The key international parties concerned are currently in the process of joining forces in an effort
to counter the shadow economy and the practices of money laundering and tax evasion. The main framework for
the actors’ interoperation in this effort is provided by the application of the General Anti-Avoidance
Rules (GAAR).
In its recent report on base erosion and profit shifting, the OECD pointed out that the embedding of specific
anti-avoidance provisions in the national legal frameworks is a powerful tool to discourage tax
evasion. Such tools have already been legislated in several European states.
Until recently, there were no provisions of this nature in the Russian Tax Code, while some elements of the
legal approach to the issue were, de facto, cemented within the judicial doctrine, articulated by Resolution
No. 53 of the Supreme Arbitration Court of the RF, dated 12 October 2006. However, in the
intervening eleven years of court practice, numerous interpretations of the terminology have emerged, and
diverse evaluation criteria have appeared.
The 18 July 2017 Federal Act No. 163-FZ “On the Amendments to the First Part of the Tax Code
of the Russian Federation,” which came into force as of August 2017, firmed up two ground
rules: (1) a ban on knowing misstatement of business facts; and (2) zero tolerance of fly-by-night
firms, which comes with the proviso that every transaction has to be delivered by the stated counterparty
of the first order, and avoidance of tax cannot be the chief purpose of the transaction in question.
The enactment of this legislation is part of the government’s integral, consistent commitment
to promulgating the principle of the preponderance of content over form in economic relations.
Whenever facts of abuse are exposed, it is important to make sure that not only the true measure
of tax liability is recovered, but that the taxable base becomes, from then on, firmly tied to fiscal
compliance by the mastermind of the scheme, who had benefitted at the expense of causing revenue
loss to the government. It is with this in mind that court practice is shaping up for
the prosecution of the true beneficiaries of a business enterprise.
We propose to discuss these and other matters with members of the academia and top experts from Russian
and international law firms and consultancies. Moderating this roundtable will be S.A. Arakelov, deputy chief
of the Federal Taxation Service of Russia.
The participants will discuss the means of counteracting tax evasion as used in the international law
enforcement practice, and review the pertinent legal approaches of the FTS of Russia. The subject-matter
may be of interest to members of the Russian and international business community.