Dmitry Efremov, a lawyer-analyst in the Tax Compliance practice, explained that each paragraph of the letter on the practice of Article 54.1 of the Tax Code summarizes the practice of arbitration courts in resolving disputes on the most pressing tax risks.

The letter reflects positions and approaches either developed by the highest courts or tested by thousands of tax disputes. Along with clarifications on the criteria and methods of analysis of transactions, which are mainly addressed to the territorial tax authorities, the interests of businesses have also been taken into account.

A separate place is occupied by the tax reconstruction - the mechanism demanded and expected by the market for determining the real size of the tax liability. <...>

Particular attention is paid to taxpayer prudence. The Federal Tax Service suggests that the commercial diligence that companies exercise to assess their partners' solvency and risk of default is identical to the diligence for tax purposes. <...>

Separately, the Federal Tax Service has clarified on what characteristics can be used to assess the provision of counterparty resources for the performance of obligations and determine whether it falls within the definition of a technical company.

It is recommended that documents be requested from potential partners and that they be independently verified both to eliminate the risk of being fined and to preserve the possibility of recovering tax losses from a counterparty that has misled the taxpayer regarding the fulfillment of obligations to the budget.

The economic meaning of the transaction and its business purpose are also examined. The form of the transaction must correspond to the content, and the main motive for its commission cannot be tax.

Another block of clarifications by the Federal Tax Service concerns the consequences of identifying defects in primary documentation for bona fide taxpayers. In tax disputes, the question often arose about the validity of the denial of deductions and expenses if the document is signed by an unidentified person. The letter answers this question. <...>

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