which ones created such a structure in the presence of a logical and reasonable business purpose. There is still no definitive answer to this question, and if at some point those responsible for the implementation of the amnesty, bet on the fact of artificiality, it will not achieve its stated goals. 

The Federal Tax Service claims that final decisions will be made only after discussions with all interested agencies and members of the professional community. Let us hope so and continue to follow the developments in the implementation of the amnesty.