Criminal Liability for Tax Crimes: Article 199 of the RCC

What Are the Elements of Tax Crimes?

The system of criminally punishable tax offenses in the Russian Federation is represented by several articles of the Criminal Code, each with its own specifics and object of infringement. The main body of such acts is concentrated in Chapter 22 of the RCC, "Crimes in the Sphere of Economic Activity."

The key offenses are: * Article 198 of the RCC – Evasion of taxes, fees, and (or) insurance premiums payable by an individual. This provision regulates the liability of citizens who are not individual entrepreneurs for non-payment of personal taxes (e.g., personal income tax upon the sale of property, land tax, transport tax). * Article 199 of the RCC – Evasion of taxes, fees, and insurance premiums payable by an organization. This article is the subject of our detailed review and applies to legal entities. * Article 199.1 of the RCC – Failure to fulfill the duties of a tax agent. Provides for liability for failure to transfer or incomplete transfer to the budget of tax amounts that an organization or individual entrepreneur was obliged to withhold and transfer (e.g., personal income tax from employees' salaries). * Article 199.2 of the RCC – Concealment of funds or property of an organization or individual entrepreneur, at the expense of which taxes, fees, and insurance premiums should be collected. This offense occurs after the tax authority has made a decision to collect arrears, and the guilty party has taken actions to conceal assets. * Articles 199.3 and 199.4 of the RCC – Evasion of insurance premiums for compulsory social insurance against industrial accidents and occupational diseases (Article 199.3) and evasion of insurance premiums to state extra-budgetary funds (Article 199.4). These articles regulate liability for evasion of insurance premiums not mentioned in Articles 198 and 199 of the RCC and have their own threshold values.

The most important guideline for law enforcement practice is the Resolution of the Plenum of the Russian Supreme Court No. 48 of November 26, 2019, "On Judicial Practice in Cases of Crimes Provided for by Articles 198, 199, 199.1, 199.2 of the Criminal Code of the Russian Federation." This document contains detailed clarifications on all key aspects of qualification, subjects, methods of commission, and grounds for exemption from liability, serving as a desk reference for investigators, prosecutors, and judges.

The relationship between Article 199 of the RCC and Article 198 of the RCC lies in the difference in the subject of the crime: Article 198 of the RCC applies to individuals, while Article 199 of the RCC applies to organizations. At the same time, it is important to understand that criminal liability under Article 199 of the RCC is always personalized and imposed on specific individuals who actually directed the organization's activities and made decisions regarding evasion.

Elements of the Crime under Article 199 of the RCC

To be held criminally liable under Article 199 of the RCC, all elements of the crime must be present: the object, the objective side, the subject, and the subjective side.

The object of the crime is the social relations associated with the formation of the state budget and extra-budgetary funds through the timely and full payment of taxes, fees, and insurance premiums.

The objective side of the crime provided for in Part 1 of Article 199 of the RCC is expressed in the evasion of taxes, fees, and insurance premiums payable by an organization in one of two ways: 1. Failure to submit a tax return (calculation) or other documents, the submission of which is mandatory in accordance with the legislation of the Russian Federation on taxes and fees. This method involves completely ignoring the obligation to submit reports, where the tax authority receives no information about the tax base. 2. Inclusion of knowingly false information in a tax return (calculation) or such documents. This is the most common method of evasion, which can manifest in various forms: * Understatement of the tax base: Reducing income, overstating expenses, unlawful application of benefits. For example, concealing revenue from the sale of goods (works, services), reflecting fictitious expenses for non-existent transactions. * Unjustified VAT deductions: Claiming VAT deductions based on fictitious invoices received from shell companies without actually carrying out business operations. This is one of the most frequent grounds for criminal prosecution. * Application of special tax regimes without legal grounds: For example, continuing to apply the simplified taxation system (STS) after exceeding the established limits for income or number of employees, or artificial business fragmentation (business splitting) to formally retain the right to the STS. * Use of shell companies ('technical' counterparties): Creating or using a chain of fictitious counterparties to create the appearance of real business operations aimed at unjustifiably obtaining tax deductions or reducing the tax base. * Failure to reflect objects of taxation: For example, concealing property subject to taxation or incompletely reflecting operations that form the tax base.

The crime is considered completed from the moment of actual non-payment of taxes (fees, premiums) on a large or especially large scale within the period established by tax legislation, after submitting a tax return (calculation) containing knowingly false information, or after the expiration of the period established for submitting a return (calculation) if it was not submitted at all.

