Nikita Deynega helped RBC Pro compile the top 10 most interesting tax cases considered by the Russian Supreme Court in 2022
In 2022, the Supreme Court of the Russian Federation considered on the merits, granted or sent for retrial 18 out of 970 cassation appeals against court decisions on taxation issues. Specially for RBC Pro, Nikita Deynega, Counsel, Head of Tax and Administrative Law Practice at Maxima Legal, helped select the most interesting ones.
The expert noted a case in which “Gazprom Neft” PJSC challenged the results of a field tax audit for 2015-2017 conducted by the Federal Tax Service in 2020. Based on its results, the company was asked to reduce its losses for 2015 by RUB 78 mn in its financial statements, and then was additionally charged RUB 37 mn of profit tax for 2016 and RUB 24 mn for 2017. The reason was that “Gazprom Neft” PJSC included depreciation of the marine fleet of its subsidiary, “Gazprom Neft Shipping” LLC, arising from the use of vessels for intra-Russian maritime transport in production and sales expenses.
The tax authorities considered this to be unlawful, as vessels registered in the Russian Maritime Register of Shipping are exempt from profits tax when used for international shipping. However, they are not considered depreciable property, and the costs of their maintenance and use cannot be recorded as losses when calculating profit tax.
“Gazprom Neft” PJSC pointed out that only those expenses were taken into account that were incurred during transportations from one Russian port to another, but the courts of three instances sided with the Federal Tax Service.
The Supreme Court of the Russian Federation reviewed the case and granted the oil and gas company’s claim, noting that income from intra-Russian shipments was taken into account when calculating profits tax, which means that it is also fair and lawful to take into account expenses for them. Otherwise, vessels registered in the Russian Maritime Register of Shipping would have found themselves in an unequal position with competitors not belonging to it.
“Here the taxpayer faced a not uncommon problem: there is an error in the law – the procedure for accounting of income and expenses for profit taxation purposes is incorrectly regulated. Several aspects spoke in favour of the fact that it was a lack of regulation: the subsequent elimination of the inaccuracy in the law, the lack of “mirroring” of income and expenses, which is typical for the profit tax, and, finally, the violation of one of the foundations of taxation that any tax must have an economic basis, which in the case of the tax in question is the financial result – profit, and not just the receipt of revenue,” Nikita Deynega explained to RBC Pro.
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