Changes in legislation

Tax monitoring as a new form of control was introduced in a separate section "V.2." in part one of the Tax Code of the Russian Federation by the Federal Law No. 348-FL of November 4, 2014.

Tax monitoring consists in providing tax authorities with access to taxpayers' accounting records for real-time control. If errors are found in accounting, the tax authorities are obliged to inform taxpayers about this.

This form of control is possible only upon a voluntary application of taxpayers and a decision of the tax authorities under the certain conditions.

The Federal Law No. 470-FL of December 29, 2020, amended the RF Tax Code providing for a significant reduction in the criteria for tax monitoring.

In particular,

• the amount of taxes paid for a calendar year has been reduced from 300 to 100 million RUB;
• the annual total volume of income received and total value of assets has been reduced from 3 to 1 billion RUB.

In addition, the changes affected the grounds for conducting on-site inspections for the period when tax monitoring is carried out. Thus, on-site inspections are carried out in case of non-fulfillment by the taxpayer of the reasoned conclusions of the tax authorities before December 1 of the year following the period of tax monitoring. Previously, this period was not set. Clarification of tax returns with an increase in loss can also be a reason for on-site inspections.

The amendments also provide for:

• the right of officials of tax authorities conducting tax monitoring to demand from counterparties or other persons documents or information regarding the activities of taxpayers;
• the duty of tax authorities to notify taxpayers in electronic form about the appearance of grounds for early termination of tax monitoring and the right of taxpayers to provide appropriate explanations in this regard.

According to the Federal Tax Service of the Russian Federation, in 2017 tax monitoring was carried out in 21 organizations, in 2020 - in 95. Based on the results of consideration of the submitted applications, in 2021 this form of tax control will be applied for 209 companies.

Reducing the criteria for tax monitoring provides the potential for such control to be carried out on more than 5,000 taxpayers. Calculations are based on the data from the Information and Analytical system Globas.