In July 2024, the Arbitrazh Court of Tomsk Region reduced a previously imposed tax penalty by eight times, citing the economic pressure of sanctions on the Russian economy. The court noted that it took into account the “character of the offense” and the need to “maintain the financial stability of the organization’s economic activity and counteract negative economic consequences” when making the decision.
Similarly, in December 2023, the Arbitrazh Court of Orenburg Region partially satisfied the requirements of an individual entrepreneur and recognized the invalidity of additional VAT and income tax, as well as fines and penalties. The court cited the “economic situation in the country, caused by sanctions pressure from unfriendly countries, the need to ensure import substitution, competitiveness, and protection from external threats” as a reason for its decision.
In another case, in March 2024, the Arbitrazh Court of Moscow ruled in a dispute between an oil company and the tax inspection that it is unacceptable to impose very high fines on companies in the oil sector, given the unprecedented economic sanctions in the oil and gas sector aimed at “destroying the oil industry of our [Russian] state, reducing GDP indicators, and creating a budget deficit”. The court ordered the tax authority to reduce the fine by 16 times, but the appeal court later overturned this decision due to the taxpayer’s refusal to claim.
According to Article 112 of the Tax Code of Russia, any circumstances can be recognized as mitigating factors for tax offenses. Article 114 states that if there is at least one mitigating circumstance, the fine should be reduced by at least half.
While it is not yet standard practice, courts and tax authorities are now taking into account the impact of sanctions on businesses. This means that companies may be able to reduce their tax liabilities if they can demonstrate that sanctions have affected their operations or financial decisions.