Last summer brought a lot of questions on planned legal developments and taxpayer's actions in disputable situations.
This article covers the most frequently asked questions by our clients and colleagues.
Are auditors the spies hired by tax authorities?
Nowadays articles in professional magazines and on the Internet are riddled with similar headings, and this fact scares not only the business community, but also accountants. Word of mouth even spread the rumors that from 2018 auditors will have to "report" revealed violations to tax authorities.
All the above mentioned is far from reality.
The draft law approved in the first reading on June 23, 2017 removes the term "audit secret" from Article 82 of the Tax Code of the Russian Federation, which prohibits collection and use of information classified as the audit secret during tax inspections.
Simultaneously, tax authorities are granted the right to receive documents from auditors certifying calculation and payment of taxes and duties by a taxpayer.
Under a new draft law documents may be requested from an auditor in case they haven't been submitted by a taxpayer and only in accordance with:
- A resolution of the head (deputy head) of the superior tax authority;
- A resolution of the head (deputy head) of the federal executive authority responsible for control and monitoring of taxes and duties during a tax inspection;
- A request of the authorized authority of a foreign state in cases stipulated by international treaties of the Russian Federation.
Thus, according to the law, a responsible taxpayer who has submitted all the information required by tax authorities shall have no fear of the audit secret cancellation.
At the moment, the legislation on audit still contains the term "audit secret".
The audit secret includes any information and documents obtained and/or prepared by auditors for service rendering, except for:
- Information disclosed by the person to whom the services were rendered;
- Information on the execution of the audit agreement;
- Information on the amount of the auditor's fee.
Moreover, disclosure of the audit secret is one of the reasons for cancellation of an auditor qualification certificate. Auditors will not risk their right to auditor practice in order to comply with the new draft law, considering that liabilities for the failure to disclose information have not been established yet.
All the above mentioned facts prove that the draft law On the Cancellation of the Audit Secret in its current form is not practically applicable, as it contradicts the main law on audit.
It's most likely that by 2018, legislators will fail to ensure fulfillment of the draft law produced with great pains, therefore, there is no need to "hide" information from auditors.
I would also like to add that the auditor community is outraged not less than the business community and keeps fighting against the audit secret cancellation, because the audit secret is one of the pillars supporting audit activities.
Adjustment invoice: helper or additional problem?
Despite the fact that adjustment invoices have been used for quite some time now, numerous accountants have difficulties with their execution and filing of tax returns on VAT.
Let us begin from the cases when it's required to issue an adjustment invoice.
The seller shall issue an adjustment invoice if after the sale of goods (works, services) under the agreement between the seller and the buyer:
- The price of goods (works, services) specified in an original invoice increases or decreases;
- The amount of goods (works, services) specified in an original invoice increases or decreases;
- Both the price and the amount of goods (works, services) specified in an original invoice change;
- The buyer, who has no liabilities for paying VAT or is exempted from them, returns part of goods.
An adjustment invoice is issued and delivered to the buyer within five calendar days from the issue of a supporting document for making amendments.
An adjustment invoice provides acceptance of tax deductions on VAT, if there is a document (contract, agreement, and other documents) in accordance thereto an adjustment invoice has been issued.
Errors in adjustment invoices that do not prevent tax authorities from identifying the seller, the buyer of goods (works, services), their cost, tax rate and tax amount charged from the seller during the tax inspection are not deemed as the reason for refusal in acceptance of tax deductions.
A taxpayer shall consider the increase in the price of shipped goods (performed works, rendered services) when determining the tax base for the tax period where the documents providing for the issue of adjustment invoices were prepared.
Thus, an adjustment invoice is issued only upon approval of the changes by the parties in writing.
There is no need to adjust VAT tax base for the period of the initial sale of goods (works, services), if there is an agreement on changes of the price and the amount of goods (works, services) executed as of the current date.
There is no need to issue an adjustment invoice in case of the incorrect sale of goods (works, services) during the earlier tax period.
The Federal Tax Service has no idea what happened last year
The transfer of insurance contributions management from non-budgetary funds to the Federal Tax Service has become an overwhelming problem for the business community.
For the last 9 months of 2017 taxpayers received numerous letters demanding to pay the arrears for insurance contributions, which had already been paid in 2016.
This happened to the most responsible payers of contributions who paid insurance contributions for December 2016 before the end of the year out of fear of confusion. Unfortunately, the reverse happened and payments to the fund made in December 2016 got lost upon the data transfer.
The obvious question is "What to do next?"
Unfortunately, there is no magical solution at the moment. Each tax payer in this situation goes its way from the Federal Tax Service to the Pension Fund of the Russian Federation in search of its money.
As a rule, the procedure goes as follows:
- A tax payer receives a statement on budget settlements indicating outstanding debt and addresses tax authorities to solve the problem;
- Tax authorities reply that data uploading from the Pension Fund of the Russian Federation failed, and that a tax payer has to file an application to the Pension Fund of the Russian Federation on another data uploading;
- A tax payer files an application to the Pension Fund of the Russian Federation on another data uploading;
- The Pension Fund of the Russian Federation replies with the refusal due to technical malfunctions, prohibition of another data uploading or any other reasons.
Everything goes on a loop, when a tax payer delivers refusal letters and explanations from the Pension Fund of the Russian Federation to the Federal Tax Service and back, but with no result in the end.
The Federal Tax Service may even issue a document confirming validity of the data submitted by a tax payer, but a statement on budget settlements will still indicate outstanding debt.
Officially, in March the Federal Tax Service issued the letter (Letter of The Federal Tax Service No. ЗН-4-1/4593@ dated 15.03.2017) which explained that in case a tax payer disagrees with the calculated balance as of 01.01.2017, he shall address his regional fund as the Federal Tax Service did not manage insurance contributions before 01.01.2017. Tax authorities are entitled to make amendments to record cards on budget settlements only after submission of updated data by the Fund.
Numerous tax payers have already suffered from sanctions in the form of penalties, fines and even withholding of "phantom" outstanding debts from bank accounts by tax authorities.
Unfortunately, one cannot prevent debiting of bank accounts.
This situation resembles peculiar budget "advancing". The budget is replenished with the funds that tax payers would have paid in several months.
If tax authorities are clearly unwilling to comply with tax payers' requests, there are only two ways to solve this problem:
- To file a complaint to the superior tax authority or the Ministry of Finance of the Russian Federation;
- To file a lawsuit.
Fine for improper statements
The following question has been urgent for a long time:
Will the documents be deemed undelivered if they are filed to the Federal Tax Service in an improper form?
It is not infrequent that tax authorities refuse to accept statements from tax payers, because statements and documents were sent in the form of an ordinary letter with copies of basic documents attached thereto. Refusal to accept documents leads to the fine charged by the inspection for a failure to report information to a tax authority.
In 2017, a company filed a complaint on the said matter to the superior tax authority. The Federal Tax Service issued the resolution (Resolution No. СА-4-9/18214@ dated 13.09.2017) cancelling the fine and explaining that this fine shall be charged for a failure to report information, but not for reporting information in an improper format.
The Federal Tax Service clarified that provisions of the Tax Code contain no indication of the fact that statements submitted in an electronic form, but in an improper format, shall be deemed undelivered.
Let us recall that under the current legislation, statements on VAT shall be submitted only in an electronic form (via telecommunications channels), as VAT tax returns shall be filed to tax authorities only in an electronic form.
Due to the facts mentioned above, a tax payer is entitled to submit requested statements and required documents by sending an ordinary e-mail (via telecommunications channels) with copies of the documents attached without any fines charged for reporting information in an improper format.