Some explanations.

What is the novelty of our service?

In the market of tax optimization services there is a big number of audit and consulting organizations. However, none of them advises taxpayers to file claims against tax authorities . Nevertheless, tax law has many disputable issues.

The novelty of the service is that it provides for disputable matters be considered in the most civilized manner, i.e., through court procedures. If a court decides that the disputable matter in question should be settled in favor of the taxpayer, then a real chance appears to challenge the disputable amounts of taxes paid for the last periods (for three and more years), and there is a reliable guarantee for the future periods. The value of benefits derived from the above is substantial.

Examples.

1 Many major enterprises maintain their own building subdivisions to carry out building projects for their fixed basic production assets. All expenditures incurred therewith, in the opinion of tax authorities should be referred to (value) realization with subsequently charged indirect taxes on such expenditures (in the region of 24 % of the said expenditures )

Altogether, the said position of tax authorities is not based on the provisions of law as it proceeds from the violently interpreted term of "realization". This interpretation is contradictory to the concept of realization which is established in Part 1 of the first Tax Code of the Russian Federation.

2. The same can be applied also to all other instances, when indirect taxes are charged, for example, on inter- company sales proceeds, when an enterprise consumes fuel and lubricants for its own production purposes. Tax authorities equalled the said expenditures to realization and force the taxpayer to impute excise taxes on such amounts.

3. There is an urgent problem with the obtaining of privilege for VAT on export deliveries.

Recently, RF Ministry for Taxes and Charges disseminated through media its letters and explanations, wherein it established that exporters must present additional documents to evidence the right to the said tax privilege, though such documents are not expressly required by law. Apart from that, when export proceeds are transferred to the other than the direct exporter (owner of the exported goods) account, such privilege is denied by tax authorities. The analysis of the legislation provisions allows to make a conclusion that the said position of the RF Ministry of Taxes and Charges is unlawful.

4. It is provided in Tax Code that for the purpose of discharging tax liability only strictly fixed mandatory charges are established as payable to the state budget, and specifically the following :

• taxes;
• charges;
• fines;
• penalties.

However in several instances taxpayers are liable to impute and pay extra amounts referred to tax on profit, and also fines on advance payments, if such payments exist. Comparison of such concepts, as " tax", "arrears", "method of payment of tax", "advance payment", "extra payment", "right to collection without recourse to the court" allow to challenge the position of the RF Ministry of Taxes and Charges on the base of Tax Code provisions.

There are still many disputable matters when the opinion of tax authorities may be challenged with sufficient confidence. Under the obvious reasons these issues are not discussed in this document because such issues are specific for each particular enterprise.

As it has been already noted, the court proceedings are the most civilized way for resolving disputes. The effective Tax Code of the Russian Federation granted to taxpayers the most substantial arguments in their disputes with tax authorities. Judges received the appropriate legislative act to be governed by in their decisions and the provisions of the said act very often leaves no chance for the taxation authorities to interpret the disputable matters to their own advantage and benefit. Costs of filing a statement of claim by a taxpayer are minimal (10 minimal established wages), but the benefits are substantial. No executory process exists with regards to such kind of claims.

The novelty of the service is also that it is a taxpayer himself who initiates a dispute in court, who "pulls out" the tax inspection to trial in court. In order to successfully handle this procedure, it is necessary to have specific knowledge of procedural issues related to mutual relationship between the taxpayer concerned and tax authorities.

It would be interesting to deal with the challenged sums starting from 5 mln roubles (USD200, 000.00). The rates are approximately as follows:

• 10 % of the amount awarded to taxpayer by the court decision in force ( up to 5 mln roubles - 15%) ;

• services are paid on a contingency basis ( some costs shall be paid by the client which are travelling expenses and accommodation of the specialists to be engaged, state duty, etc.)