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ACCOUNTOR 
Sadovnicheskaya nab. 79 
115035 Moscow, Russia 
+7 495 788 00 05 
moscow@accountor.ru 
1 07/09/14 
PROCEDURE, TIME LIMITS FOR 
PERFORMING IN-HOUSE TAX AUDITS 
OF TAX DECLARATIONS WITH 
REGARD TO VAT 
APPEALING AGAINST THE RESULTS 
OF IN-HOUSE TAX AUDITS
2 07/09/14 
Conditions for VAT Reimbursements 
1. a taxpayer entity is registered with the tax authorities and is the payer of 
VAT (paragraph 2, clause 3, Article 171 of the Tax Code of the Russian 
Federation). 
2. a taxpayer entity has payment documents which confirm the actual 
payment of VAT (paragraph 3, clause 3, Article 171; clause 1, Article 172 of 
the Tax Code of the Russian Federation; 
3. a taxpayer entity has a properly prepared VAT invoice (paragraph 2, clause 
3, Article 168 of the Tax Code of the Russian Federation) 
4.acquired goods (work, services) have been entered in accounting records 
(paragraph 2, clause 1, Article 172, Tax Code of the Russian Federation).
3 07/09/14 
Procedure and Grounds for a Tax Audit 
Even though the reimbursement of VAT is governed by Article 176 of the Tax Code of the Russian 
Federation, a taxpayer entity applying for VAT reimbursement will be audited by the tax inspectorate as 
per general rules as all matters related to the tax audit procedure, review of its results and the adoption of 
a decision on reimbursement are governed by the provisions of Articles 88, 100 and 101 of the Tax 
Code of Russia. 
The main thing that will be required at this stage is the presentation of documents confirming tax 
deductions (the right of the tax authorities to demand presentation of such documents is established by 
clause 8, Article 88 of the Tax Code of Russia). 
Non-compliance with requests by the tax auditors for presentation of documents undermines the right to 
submit documents thereafter during a court hearing. 
The decision of the tax authorities to deny the reimbursement of VAT for reason of absence of documents 
confirming deductions will be upheld by courts (paras 5 & 6, clause 2 & 3, Enactment No. 65 of 
December 18, 2007, Plenum, Supreme Commercial Court, Russian Federation). 
It is necessary to comply with a request by providing documents which, pursuant to Articles 165 and 172 
of the Tax Code, confirm the correctness of deductions and other circumstances linked by applicable law 
with the right for reimbursement of tax.
4 07/09/14 
Requests for Documents During In-House Tax 
Audits 
- As per general rule, a tax authority does not have the right to require 
a taxpayer to provide additional documents while performing an in-house 
audit (clause 7, Article 88, Tax Code of Russia). 
- However in certain instances, a taxpayer may be required to provide 
additional documents during an in-house tax audit and namely upon 
submission of a tax declaration for VAT, in which the right to a tax 
reimbursement is claimed (paragraph 2, clause 8, Article 88; 
paragraph 2, clause 1, Article 176, clauses 1, 11, Article 176.1, Tax 
Code of the Russian Federation). 
- In view of the above, a tax authority may require a taxpayer to 
provide specified documents only where the taxpayer claims a VAT 
reimbursement (clause 8, Article 88, Tax Code of Russia, Letter of the 
Ministry of Finance of Russia dated 27.12.2007 No. 03-02-07/2-209).
5 07/09/14 
Duration of Tax Audits and Presentation of 
Objections Relating to Tax Audit Results 
- A tax audit is performed within three months. Within seven days 
upon completion of a tax audit a tax authority must adopt a decision 
for the reimbursement of VAT if it found no violations of tax or levy 
legislation. 
- In the event that violations are found, the tax authority officials 
performing the audit must prepare a tax audit report. The Tax 
Code provides five more days for the report to be delivered to the 
taxpayer. 
- Within a month after receiving a tax audit report, the taxpayer 
may submit written objections relating to the report (clause 6, 
Article 100 of the Tax Code). In the event a company is unable to 
prepare reasoned objections, such objections may be presented 
directly during the examination of the tax audit materials in the tax 
authority.
6 07/09/14 
Examination of Tax Audit Materials 
- Materials relating to an in-house tax audit and objections by a 
taxpayer are examined by the director or the deputy director of the 
tax authority (in a procedure set out in Article 101 of the Tax Code). 
- The Code provides for such examination to be completed within ten 
days but also allows the tax authority to extend the period by no more 
than one month (clause 6, Article 101 of the Tax Code of the Russian 
Federation). Thereafter the director issues a decision either on the 
imposition of sanctions for commission of a tax offense or on the non-imposition 
of sanctions. 
