Tax monitoring or 'horizontal monitoring' programmes have
been introduced across the world. This type of programme of
cooperative compliance has been available in Russia since
The number of companies joining this programme in Russia is
on the increase. In 2016 only six companies applied this
regime. However, by 2019, there will be 44 companies from
various sectors of the economy, including oil and gas, metals
and mining, telecoms, banking, and consumer goods, and services
participating in the programme. Tax authorities in Russia
actively encourage companies to join the tax monitoring
Applicants for the tax monitoring programme need to have an
internal control system ensuring the proper calculation and
payment of taxes. The more reliable and developed the internal
tax control system, the lower the volume of documents that tax
authorities may request during tax monitoring will be.
Tax monitoring in Russia also allows tax authorities to have
access to the company's accounting and tax data in real time.
Companies applying tax monitoring are exempt from standard
desktop and field tax audits and potential tax penalties.
Furthermore, tax authorities will close the reporting year for
the audit within nine months after the year-end (which provides
a strong advantage, as the standard period is three years).
Other advantages of tax monitoring include:
- The possibility of obtaining a ruling from
the Federal Tax Service on the tax treatment of particular
- Fewer requests are received from the tax
authorities in relation to providing copies of documents,
resulting in a decrease in compliance costs (as data and
copies of documents are available to tax authorities online);
- The mitigation of tax risks and
enhancement of the company's reputation.
At the moment, the tax monitoring regime is available only
for large companies that fulfil the following criteria:
- The amount of federal taxes paid is more
than RUB 300 million ($4.5 million);
- Income is at least RUB 3 billion; and
- The value of assets is at least RUB 3
Companies wishing to apply to participate in the tax
monitoring programme in 2020, should submit an application by
July 1 2019. In our experience, the preparation for tax
monitoring may require at least six months. Among other things,
the preparation includes a review of the company's tax
management system and the creation of a mechanism for
information exchange with the tax authorities.
The development of tax monitoring in Russia is an important
step towards improving the Russian tax system and building
trust between the tax authorities and businesses. We expect to
see more companies joining this programme in the future.
Ilarion Lemetyuynen (firstname.lastname@example.org) and Veronika Sergeeva (email@example.com)
KPMG Russia and CIS