Will the businesses get better off if allowed to pay taxes on installment basis. A comment for Pravo.ru by Julia Andreeva, head of projects at S&K Vertical

20 july 2017

For the installment scheme of payment taxes accrued as a result of control measures, a new legal basis may appear; it is presented in the amendments to the Tax Code, which have already been submitted to the State Duma. The changes, according to the authors of the initiative, will ease the burden upon taxpayers. What do lawyers think of this initiative: read the Pravo.ru material.

To date, the right to postpone the tax payment period can not be used by all taxpayers, but only those who have suffered damage as a result of a natural disaster or untimely budgetary appropriations, and if there is a threat of their being declared bankrupt. A group of deputies, including Andrei Makarov, head of the budget and taxes committee, and Yevgeny Bushmin, vice-speaker of the Council of Federation, proposed to expand this list: it can be replenished by legal entities and individual entrepreneurs, whose taxes have been reaccrued as a result of tax controls, if they cannot pay them off within the specified period.

The deputies' idea was to postpone deadlines for tax payments at the discretion of the authorized body. Such a decision can be made if the amount of monetary receipts to the accounts of the taxpayer three months before the filing of the application was less than the amount of its short-term liabilities, with exclusion of the amount of future income. In addition, those who want to get an installment plan should conduct their activities for at least a year, and the amount of taxes, fees, fines and penalties for this period should be from 30 to 70% (not less and not more) of the proceeds from the sale of goods. If it is an individual entrepreneur, then there can not be insolvency proceedings against it, and the legal entity should not be in the process of reorganization or liquidation. Among other things, the applicant will be required to provide a bank guarantee.

The explanatory note states that the new grounds to be secured in the Tax Code for granting installment plan will ensure transparency and availability of a mechanism for changing the deadline for payment of taxes and create an effective measure to maintain the solvency and financial stability of taxpayers, which will positively affect the improvement of business conditions and the qualitative development of the business climate in the country .

Julia Andreeva, advocate and head of projects at S&K Vertical, believes that the initiative will be supported by taxpayers, since the amounts of taxes that are subject to recovery after desk checks are often quite tangible for the company, and many are forced to resort to borrowed funds to repay debts to the budget in order to avoid more serious sanctions and payment of penalties. According to her, the tax authorities will benefit from this approach, because in order to receive benefits, the taxpayer must provide security for the fulfillment of their obligations. Tax disputes counsel of Delkredere Law Firm, Mary Alekperova, agrees with her colleague, but notes that in the proposed version of the draft law, section 7, paragraph 2 of Art. 64 the grounds for granting installment plan shall be determined based on the data from financial statements as of the last reporting date (annual). "It will be more expedient to decide on the basis on the data of the interim financial statements, which the taxpayer must draw up in order to apply for the installments plan, since these data will contain more precise information about the financial position of the taxpayer," the lawyer explains.

Ivan Shienok, head of the tax practice of Infralex law firm, supports the bill for several reasons: firstly, it will positively affect the interests of taxpayers, encouraging them to apply for installments and at the same time facilitating the decision making for tax authorities. "The interests of the state will be protected as well, since the obligatory condition for receiving the installment by the taxpayer is to provide them with a bank guarantee for the appropriate amount," the lawyer emphasizes and at the same time draws attention to the uncertainty as to whether the document implies the possibility of providing the taxpayer with not only installment plan, but also postponement in the payment of tax - this would be logical in this case.

"It should be noted that the requirement of the draft law on application abstaining to appeal against a decision based on the results of a tax audit, which resulted in additional taxes, restricts the taxpayer's constitutional right to protect his rights and freedoms." Moreover, this condition seems completely superfluous and does not correspond to public interests, since the state can not be interested in receiving unreasonably added tax amounts." As in the current version of the law, on the basis of the literal meaning of the provisions of the draft law, the provision of installment plan is not an obligation of the tax authority, even if the applicant complies with all established requirements. Therefore, it would be advisable to provide for cases in which the tax authority has no right to refuse to grant the installment to the taxpayer (subject to compliance with established legal requirements): for example, when the tax offense is committed for the first time or is of an unintentional nature, the lawyer says. "It also makes sense to establish a simplified procedure for granting installments to small and medium-sized businesses, for which obtaining a bank guarantee can be difficult," Shienok believes. "For such persons, the law should provide for the provision of other collateral, for example, in the form of a pledge of property."

The text of the bill No. 225063-7 "On Amending Part One of the Tax Code of the Russian Federation" is available here.

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