Industries

• Employee involved

  Alexey Stanchin

• Process description

  Following a tax audit, the Inspectorate sent the taxpayer a demand for payment of arrears. The company had no possibility to repay this amount in a lump sum due to the threat of bankruptcy.

• Result

  Tax Compliance experts on behalf of the taxpayer issued an application for installment payment for 3 years in equal installments. Despite the expiration of the deadlines for receiving installments, the application was granted. In the process, a "mixed" option of securing the fulfillment of the tax obligation was used. The installment itself was granted for the longest possible period of time.

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The client (mainland - a company in the UAE) was interested in legal support of the procedure of dismissal of an employee. The process was complicated by the fact that it had to be completed within a short period of time before the employee left the UAE.

• Result

  The TC team assisted the client in the framework of dismissal of an employee, in particular: (1) drafting the necessary documents; (2) supporting communication with the UAE governmental authorities.

• Employee involved

  Ivan Tsvetkov

• Process description

  During the audited period, the joint-stock company carried out water supply and water disposal of facilities, including residential buildings, industrial facilities and social infrastructure facilities. As a result of the field tax audit, the tax authority concluded that the Company had received an unjustified tax benefit in the following episodes: (1) provision of motor transportation services by a person who is not a party to the contract; (2) unjustified inclusion of amounts of written-off accounts receivable in non-operating expenses; (3) Illegal non-recovery of VAT, non-deduction of VAT and overstatement of expenses on transactions, VAT and expenses on which were reimbursed by subsidies as gratuitous contributions to property that did not increase the Company's authorized capital; (4) Illegal non-inclusion in non-operating income of a part of the subsidy equal to capital investments in depreciable real estate and written off by the Company through the depreciation mechanism. The Company, while not disputing the amounts of additional charges imposed by the tax authority in the episode involving the unjustified inclusion in non-operating expenses of amounts of written-off accounts receivable, disagreed with the tax claims in the other episodes.

• Result

  Following a study of the legal position, which was developed by Tax Compliance specialists based on the results of the analysis of the actual circumstances of the dispute, the tax authority made a decision to satisfy in full the Company's claims in respect of profit tax. In addition, the tax authority satisfied the Company's claims (1) on the necessity to carry forward the unused amount of losses of previous years to reduce the taxable base for profit tax, (2) on the necessity to reduce the amount of the penalty due to the presence of mitigating circumstances (the amount of the penalty was reduced by 99%), as well as (3) on the calculation of penalties taking into account the moratorium on their accrual. Thus, the tax authority satisfied the Company's claims with respect to profit tax, the need to carry forward the unused amount of losses from previous years, and the need to reduce the fine and penalties in full, which significantly reduced the amount of additional charges - over RUB 10 million (approximately 66% of additional charges).

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  A client registered a company in an IFZA freezone in the UAE. He needed to open a corporate account with a bank in the UAE for settlements with counterparties.

• Result

  The TC team helped the client to open corporate accounts (in AED / USD) in a bank in the UAE. As part of the project, our specialists assisted with the preparation of the necessary documents and communication with the bank's representatives.

• Employee involved

  Alexey Stanchin

• Process description

  The tax authority, within the framework of an on-site tax audit, concluded that there was a scheme aimed at reducing the tax burden. In particular, the tax authority believed that: (1) the transaction was driven solely by tax motives; (2) a scheme using technical companies to increase deductions and expenses was used in the course of business activities. The Tax Compliance team helped the client: (1) to conduct tax reconstruction in the court of first instance; (2) to develop a legal position confirming the possibility of reconstruction and justifying the method of calculating valid tax liabilities.

• Result

  The court granted the taxpayer's application in full.

• Employee involved

  Alexey Stanchin

• Process description

  Following an on-site audit, the tax authority concluded that the taxpayer had created a formal document flow to understate the tax base. In particular, the tax authority believed that: (1) the client had methodological violations under VAT; (2) the use of zinc dust in production was overstated; (3) an agency agreement was concluded with a PE for tax saving purposes.
  
  The Tax Compliance team helped the client develop a legal position to challenge the results of an on-site tax audit substantiating:
  
  (1) incorrect application by the tax authority of the methodology for determining import deductions based on the organisation's accounting policy;
  (2) the use of zinc dust in production;
  (3) the existence of a business purpose in concluding the agency agreement.

• Result

  The tax authority partly accepted the taxpayer's arguments and the tax claim was reduced by 46%.

• Employee involved

  Alexey Stanchin

• Process description

  The tax authority, as part of an on-site tax audit, concluded that there was a "tax optimization scheme. In particular, the tax authority believed the following: (1) the formality of the Company's relations with its counterparties; (2) nominality of the counterparties; (3) the actions of the Company and/or its counterparties led to its bankruptcy (which the inspection recognized as "fictitious"). The Tax Compliance team helped the client to elaborate a legal position supporting the possibility to apply the "tax reconstruction".

