News about business, accounting and taxes in Russia

Accounting Violations in Russia that Lead to Penalties

Taking care that transactions are duly documented is an important part of the Russian accounting process. Each operation has to be supported by an appropriate source document (or a set of documents). The checking of the accuracy of the figures reported by companies in their tax returns by asking companies to provide full sets of transaction documents for those transactions that attract their attention is a standard and very frequently used practice of the Russian tax authorities. For this reason, it is important for any business in Russia to be fully compliant with the legislation in this regard and to take care that all required documents are in place.

Fines are levied on taxpayers for gross violations of the requirements of the legislation on the accounting of income and expenses and taxable objects. According to the Russian Tax Code, a gross violation is when primary documents (like waybills, service acceptance protocols, invoices, contracts and bank statements) and accounting records are absent. Also, when various funds, inventory, fixed assets, and financial investments are chronically (twice or more during a calendar period) not reflected on the accounts, registers, accounting reports and tax filings.

Fines applicable for Russian taxpayers

In the case of a gross violation of accounting procedures, the minimum fine is 10,000 Russian rubles. The fine is imposed only for a violation that occurred during a single tax period. If the violation lasted longer than the specified time, the fine is 30,000 Russian rubles. When gross violation of the law causes a reduction in the tax base, the fine is 20% of the amount of the unpaid tax but not less than 40,000 Russian rubles.

In order to ensure that all transactions are duly documented, LowLands advises to use an electronic document exchange platform to automatize the exchange of documents with clients and suppliers and implements the use of such platforms as a standard part of its service package.
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