The subject of the crime under Article 199 of the RCC is a sane individual who has reached the age of 16 and is entrusted with the duties of calculating and (or) paying taxes, fees, and insurance premiums for the organization. As a rule, this is: * The head of the organization (general director, director). * The chief accountant (accountant). * Another authorized person actually managing the financial and economic activities of the organization (e.g., founder, financial director, commercial director, if they actually made decisions regarding evasion). * Persons who organized the commission of the crime or induced its commission (organizers, instigators, accomplices).

It is important to note that criminal liability does not arise automatically by virtue of a position. It must be proven that this specific individual had direct intent to evade and committed specific actions (or omissions) that led to non-payment.

The subjective side is characterized by direct intent. This means that the guilty person was aware of the social danger of their actions (omissions), foresaw the possibility or inevitability of socially dangerous consequences in the form of non-payment of taxes on a large or especially large scale, and desired their occurrence. * The person must be aware that they are not submitting a return or are including knowingly false information in it. * The person must understand that these actions will lead to non-payment of taxes to the budget. * The person must desire precisely such non-payment.

The absence of direct intent (e.g., calculation errors, negligence, incompetence) precludes criminal liability under Article 199 of the RCC, although it may entail administrative or tax liability. Proving direct intent is one of the key tasks of the investigation and one of the main lines of defense.

Threshold Amounts: Large and Especially Large Scale

The amount of unpaid taxes, fees, and insurance premiums is a mandatory element of the crime under Article 199 of the RCC and determines the qualification of the act (Part 1 or Part 2 of the article). Without reaching the established threshold amounts, criminal liability does not arise.

According to Note 1 to Article 199 of the RCC (as amended by Federal Law No. 78-FZ of March 18, 2023):

* A large scale is recognized as an amount of taxes, fees, and insurance premiums exceeding eighteen million seven hundred fifty thousand rubles (RUB 18,750,000) for a period within three consecutive financial years. * An especially large scale is recognized as an amount exceeding fifty-six million two hundred fifty thousand rubles (RUB 56,250,000) for a period within three consecutive financial years.

Important aspects of calculating threshold amounts:

1. Calculation period: The amount of unpaid taxes, fees, and insurance premiums is calculated for a period within three consecutive financial years. This means that to determine a large or especially large scale, arrears formed during any three consecutive financial years are summed up. For example, this could be 2021, 2022, 2023 or 2022, 2023, 2024. 2. Aggregate of all unpaid payments: To reach the threshold values, all unpaid taxes, fees, and insurance premiums payable by the organization are summed up. This can be a combination of arrears on VAT, corporate income tax, property tax, insurance premiums, etc. 3. Exclusion of penalties and fines: When determining a large or especially large scale, only the amounts of the taxes, fees, and insurance premiums themselves are taken into account. Penalties and fines assessed by the tax authority are not included in these amounts. 4. Actual non-payment: For qualification under Article 199 of the RCC, actual non-payment is essential. If the taxpayer submitted an amended return and paid the arrears before the expiration of the payment deadline or before the tax authority discovered the violation, the elements of the crime are absent.

Case study: The head of an organization systematically understated the corporate income tax base and unjustifiably applied VAT deductions during 2021, 2022, and 2023. Based on the results of a tax audit, it was established that the total amount of unpaid taxes for this period amounted to RUB 20,000,000. Since this amount exceeds RUB 18,750,000, the act will be qualified as evasion on a large scale under Part 1 of Article 199 of the RCC. If the amount exceeded RUB 56,250,000, the qualification would be under Part 2 of Article 199 of the RCC.

The increase in threshold amounts by Federal Law No. 78-FZ of March 18, 2023, is aimed at decriminalizing less significant tax offenses, transferring them from the sphere of criminal to tax legislation. This means that criminal prosecution will only be applied to the most serious cases of evasion.

Penalties for Tax Crimes

The sanctions provided for by Article 199 of the RCC are quite severe and can include both fines and imprisonment. The type and severity of the penalty depend on the qualification of the act (large or especially large scale, as well as the presence of qualifying features).

Part 1 of Article 199 of the RCC (evasion on a large scale): * A fine ranging from one hundred thousand to three hundred thousand rubles, or in the amount of the convicted person's wage or other income for a period of one to two years. * Forced labor for a term of up to two years, with or without deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years. * Arrest for a term of up to six months. * Imprisonment for a term of up to two years, with or without deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years.

The crime provided for in Part 1 of Article 199 of the RCC is classified as a crime of medium gravity.

