In a letter dated 24 October 2012, the Federal Tax Service of the Russian Federation (the "FTS") clarified that sums of VAT which are not withheld and not paid by tax agents must be reflected as tax arrears in the decision on imposition (or non-imposition) of sanctions for the commission of a tax offence.

The FTS emphasised that such a position is supported by rulings of the Presidium of the Supreme Commercial Court of the Russian Federation (the "SCC") dated 13 January 2011 and 3 April 2012.

The FTS also stipulated that the documented circumstances of the tax offence committed by the tax agent must be reflected in the descriptive part of the decision on imposition (or non-imposition) of sanctions for the commission of a tax offence.

In summary, tax agents that fail to fulfill their obligation to withhold and pay VAT are liable for this offence and these sums of VAT are reflected as tax arrears in the decision of the tax authority on imposition (or non-imposition) of sanctions. If a tax agent decides to challenge such a decision in court, taking into consideration the above position of the SCC, there is a real risk that the court may render a decision in favour of the tax authority.

[Letter No. АS-4-2/18029@ of the Federal Tax Service of the Russian Federation, dated 24 October 2012; Ruling No. 10067/10 of the Presidium of the Supreme Commercial Court of the Russian Federation, dated 13 January 2011; Ruling No. 15483/11 of the Presidium of the Supreme Commercial Court of the Russian Federation, dated 3 April 2012]