KPMG : Decriminalization of tax offences

Federal Law No. 381-FZ dated 29 December 2009 On Amendments to Part One of the Tax Code of the Russian Federation and Separate Legislative Acts of the Russian Federation (hereinafter the Federal Law) was published on 31 December 2009 and, with the exception of some provisions, entered into force from 1 January 2010.

Andrey Vakar
Senior Consultant, Tax
KPMG in Russia and the CIS

The Federal Law makes amendments to the Tax Code of the Russian Federation (RF Tax Code), the Criminal Code of the Russian Federation (RF Criminal Code), Criminal Procedure Code of the Russian Federation (RF Criminal Procedure Code) and the Law of the Russian Federation On the Police.

The amendments have been adopted to clarify the procedure for holding individuals criminally liable for offences related to violations of the legislation of the Russian Federation on taxes and duties.

In particular, amendments have been introduced to the RF Criminal Code that increase the threshold size of concealed tax that may lead to criminal prosecution - for individuals – up to RUB 600,000 for three financial years in a row (currently RUB 100,000), for legal entities – up to RUB 2 million for three financial years in a row (currently RUB 500,000).

Amendments have also been made to the RF Criminal Code, which stipulate that if a person commits for the first time an offence stipulated by article 198 of the RF Criminal Code “Evasion of the Payment of Taxes and/or Duties by

an Individual” and article 199 of the RF Criminal Code “Evasion of the Payment of Taxes and/or Duties by an Organization”, and also by article 199.1 “Defaulting on the Obligations of Tax Agent”, an individual is exempted from criminal liability, if this individual (or organization with respect to articles 199 and 199.1) fully paid the amount of the arrears and corresponding late payment interest, and also the total fine in an amount to be determined in accordance with the RF Tax Code.

Moreover, according to the amendments to the RF Criminal Procedure Code, such a measure of restraint as placement in custody cannot be applied to a suspect or individual accused of committing offences stipulated by articles 198-199 of the RF Criminal Code (“evasion of the payment of taxes and/or duties by individuals and legal entities”), for the non-discharge of the obligations of tax agent, or the concealment of cash assets or property on which taxes and/or duties should be collected.

According to other amendments to the RF Criminal Procedure Code, investigations on criminal cases related to offences stipulated by these articles of the RF Criminal Code will be performed by the Investigative Committee under the office of the Public Prosecutor of the Russian Federation from 1 January 2011.

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