Media & Resources
The Russian Tax Authorities (RTA) have clarified when entrepreneurial activities are considered “business splitting”
DATE: September 18, 2024 | AUTHOR: AT
Under the Russian Tax Code (RTC), if a taxpayer fails to meet the conditions for preferential tax regimes, they must switch to the general tax system.
“Business splitting” occurs when a taxpayer attempts to artificially meet the conditions for preferential tax regimes by distributing income, assets, and personnel among related entities. Although “business splitting” is illegal, there is no definitive list of criteria that prove this abuse. The RTA assesses each case individually.
In a letter dated 09.08.2024 N СД-4-7/9113, the RTA outlined several indicators of “business splitting,” including:
- Multiple companies with the same shareholders, managers, accountants, and employees;
- Shared IP addresses;
- Access to bank accounts from the same devices;
- Shared phone numbers, email addresses, and websites;
- Common business partners and representatives;
- Artificial document flow between companies.
These indicators are not exhaustive.