- At the same time the director decides the question of whether to 
provide a VAT reimbursement (in full or in part) or to reject a tax 
reimbursement. In this way, the results of a tax audit are these two 
decisions.
7 07/09/14 
Types of Decisions Adopted Based on the 
Results of Tax Audits 
If the tax authority believes that a taxpayer has no right for a VAT 
reimbursement, it issues two decisions: 
- first – to reject the provision of a tax reimbursement in full or in part, 
- second – on the imposition of sanctions for the commission of a tax 
offence or on the non-imposition of sanctions for the commission of a 
tax offence (clause 3, Article 176 of the Tax Code of the Russian 
Federation)
8 07/09/14 
Procedure for Issuing to a Taxpayer of a 
Decision Based on the Results of a Tax Audit 
Issued decisions are handed to the taxpayer within five days 
(clause 9, Article 101 of the Tax Code). Within five days upon 
its adoption a decision must be delivered to the taxpayer, to 
whom it relates (or to his representative), under signature, or can 
be transmitted using any other method making it possible to 
establish the date on which the decision is received by the 
taxpayer (or his representative). 
In the event that it is impossible to deliver or hand over a decision 
using any method confirming the date of its receipt, it shall be 
sent by registered letter to the location of the taxpayer company 
(or its autonomous subdivision). 
In the event a decision is sent by registered letter, it will be 
deemed received on the sixth day upon the sending of a 
registered letter.
9 07/09/14 
Prejudicial Appeals Against Decisions by Tax 
Authorities 
A mandatory prejudicial procedure is provided for appealing against decisions 
made by a tax authority: a taxpayer must lodge an appeal with a Higher Tax 
Authority within a month following the receipt of the decision. 
An appeal is lodged through the tax authority which adopted the disputed 
decision which must then forward the appeal to the addressee within three 
days, that is, to the Directorate of the Federal Tax Service for the constituent 
entity of the Russian Federation (clause 2, Article 139.1 of the Tax Code). The 
decision will not become effective until the process has been exhausted 
(clause 9, Article 101; clause 2, Article 101.2; paragraph 3, clause 2, Article 139 
of the Tax Code).
10 07/09/14 
Prejudicial Appeals Against Decisions by 
Tax Authorities 
Pursuant to clause 3, Article 101.2 and clause 2, Article 139 of the Tax Code, a 
decision of a tax authority not appealed against in the appeal procedure may 
be appealed against to the Directorate of the Federal Tax Service within one 
year upon its adoption. 
That is, the appeal is not the only form of prejudicial dispute settlement, and a 
failure to observe its time limits does not prevent one from lodging with the 
Federal Tax Service Directorate an appeal against a decision which has come 
into effect. Meanwhile, the right to apply to a court of law arises only after 
appealing the disputed decision with a Higher Tax Authority (5, Article 101.2, 
Tax Code).
11 07/09/14 
Judicial Appeals Against Tax Audit Results 
An arbitration appeal is only possible after the prejudicial appeal 
procedure has been exhausted (clause 5, Article 101.2 of the Tax 
Code). However you can submit a claim to a court before the decision is 
adopted by a higher tax authority. 
In submitting an application to an arbitration court, it is required to attach 
documents supporting compliance with “a claim review or a prejudicial 
procedure if so provided by law…” (paragraph 7, Article 126, Arbitration 
Procedural Code). The consequences of non-compliance with any 
prejudicial procedure is the rejection by the court of the application and 
the termination of court proceedings (paragraph 2, clause 1, Article 148; 
and clause 1, Article 149, Arbitration Procedural Code). An approximate 
time for a court to complete such a case is 6 months.
12 07/09/14 
Stages of Tax Audits and Appeals Against Results Thereof 
Submission of a 
declaration for 
tax 
reimbursement 
Start of an in-house 
tax audit 
Within 3 months 
(clause 2, 
Article 88, Tax 
Code) 
Tax audit 
completion 
Within 7 days 
(clause 2, 
Article 176, TC) 
Tax 
reimbursement 
decision 
Within 10 days 
upon 
completion (cl. 
1, Art. 100) 
In-house tax 
audit report 
Not more than 1 
month and 10 
days (clause 1, 
Art. 101, TC) 
Objections to 
an audit report 
Within 1 month 
(clause 6, Art. 
100 TC) Report 
delivered to 
taxpayer 
Within 5 days 
(clause 5, Art. 
