Participation of foreign competent authorities in a tax inspection

Participation of foreign competent authorities in a tax inspection

Participation of foreign competent authorities in a tax inspection

LEGAL DIGEST \ 19.03.2020

The Federal Tax Service has developed a document defining the procedure for the interaction of competent authorities of a foreign state with Russian supervisory authorities during tax inspections of companies.

In accordance with the new document, communication with foreign supervisory authorities may be carried out via mail (including e-mail), fax, telephone conversations or the conducting of meetings. The choice of a particular method depends on the terms of the double tax treaty concluded between Russia and the foreign state in question.

The participation of a competent foreign authority in a tax inspection takes the form of information exchange and is only possible on the basis of a request sent to the Federal Tax Service of the Russian Federation (referred to below as the FTS). The deadline for making a decision to consider or to refuse to consider such a request is 5 working days from the date of its receipt. 

The reasons for refusal may be:

– insufficient information when identifying the competent authority of a foreign state and its representatives;

– non-compliance with the international standard for information exchange;

– non-compliance with the principle of reciprocity.

If there are no reasons for refusal, the deadline for consideration of the request is 40 working days after its receipt. Based on the results of the consideration, the Head of the FTS makes a decision that the competent foreign authority will participate in the tax inspection or a decision to refuse to comply with the request. If the decision is positive, the FTS must inform the foreign authority of the following information:

– an indication of the tax authority and contact persons who made the decision to conduct a tax inspection;

– the time when and place where the inspection will be conducted;

– the procedure and conditions for conducting the inspection;

– the conditions for the competent foreign authority to participate in the tax inspection.

If necessary, foreign authorities may request access to documents that were obtained by the Russian FTS during the inspection. However, in order to do this, foreign supervisory authorities should comply with the requirements of the Russian legislation On State Secrets and the provisions of international taxation agreements of the Russian Federation.

If you have any questions about the conducting of tax inspections by the supervisory authorities, please contact Acsour’s specialists.