The Desk Tax Audit in Russia: Three Months, Explanations and Corrected Returns

A desk tax audit (kameralnaya proverka) is a check that the tax authority carries out at its own office on the basis of the return or calculation the taxpayer filed, the documents he submitted and the information the authority already holds. Under Article 88 of the Tax Code it takes, as a general rule, three months from the date the return was filed. VAT returns have a shorter period of two months, and audits based on an application under Article 221.1(2) take thirty calendar days.

Every filed return can lead to a desk audit, and most are routine. The taxpayer notices them only when a letter arrives asking for explanations. This guide explains what the audit covers, the time limits, the five-day explanation request, what documents the authority may demand, how a corrected return changes the audit and what happens when a violation is found.

What a Desk Audit Is

The audit is not an on-site inspection. The inspector compares the data in the return with the documents submitted with it and with the information in the authority's databases: other taxpayers' returns, bank data, customs data. Discrepancies lead to a request for explanations.

The audit is automatic and has no separate decision to start it. The three months run from the filing date, and the inspector does not need to inform the taxpayer when it starts.

For a foreign-owned company, the usual triggers are VAT refunds, large expenses with foreign counterparties, loss-making periods and transactions with related parties. These are not signs of a violation, but they receive closer attention.

Time Limits

Article 88 sets three months from the date of filing as the general period. For VAT returns it is two months, and six months for certain foreign entities. For the audit based on the application under Article 221.1(2), thirty calendar days apply.

The authority may extend the audit up to three months from filing for VAT and Article 221.1 applications when there are signs of a possible violation, and the head or deputy head of the authority decides. The commentary notes that the general three-month period has no extension mechanism.

If the authority exceeds the period, the results of the audit are open to challenge, and the taxpayer should record the date of filing and the date of any act. A late act is a ground for appeal, but its effect depends on the facts.

The Five-Day Request for Explanations

If the inspector finds errors, contradictions or discrepancies with the authority's own data, he must notify the taxpayer and require explanations within five days or corrections within a set period (Article 88(3)). Periods in the Tax Code counted in days mean working days (Article 6.1), so the five days are working days. The taxpayer may also submit supporting documents, such as ledger extracts.

The five days are short, and the reply should be written, specific and supported by documents. A general statement that the data are correct does not help if the inspector has found a mismatch. The reply should identify the line of the return, the source of the difference and the document that supports the taxpayer's position.

If the taxpayer cannot reply in five days, he can ask in writing for more time, but he should also send a partial answer. A company that fails to answer at all increases the risk that the inspector will draw conclusions without its explanation.

Limits on Document Requests

The inspector may not demand additional documents in a desk audit unless the Article allows it. The commentary says that where no errors are found, there is no basis to request primary accounting documents. A request for them in the absence of errors is open to challenge.

For the cases where documents are allowed, the separate Article 93 sets the periods and the form of the reply, as another page on this site describes. The taxpayer should read the request carefully and compare it with the grounds for requesting in the Code.

Where the request is lawful, the taxpayer should comply in full and on time. Failure to submit requested documents on time is a tax offence under Article 126, and in some situations the Code allows the inspector to take further control measures.

Corrected Returns During the Audit

If the taxpayer files a corrected return before the audit ends, the audit of the original return stops and a new audit of the corrected return begins. The new period runs from the filing of the correction.

This is a tool and a risk. Correcting an error voluntarily before the authority finds it can reduce the consequences, but a correction submitted late in the audit may restart the clock and invite deeper questions. The decision should follow an assessment of the size of the error.

A taxpayer who finds a mistake after the audit has ended can still file a corrected return, with the consequences that the Code provides for the period and for the tax paid.

When a Violation Is Found

If, after reviewing the explanations and documents, the inspector finds a violation, he draws up an audit act under Article 100. The taxpayer receives the act, has the right to submit objections and to take part in the consideration of the materials, and then receives the decision.

The objections to the act are the most important written document in the dispute. They should respond point by point, attach evidence and refer to the legal provisions. After the decision, the taxpayer may appeal to the higher tax authority and then to the arbitrazh court.

A decision on additional tax comes with penalties and interest. The taxpayer should check the calculation and the period to which it relates.

Practical Steps

Record the filing date and calendar the three-month, two-month or thirty-day period. Monitor the personal account for notices. Reply to the request for explanations within five days with documents. Check whether the inspector's request for documents is within the Article. Decide whether a corrected return is appropriate. Prepare objections to the act if it is issued.

The attorney prepares responses to the tax authority and objections to audit acts, and represents taxpayers on appeal. First review covers the return, the request and the documents.

The main channel of communication with the attorney is email: attorneypetrova1@gmail.com.