Ekaterina Kopylova, Tax Compliance tax consultant, in an article in EJ-Jurist examined the draft law amending the Federal Law "On Insolvency (Bankruptcy)".

On May 31, 2023, the Constitutional Court of the Russian Federation in its Resolution 28-P declared unconstitutional Articles 248, 249, paragraph 1 of Article 251 and Article 271 of the Tax Code of the Russian Federation and paragraphs 1 and 3 of Article 5, paragraph 2 of Article 134 of the Bankruptcy Law insofar as they do not allow to definitely resolve the issue of the priority of satisfaction of the income tax claim from the sale of the debtor's property constituting the bankruptcy estate. 

The Ruling reflects various approaches to the issue in question: from the most pro-fiscal in the form of attributing the tax claim to current payments, to a complete refusal to tax the proceeds received from the sale of property at auction.

As a result, the Constitutional Court of the Russian Federation proposed to the federal legislator to clarify the regulation and ruled that up to this point the claims of the tax authority related to the payment of profit tax on proceeds from the sale of the debtor's property are subject to satisfaction as part of the third priority of the register of creditors' claims. Such an order seemed to be the most balanced with respect to the diametrically opposed interests of the participants in bankruptcy proceedings.

In general, the draft law correlates with the legal positions expressed in Resolution 28-P.

However, despite the criticism of the Russian Federation Constitutional Court's classification of profit tax as a current payment, the draft determines that profit tax is a claim to be paid in priority to other creditors "out of turn", on a par with other current payments (paragraph 6, item 2, Article 134 of the Bankruptcy Law). The same applies to VAT, as follows from the new wording of the amended norm.

At the same time, the developers took into account the comments of the Constitutional Court of the Russian Federation and provided for a special "substitution mechanism". Thus, if there are claims of register creditors of the first and second turn, payment of profit tax from the sale of the bankruptcy estate shall be made in preference to the creditors of the third turn, but after settlement of the claims of the first and second turn creditors included in the register.

In addition to the profit tax itself, the draft law also clarifies the regulation of the priority of satisfaction of claims for personal income tax and insurance contributions within the framework of the unified tariff of insurance contributions, stipulating that the repayment of such payments shall be made as part of the claims of second turn creditors after the full payment of the claims of second turn creditors on wages before the beginning of payments on the claims of third turn creditors.

In addition, the proposed regulation consolidates the approach established at the level of the Supreme Court of the Russian Federation on the repayment of taxes accrued on a pledged item at the expense of proceeds from its sale as part of the costs of securing the pledged item and selling it at auction.

Thus, as one might expect, the draft law presents a more or less balanced solution that does not violate the rights of pledge creditors, as well as first and second priority creditors. We hope that the legislative consolidation of the adopted decision will minimize the number of cases on the resolution of disagreements between the parties to the bankruptcy case in terms of taxation.