100, TC) 
Examination of 
audit materials 
and adoption of 
a decision (incl. 
time for add. 
measures) 
VAT 
reimbursement 
(in full, in part) 
Denial of 
reimbursement 
Imposition of 
tax sanctions or 
non-imposition 
of tax sanctions 
1 month (clause 
2, Article 139.1, 
TC) 
Appeal to a 
higher authority 
against the 
decision not yet 
in effect 
Decision in effect 
may be appealed 
against within a 
year from adoption 
by the Federal Tax 
Service 
Directorate 
Submit an application to an 
arbitration court within 3 
months. An application is 
generally reviewed by courts of 
three instances within 6 months
13 07/09/14 
Duration of a Process Relating to a VAT 
Remuneration 
Stage 1 
In-house tax audit 
3 months + 7 days 
Stage 2 
In-house tax audit + 
examination of 
objections 
5 months + 15 days 
Stage 3 
In-house tax audit + 
prejudicial appeal 
6 months + 15 days 
Stage 4 
In-house tax audit, 
prejudicial and judicial 
appeals 
12 months 
- At each stage, the matter may be resolved 
fully which means that it is not always 
required to go through the entire procedure. 
- Time limits expressed in days do not include 
days-off or public holidays.
14 07/09/14 
Interest Charged for Overdue Tax 
Reimbursement 
- In accordance with clauses 2, 8, Article 176 of the Tax Code of the 
Russian Federation, where there is overdue tax reimbursement, 
interest will be charged, that is upon the expiration of 12 days (7 days 
plus 5 days) upon submission of an application for a tax refund. 
- Interest is the compensation of a taxpayer’s losses caused by an 
untimely and overdue refund of amounts due in cases where a tax 
authority fails to perform in time its responsibilities in connection with 
the refund of tax deductions. A similar position was expressed by the 
Supreme Commercial Court of the Russian Federation in its 
Enactment No. 11484/06 dated 27.02.07.
15 07/09/14 
Successfully Completed Projects Related to 
Appeals Against Decisions To Reject Tax 
Reimbursements 
- Bibirevo-Nedvizhimost, LLC. The reimbursement of VAT in a court 
procedure for the amount of RUB 5,684,437, charging interest on 
overdue VAT refunds. 
- Promenad LLC. Representation of the company’s interests in a court, 
a Tax Service Inspectorate and the Tax Service Directorate for the 
Moscow Region related to the reimbursement of VAT for the period of 
2007 to 2011. VAT refunds for the amount exceeding RUB 90 million.
16 07/09/14 
Contact: Vladimir Ryvkin 
Phone: +7(495) 788 00 05 (237) 
cell: +7(903) 688 66 43 
Vladimir.Ryvkin@accountor.ru
17 07/09/14 
Thank you!

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In-house tax audit of tax declaration in Russia, VAT

  • 1. ACCOUNTOR Sadovnicheskaya nab. 79 115035 Moscow, Russia +7 495 788 00 05 moscow@accountor.ru 1 07/09/14 PROCEDURE, TIME LIMITS FOR PERFORMING IN-HOUSE TAX AUDITS OF TAX DECLARATIONS WITH REGARD TO VAT APPEALING AGAINST THE RESULTS OF IN-HOUSE TAX AUDITS
  • 2. 2 07/09/14 Conditions for VAT Reimbursements 1. a taxpayer entity is registered with the tax authorities and is the payer of VAT (paragraph 2, clause 3, Article 171 of the Tax Code of the Russian Federation). 2. a taxpayer entity has payment documents which confirm the actual payment of VAT (paragraph 3, clause 3, Article 171; clause 1, Article 172 of the Tax Code of the Russian Federation; 3. a taxpayer entity has a properly prepared VAT invoice (paragraph 2, clause 3, Article 168 of the Tax Code of the Russian Federation) 4.acquired goods (work, services) have been entered in accounting records (paragraph 2, clause 1, Article 172, Tax Code of the Russian Federation).