• Result

  The tax authority accepted the arguments of the taxpayer

Development of requirements for the functionality of an analytical data mart for the purposes of tax monitoring

• Purpose

  Develop requirements for the functionality of an analytical data mart for the purposes of tax monitoring

• Employee involved

  Mikhail Begunov

• Process description

  The client was interested in providing the following services: - development of business requirements and functional requirements for the analytical data mart; - support of communication with an IT integrator during the implementation of a data mart.

• Result

  The analysis of business processes and IT systems of the Company, mechanisms of their interaction was carried out. Business requirements for the functionality of the data mart were formed based on the requirements of the Federal Tax Service of Russia, the requirements and wishes of the Company, and the best practices for implementing data marts. There was a discussion of business requirements with an IT integrator, as well as a discussion of the capabilities and logic of the integrator's IT solution. The functional requirements for the system were formed and agreed with the integrator, support was provided for the development and testing of the data mart.

Development of a description of a comprehensive internal control system and requirements for automation of control procedures when implementing a unified information system for accounting and tax accounting of the largest industrial holding

• Purpose

  Development of a description of a comprehensive internal control system and requirements for automation of control procedures

• Employee involved

  Mikhail Begunov

• Process description

  The client was interested in providing the following services: - development of a detailed description of the risks of the financial function (including accounting, formation of regulated reporting, planning and budgeting, treasury); - development of a description of control procedures covering the specified risks; - formation of a risk matrix and control procedures with analysts necessary for the Company; - development and implementation of documents regulating the definition of the boundaries of the internal control system of the financial function, updating its description, testing the effectiveness of the design and operational effectiveness of control procedures, conducting a procedure for assessing the effectiveness of the internal control system by the Company's management;

• Result

  An analysis of the business processes of the financial function was carried out, risks and controls were described, and a matrix of risks and controls was formed. Documents regulating the functioning of the internal control service, as well as a package of applied documents, have been formed. Requirements for the automation of control procedures and recommendations for further improvement of the internal control system have been developed.The company highly appreciated the results of the project and the effect of the introduction of a comprehensive internal control system - the results of the project helped to increase the management's confidence in the correctness of accounting and reporting data, the timeliness of payments, the completeness and correctness of budgets, reduce the risk of errors and inaccuracies, and increase the responsibility of employees.

• Employees involved

  Mikhail Begunov, Nikita Zharov, Ivan Tsvetkov

• Process description

  The tax authority, as part of its pre-inspection analysis, concluded that the taxpayer used a "split" business scheme. In particular, the tax authority believed that: (1) the inclusion of a retailer who applied the simplified taxation system ("Counterparty") in the chain "producer - end buyer" is due solely to tax motives; (2) the taxpayer and the counterparty are interdependent business entities. In view of the above, the taxpayer was requested to adjust its tax liabilities and submit revised tax returns. The Tax Compliance team helped the client to elaborate a legal position confirming that (1) business transactions with the Counterparty are real; (2) business transactions with the Counterparty have a business purpose; (3) no interdependence exists between the taxpayer and the Counterparty.

• Result

  The tax authority accepted the arguments of the taxpayer.

Various jurisdictional options for the holding company within the Group are proposed

• Employee involved

  Nikita Zharov

• Process description

  The team was tasked with selecting the best jurisdiction for the holding company within the Group. The team analyzed various jurisdictions for opportunities to create / relocate a holding company within the Group. As part of this analysis, including the possibility of redomiciliation of the business in the ATS was considered.

• Result

  As a result of the analysis, the client was offered various jurisdictional options for the holding company within the Group.

Settled a dispute with the tax authority on the legality of accounting exchange rate differences for income tax purposes

• Employees involved

  Mikhail Begunov, Nikita Zharov

• Process description

  The Company was accounting for profit taxation purposes for income/expenses in the form of exchange rate differences. Based on the results of the on-site tax audit, the tax authority concluded that the Company's expenses in the form of exchange rate differences do not meet the criterion of documentary support and should not be taken into account for profit taxation purposes

• Result

  The Tax Compliance team has prepared an appeal to the superior tax authority (Department of the Federal Tax Service of the subject), in which it: (1) presented evidence of sufficient documentary support of the respective expenses; (2) pointed out the methodological errors committed by the auditors in calculating the additional tax charges. Upon consideration of the appeal, the superior tax authority upheld the Company's position in full.

To dispute the claims of the tax authority on the improper use of tax credits for VAT.

• Duration

  June 2019 - December 2019

• Employees involved

  Mikhail Begunov, Alexander Dmitriev

• Process description

  Additional tax control measures were taken. Evidence of the absence of interdependence with suppliers of equipment was presented. The price of the purchased equipment is indicated to be corresponding to the market level. All established violations concerned beneficiaries-importers of the supplied products, rather than the taxpayer.

• Result

  Claims of the tax authority were disputed. A positive practice was formed on additional payments to companies that supply imported equipment through a chain of suppliers