Part 2 of Article 199 of the RCC (evasion on an especially large scale or by a group of persons by prior conspiracy): * A fine ranging from two hundred thousand to five hundred thousand rubles, or in the amount of the convicted person's wage or other income for a period of one to three years. * Forced labor for a term of up to five years, with or without deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years. * Imprisonment for a term of up to six years, with or without deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years.

The crime provided for in Part 2 of Article 199 of the RCC is classified as a grave crime.

Additional penalty: An important element of the sanctions under both parts of Article 199 of the RCC is the possibility of imposing a deprivation of the right to hold certain positions or engage in certain activities. This penalty can be imposed as a primary penalty (in the case of forced labor) or as an additional penalty to a fine or imprisonment. For executives and accountants, this means a ban on professional activity for a certain period, which can have serious consequences for their careers and reputations.

When imposing a penalty, the court considers many factors: the nature and degree of public danger of the crime, the identity of the guilty person, and the presence of mitigating and aggravating circumstances (e.g., presence of criminal records, active assistance in solving the crime, voluntary compensation for damages). The presence of mitigating circumstances can lead to a more lenient penalty, up to a suspended sentence or exemption from punishment.

Grounds for Exemption from Criminal Liability

Criminal legislation provides for a number of mechanisms allowing a person who has committed a tax crime to be exempted from criminal liability. These mechanisms incentivize voluntary compensation for damages to the state.

1. Full payment of arrears, penalties, and fines (Note 2 to Article 199 of the RCC): This is the most significant and frequently applied ground for exemption. A person who has committed a crime provided for by Articles 198–199.2 of the RCC for the first time is exempted from criminal liability if they have fully paid the amounts of arrears, penalties, and fines in the amount determined in accordance with the legislation of the Russian Federation on taxes and fees. * Key condition: Payment must be made before the scheduling of a court hearing. If the case has already been transferred to court and a hearing date has been set, this ground generally no longer applies. * Scope of payment: It is necessary to pay not only the arrears themselves but also the penalties assessed by the tax authority, as well as fines. * "Committed a crime for the first time": This means the absence of an unexpunged or uncancelled criminal record for a similar crime. * Mechanism: Upon fulfillment of these conditions, criminal prosecution is terminated at any stage — from the pre-investigation inquiry to the trial. This is a non-rehabilitating ground, meaning the fact of committing the crime is recognized, but the person is exempted from liability.

Case study: In one of the cases reviewed by the Russian Supreme Court (Ruling of the Supreme Court of the Russian Federation No. 5-UD17-74 of June 20, 2017), it was confirmed that if the accused fully compensated the damage, including penalties and fines, before the scheduling of a court hearing, the criminal case is subject to termination based on Note 2 to Article 199 of the RCC. This underscores the mandatory nature of this provision.

2. Expiration of the statute of limitations for criminal prosecution (Article 78 of the RCC): A person is exempted from criminal liability if the following periods have elapsed since the day the crime was committed: * 2 years after the commission of a crime of minor gravity. * 6 years after the commission of a crime of medium gravity (Part 1 of Article 199 of the RCC). * 10 years after the commission of a grave crime (Part 2 of Article 199 of the RCC). * 15 years after the commission of an especially grave crime.

The statute of limitations begins to run from the day the crime is committed and is suspended if the person evades investigation or trial. The moment of committing a crime under Article 199 of the RCC is considered the expiration of the deadline set for the payment of the tax (fee, premium), or the submission of a return with knowingly false information.

3. Active repentance (Article 75 of the RCC): A person who has committed a crime of minor or medium gravity for the first time may be exempted from criminal liability if they voluntarily surrendered, assisted in solving and investigating the crime, compensated for the damage caused, or otherwise made amends for the harm. * Limited application: For Article 199 of the RCC, this ground is rarely applied, since Part 1 is a crime of medium gravity and Part 2 is a grave crime. However, if all the conditions of Article 75 of the RCC are met, and at the same time Note 2 to Article 199 of the RCC is not applicable (e.g., if the damage is not fully compensated, but the person actively assisted in solving the crime), the court may consider the possibility of exemption. The Plenum of the Supreme Court of the Russian Federation in Resolution No. 48 clarifies that if a person who committed a tax crime cannot be exempted from liability under Note 2 to Article 199 of the RCC (e.g., did not fully compensate the damage), but all the conditions of Article 75 of the RCC are met, the court may apply active repentance.