  • 3. 3 07/09/14 Procedure and Grounds for a Tax Audit Even though the reimbursement of VAT is governed by Article 176 of the Tax Code of the Russian Federation, a taxpayer entity applying for VAT reimbursement will be audited by the tax inspectorate as per general rules as all matters related to the tax audit procedure, review of its results and the adoption of a decision on reimbursement are governed by the provisions of Articles 88, 100 and 101 of the Tax Code of Russia. The main thing that will be required at this stage is the presentation of documents confirming tax deductions (the right of the tax authorities to demand presentation of such documents is established by clause 8, Article 88 of the Tax Code of Russia). Non-compliance with requests by the tax auditors for presentation of documents undermines the right to submit documents thereafter during a court hearing. The decision of the tax authorities to deny the reimbursement of VAT for reason of absence of documents confirming deductions will be upheld by courts (paras 5 & 6, clause 2 & 3, Enactment No. 65 of December 18, 2007, Plenum, Supreme Commercial Court, Russian Federation). It is necessary to comply with a request by providing documents which, pursuant to Articles 165 and 172 of the Tax Code, confirm the correctness of deductions and other circumstances linked by applicable law with the right for reimbursement of tax.
  • 4. 4 07/09/14 Requests for Documents During In-House Tax Audits - As per general rule, a tax authority does not have the right to require a taxpayer to provide additional documents while performing an in-house audit (clause 7, Article 88, Tax Code of Russia). - However in certain instances, a taxpayer may be required to provide additional documents during an in-house tax audit and namely upon submission of a tax declaration for VAT, in which the right to a tax reimbursement is claimed (paragraph 2, clause 8, Article 88; paragraph 2, clause 1, Article 176, clauses 1, 11, Article 176.1, Tax Code of the Russian Federation). - In view of the above, a tax authority may require a taxpayer to provide specified documents only where the taxpayer claims a VAT reimbursement (clause 8, Article 88, Tax Code of Russia, Letter of the Ministry of Finance of Russia dated 27.12.2007 No. 03-02-07/2-209).
  • 5. 5 07/09/14 Duration of Tax Audits and Presentation of Objections Relating to Tax Audit Results - A tax audit is performed within three months. Within seven days upon completion of a tax audit a tax authority must adopt a decision for the reimbursement of VAT if it found no violations of tax or levy legislation. - In the event that violations are found, the tax authority officials performing the audit must prepare a tax audit report. The Tax Code provides five more days for the report to be delivered to the taxpayer. - Within a month after receiving a tax audit report, the taxpayer may submit written objections relating to the report (clause 6, Article 100 of the Tax Code). In the event a company is unable to prepare reasoned objections, such objections may be presented directly during the examination of the tax audit materials in the tax authority.
  • 6. 6 07/09/14 Examination of Tax Audit Materials - Materials relating to an in-house tax audit and objections by a taxpayer are examined by the director or the deputy director of the tax authority (in a procedure set out in Article 101 of the Tax Code). - The Code provides for such examination to be completed within ten days but also allows the tax authority to extend the period by no more than one month (clause 6, Article 101 of the Tax Code of the Russian Federation). Thereafter the director issues a decision either on the imposition of sanctions for commission of a tax offense or on the non-imposition of sanctions. - At the same time the director decides the question of whether to provide a VAT reimbursement (in full or in part) or to reject a tax reimbursement. In this way, the results of a tax audit are these two decisions.
  • 7. 7 07/09/14 Types of Decisions Adopted Based on the Results of Tax Audits If the tax authority believes that a taxpayer has no right for a VAT reimbursement, it issues two decisions: - first – to reject the provision of a tax reimbursement in full or in part, - second – on the imposition of sanctions for the commission of a tax offence or on the non-imposition of sanctions for the commission of a tax offence (clause 3, Article 176 of the Tax Code of the Russian Federation)
  • 8. 8 07/09/14 Procedure for Issuing to a Taxpayer of a Decision Based on the Results of a Tax Audit Issued decisions are handed to the taxpayer within five days (clause 9, Article 101 of the Tax Code). Within five days upon its adoption a decision must be delivered to the taxpayer, to whom it relates (or to his representative), under signature, or can be transmitted using any other method making it possible to establish the date on which the decision is received by the taxpayer (or his representative). In the event that it is impossible to deliver or hand over a decision using any method confirming the date of its receipt, it shall be sent by registered letter to the location of the taxpayer company (or its autonomous subdivision). In the event a decision is sent by registered letter, it will be deemed received on the sixth day upon the sending of a registered letter.
  • 9. 9 07/09/14 Prejudicial Appeals Against Decisions by Tax Authorities A mandatory prejudicial procedure is provided for appealing against decisions made by a tax authority: a taxpayer must lodge an appeal with a Higher Tax Authority within a month following the receipt of the decision. An appeal is lodged through the tax authority which adopted the disputed decision which must then forward the appeal to the addressee within three days, that is, to the Directorate of the Federal Tax Service for the constituent entity of the Russian Federation (clause 2, Article 139.1 of the Tax Code). The decision will not become effective until the process has been exhausted (clause 9, Article 101; clause 2, Article 101.2; paragraph 3, clause 2, Article 139 of the Tax Code).
