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Investigative Committee officers to regain the right to commence tax proceedings against taxpayers

07/2014

The Russian authorities continue to tighten up Russian tax legislation. A bill providing new rules for initiating tax cases is currently under review and is no exception.

In recent years, the authority of Investigative Committee officers to initiate tax cases has repeatedly been on the legislative agenda. In 2011, at the initiative of the then-President Dmitry Medvedev, the Investigative Committee lost its right to initiate criminal cases for tax offences. Since then, its officers have only been able to react to tax crimes once they have received relevant instructions from the tax authorities.

However, according to Vladimir Putin, these amendments did not help to resolve the level of corruption among the ranks of Investigative Committee officers and have even led to a deterioration in the levels of crime detection. Therefore, last autumn, the President insisted on submitting to the State Duma a bill restoring their authority to initiate tax proceedings. The bill was approved in the first reading in record time (two weeks). This unusual fast-track review of the bill raised serious concerns among the business community, which appealed to the state authorities in order to develop a version of the bill acceptable to both the State and business.

After a long discussion, the Investigating Committee and the Federal Tax Service finally agreed upon the final version of amendments to the bill to be submitted to the State Duma. According to the proposed changes, Investigating Committee officers will, based on the evidence they receive from internal affairs officers, submit within three days the relevant materials and tax arrears calculation to the tax authorities. In turn, the tax authorities will send to the Investigating Committee a written opinion confirming the tax arrears calculation as well as the violations discovered during tax audits (if held), or that no such audit was held or that an audit is on-going. However, the confirmation obtained from the tax authorities will be neither binding on, nor restrictive for the Investigating Committee officers when they decide whether to initiate criminal proceedings (provided they have sufficient evidence of a tax crime).

Thus, if adopted as currently drafted, the contemplated amendments will take away a powerful safeguard for taxpayers, the Federal Tax Service, when facing investigations by the Investigating Committee officers in cases where the latter might be subject to manipulation.

Authors

Portrait of Hayk Safaryan
Hayk Safaryan
Partner
Moscow