On 1 January 2019 Federal Law 231-FZ of 29 July 2018 will come into force, enabling the tax authorities to request client-related documents from auditors which constitute 'auditing secrets'. This law's introduction will mark the end of years of struggle by the Russian tax authorities to gain access to audit documents.

Key changes

Since the Tax Code's adoption in 1999, the tax authorities have had the right to collect from 'information sources' (ie, not from audited taxpayers) the information necessary to conduct a tax audit. However, an exception was made for information which constitutes advocacy or auditing secrets. As such, the tax authorities were prohibited from requesting such information from lawyers and auditors, respectively. This ban will cease to be effective with regard to auditors from 1 January 2019. At the same time, the concept of auditing secrets provided for in the Law on Auditing has been preserved. It is understood that any information received and compiled by an audit company and its employees, as well as individual auditors, will constitute 'auditing secrets'. Information disclosed by clients will not constitute auditing secrets. Audit companies must keep all documents that they receive from customers for three to five years (three years for all consulting and legal projects and five years for auditing services).

As of 1 January 2019 the above restriction will be lifted and the tax authorities will be authorised to solicit from auditor companies and individual auditors documents and information that they receive from clients when conducting audits and providing related services (eg, tax, accounting and counselling services).

This legislative initiative will implement the Organisation for Economic Cooperation and Development's recommendations following the results of the first review of Russian legislation under the Global Forum on Transparency and Information Sharing for Tax Purposes framework.

The head of the Federal Tax Service (FTS) or their deputy must make the decision to issue a request for client-related auditor documents. The tax authorities should use this opportunity in cases where a taxpayer has failed to provide documents during a field tax inspection. In other words, the tax authority conducting the inspection should first try to obtain the necessary documents directly from the taxpayer.

If the tax authority receives no such documents from the taxpayer, the head or deputy head of the FTS (ie, the main apparatus of the tax service and not the usual territorial tax inspector) will decide whether to request the necessary information from the audit company. In order to substantiate such a request, the following details of the decision to conduct an on-site tax inspection should be specified:

  • the date of submission of the request for documents;
  • the deadline to submit the documents;
  • information on the consequences of failing to submit documents in time;
  • information on the auditor;
  • a description or other information allowing the auditor to identify the requested documents.

Following specification of the above details, the Federal Tax Service's demand will be issued to the auditor at its place of registration.

The new law will also allow the Russian tax authorities to retrieve audit documents on request from the competent authority of a foreign state in the cases provided for by international treaties in respect of Russian taxpayers.

Since such a demand for audit documents is possible only by a decision of the head or deputy head of the FTS, it will seldom be used. Essentially, it is a tool to be used in emergency situations. Documents that serve as grounds for the calculation and payment (eg, withholding and transfer) of tax (including insurance premiums) may be requested from auditors on receipt of a request from the competent authority of a foreign state or other documents which prove that the Russian tax authority can execute such a request.

Auditors must submit the relevant documents to the tax authority at its place of registration within 10 days from receipt of the request. Further, they must inform clients of a request from the tax authorities to provide documents that concern them and which documents are submitted, unless Russian law prohibits this. An exception applies to cases where the request of the competent authority of a foreign state contains a prohibition on informing clients of such a request.


At present, it is difficult to predict how the changes to the law will affect auditor-client relationships. Although these changes carry no significant risks for bona fide taxpayers, the business community is concerned that the authorities may be able to request auditors' documents and opinions on related services, such as accounting and tax consulting.

In the face of the constantly changing tax legislation, many issues regarding the calculation and payment of taxes are controversial. Taxpayers often seek opinions on such issues from consultants, including auditing firms. Thus, it is feared that under the new law, auditors will have to submit documents that disclose the content of these consultations on disputable tax issues, which may result in the tax authorities submitting additional tax claims.

Originally published by International Law Office (ILO)

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