  • 10. 10 07/09/14 Prejudicial Appeals Against Decisions by Tax Authorities Pursuant to clause 3, Article 101.2 and clause 2, Article 139 of the Tax Code, a decision of a tax authority not appealed against in the appeal procedure may be appealed against to the Directorate of the Federal Tax Service within one year upon its adoption. That is, the appeal is not the only form of prejudicial dispute settlement, and a failure to observe its time limits does not prevent one from lodging with the Federal Tax Service Directorate an appeal against a decision which has come into effect. Meanwhile, the right to apply to a court of law arises only after appealing the disputed decision with a Higher Tax Authority (5, Article 101.2, Tax Code).
  • 11. 11 07/09/14 Judicial Appeals Against Tax Audit Results An arbitration appeal is only possible after the prejudicial appeal procedure has been exhausted (clause 5, Article 101.2 of the Tax Code). However you can submit a claim to a court before the decision is adopted by a higher tax authority. In submitting an application to an arbitration court, it is required to attach documents supporting compliance with “a claim review or a prejudicial procedure if so provided by law…” (paragraph 7, Article 126, Arbitration Procedural Code). The consequences of non-compliance with any prejudicial procedure is the rejection by the court of the application and the termination of court proceedings (paragraph 2, clause 1, Article 148; and clause 1, Article 149, Arbitration Procedural Code). An approximate time for a court to complete such a case is 6 months.
  • 12. 12 07/09/14 Stages of Tax Audits and Appeals Against Results Thereof Submission of a declaration for tax reimbursement Start of an in-house tax audit Within 3 months (clause 2, Article 88, Tax Code) Tax audit completion Within 7 days (clause 2, Article 176, TC) Tax reimbursement decision Within 10 days upon completion (cl. 1, Art. 100) In-house tax audit report Not more than 1 month and 10 days (clause 1, Art. 101, TC) Objections to an audit report Within 1 month (clause 6, Art. 100 TC) Report delivered to taxpayer Within 5 days (clause 5, Art. 100, TC) Examination of audit materials and adoption of a decision (incl. time for add. measures) VAT reimbursement (in full, in part) Denial of reimbursement Imposition of tax sanctions or non-imposition of tax sanctions 1 month (clause 2, Article 139.1, TC) Appeal to a higher authority against the decision not yet in effect Decision in effect may be appealed against within a year from adoption by the Federal Tax Service Directorate Submit an application to an arbitration court within 3 months. An application is generally reviewed by courts of three instances within 6 months
  • 13. 13 07/09/14 Duration of a Process Relating to a VAT Remuneration Stage 1 In-house tax audit 3 months + 7 days Stage 2 In-house tax audit + examination of objections 5 months + 15 days Stage 3 In-house tax audit + prejudicial appeal 6 months + 15 days Stage 4 In-house tax audit, prejudicial and judicial appeals 12 months - At each stage, the matter may be resolved fully which means that it is not always required to go through the entire procedure. - Time limits expressed in days do not include days-off or public holidays.
  • 14. 14 07/09/14 Interest Charged for Overdue Tax Reimbursement - In accordance with clauses 2, 8, Article 176 of the Tax Code of the Russian Federation, where there is overdue tax reimbursement, interest will be charged, that is upon the expiration of 12 days (7 days plus 5 days) upon submission of an application for a tax refund. - Interest is the compensation of a taxpayer’s losses caused by an untimely and overdue refund of amounts due in cases where a tax authority fails to perform in time its responsibilities in connection with the refund of tax deductions. A similar position was expressed by the Supreme Commercial Court of the Russian Federation in its Enactment No. 11484/06 dated 27.02.07.
  • 15. 15 07/09/14 Successfully Completed Projects Related to Appeals Against Decisions To Reject Tax Reimbursements - Bibirevo-Nedvizhimost, LLC. The reimbursement of VAT in a court procedure for the amount of RUB 5,684,437, charging interest on overdue VAT refunds. - Promenad LLC. Representation of the company’s interests in a court, a Tax Service Inspectorate and the Tax Service Directorate for the Moscow Region related to the reimbursement of VAT for the period of 2007 to 2011. VAT refunds for the amount exceeding RUB 90 million.
  • 16. 16 07/09/14 Contact: Vladimir Ryvkin Phone: +7(495) 788 00 05 (237) cell: +7(903) 688 66 43 Vladimir.Ryvkin@accountor.ru