Tax litigation Projects

FBK has successfully resolved a great deal of professionally, administratively and politically intricate cases, and with a solid number of court victories behind us, we can evaluate precedents where principal aspects of taxation are under examination which have not been settled previously in court or arbitration proceedings.

> Tax authorities charged one of our largest clients tens of billion rubles. After FBK’s experts defended the case in court, the amount was reduced by over 15 times. During the court case, the amount of extra taxes (fines, penalties) charged was reduced to a few tens of million rubles. Moreover, there were

          >  50 court days

          >  180 examinations

          >  102 case volumes

          > In another case, FBK managed to obtain a refund of income tax amounting to a few hundred million rubles.

> Lack of an obligation to count daily allowances in excess of the rates set by the Russian government as the taxable income of private individuals.

         > Following consideration of the case by Russia’s Supreme Arbitration Court, FBK’s experts challenged the letter of Russia’s Ministry of Finance claiming that the taxable income of private individuals does not include daily allowances only within the rates established by the Russian Government and amounting to 100 rubles. FBK lawyers showed that the law does not limit the amount of the daily allowances, so the taxable income of private individuals also does not include the daily allowances whose amount is determined by a collective agreement or local statutory acts.

> The possibility of deducting VAT in the event that the documents legalizing such a right are received later.

          > Our client faced a situation where the right to deduct VAT was evidenced only by documents in the subsequent tax period. This led to tax claims and huge penalties and fines on account of the client’s large trade turnover. During the case, it was confirmed that the company had not infringed the law because the right to deduct tax and the realization of this right (i.e. tax returns preparation and etc.) do not coincide.

> No liability to tax private pension insurance contributions

          > At present, many leading companies are entering into contracts with private pension funds to provide their employees with additional pension benefits. The tax authorities believe that such expenditures should be taxed with individual income tax and Russia’s Unified Social Tax. After examining a number of similar cases, it was established that such contracts did not give rise to taxable individual income or to an item with regard to the unified social tax. Moreover, the costs also fell under profit tax. Courts of different districts reached favorable decisions on several group companies incorporated by one of Russia’s largest enterprises (a natural monopoly).

FBK specialists have challenged a number of decisions by the tax authorities taken on the basis of a Ruling by Russia’s Constitutional Court on recognizing taxpayers that are our clients as unconscionable for transferring tax payments through “problem” banks. In particular, such decisions were taken regarding a large enterprise in the aviation industry and a well-known publishing house.

> Following action by FBK’s lawyers, the decision of the tax authorities issued was recognized as void on the grounds that the tax authorities did not follow the procedure for rendering a decision since they did not compile an act and there was no procedure for considering objections. The feature of this dispute is that the tax authorities and judicial practice in most cases proceeded from the fact that the procedure laid down for tax audits at the company was not applied to the cases where infringements occurred due to audit.

> FBK specialists won a dispute with the tax authorities on the latter’s decision against a major extractive enterprise. The dispute concerned the determination of the type of mineral being extracted in view of the conditions of extraction, as well as use of concepts and processing (enrichment) and reaching the requisite standard.

> FBK’s lawyers disputed a decision of the tax authorities regarding a leading foreign food company. The court ruled illegal the position of tax authorities in insisting on charging 18% VAT on packaging materials used to pack goods subject to a lower tax rate of 10%. The court ruled legal 10% VAT charged by a leading industrial company. FBK’s lawyers showed that the industry to which the producer had been attributed did not affect its qualification.

> With the assistance of FBK lawyers, the court invalidated a decision of the tax authorities not to refund VAT that had been paid by suppliers for the purchase of material resources. They motivated their refusal to allow tax deduction by referring to when and how invoices and other supporting documentation were completed and received (the client is a large international company).

In addition to the decisions listed above, FBK’s lawyers managed to secure numerous other important decisions in tax disputes, in particular:

>  Obligation of the tax authorities to state in writing a decision about an allowance, including when overpayment is revealed upon expiration of a 3-year period

>  Legality of allocating a wide range of expenditures to production costs

>  Legality of using allowances envisaged by federal and sub-federal legislation

For more information on our Tax Litigation Services, please contact Galina Akchurina or Alexei Yakovlev.

Tax Litigation Services

Complex Projects