Article 54.1 of the Tax Code of the Russian Federation has proven highly controversial
Article 54.1 of the Tax Code of the Russian Federation has proven highly controversial. Recent statistics show that taxpayers only won 75 cases (out of 1,013) and had claims upheld in part in 140 cases. On March 10 2021, the Federal Tax Service (FTS) issued Letter No. BV-4-7/3060@ to clarify how the article should be applied.
The Letter states that previous approaches to settling unjustified tax benefit disputes still apply under Article 54.1. In addition, the state budget must be suffering a ‘damage’, and the actual tax liability of a taxpayer in a tax audit must be calculated (via tax reconstruction, inter alia, by accounting the taxes paid under the simplified tax regime when splitting business cases are considered). The notion of due care and diligence is restated as a precondition for a taxpayer to be relieved from tax claims.