It is important to understand that each of these grounds has its own strict conditions for application, and their use requires deep legal knowledge and a competent legal position.

How Is a Criminal Case Initiated under Article 199 of the RCC?

The procedure for initiating criminal cases on tax crimes, including under Article 199 of the RCC, has its own specifics and has undergone significant changes in recent years. The most significant changes were introduced by Federal Law No. 51-FZ of March 9, 2022.

Standard initiation procedure (after Federal Law No. 51-FZ of March 9, 2022):

1. Tax audit: A criminal case under Article 199 of the RCC is usually initiated based on materials obtained during a tax audit (desk audit or field tax audit). The tax authority identifies the fact of non-payment of taxes, fees, or insurance premiums on a large or especially large scale. 2. Decision of the tax authority: Based on the results of the audit, the tax authority issues a decision on holding the taxpayer liable for committing a tax offense, which records the amount of arrears, penalties, and fines. 3. Entry of the decision into force: The decision of the tax authority must enter into legal force. This occurs either upon expiration of the appeal period or after the appeal is reviewed by a higher tax authority or a court. 4. Non-payment within 75 days: After the decision enters into force, the taxpayer is given 75 days to voluntarily pay the additionally assessed amounts. 5. Forwarding materials to the IC: If, upon the expiration of 75 days from the moment the decision enters into force, the taxpayer has not fully paid the arrears, penalties, and fines, the tax authority is obliged to forward the relevant materials to the Investigative Committee of the Russian Federation (IC) to decide on initiating a criminal case. This requirement is enshrined in Article 32 of the Russian Tax Code and Article 144 of the Russian Criminal Procedure Code.

This procedure is the primary one and is designed to ensure the priority of tax control and the possibility of voluntary settlement before the start of criminal prosecution.

Parallel investigation (initiation of a case before the completion of a tax audit):

Despite the established procedure, there are situations where a criminal case can be initiated before the tax audit is completed and the decision enters into force. This is the so-called "parallel investigation." * Grounds: The IC may initiate a criminal case for a tax crime if there is sufficient data indicating the elements of a crime obtained from other sources. Such sources may include: * Materials from operational-search activities (OSA) of internal affairs bodies (Department for Combating Economic Crime - OBEP / UEBiPK). * Statements from citizens or organizations. * Materials from other criminal cases (e.g., fraud, money laundering) during the investigation of which signs of tax evasion were discovered. * Media reports. * Specifics: In such cases, the IC initiates a case and then sends a request to the tax authority to conduct an audit and provide a conclusion on the presence of arrears and their amount. The tax authority is obliged to conduct such an audit and provide a conclusion within the established timeframes. Without a conclusion from the tax authority on the presence of arrears and their amount, a criminal case under Article 199 of the RCC cannot be sent to court.

The role of the tax authority in a criminal case:

The tax authority plays a key role at all stages of the criminal process for tax crimes: * Initiator: In most cases, it is the tax authority that identifies the crime and forwards the materials to the IC. * Expert: Tax inspectors may be involved as specialists or experts to provide conclusions on taxation issues and calculations of arrears. * Victim: The state, represented by the tax authority, is recognized as the injured party, and the tax authority represents its interests in the criminal case, filing a civil claim for damages. * Provision of evidence: Materials from the tax audit (acts, decisions, documents obtained during the audit) are important evidence in a criminal case.

Understanding this procedure is critically important for building an effective defense, as it allows foreseeing the actions of law enforcement agencies and responding to them in a timely manner.

Interaction Between Tax Audits and Criminal Investigations

The interaction between a tax audit and a criminal investigation is one of the most complex and sensitive aspects for taxpayers. These two processes, although regulated by different codes (the Russian Tax Code and the Russian Criminal Procedure Code), are closely intertwined and can have far-reaching consequences.

Stages of interaction:

1. Pre-audit analysis: Tax authorities actively use analytical tools (e.g., ASK NDS-2 (FTS automated VAT control system)) to identify potential risks and "gaps" in counterparty chains. At this stage, a dossier on the taxpayer is formed, and a decision is made on the feasibility of conducting a field tax audit. 2. Tax audit (field tax audit or desk audit): At this stage, the tax authority collects evidence of a tax offense. Requests for documents, interrogations of witnesses (employees, counterparties), and inspections of territories and premises are conducted. All collected materials are recorded in the audit act. 3. Tax audit act: Based on the results of the audit, an act is drawn up detailing the identified violations, their documentary evidence, and the amount of additional assessments. The taxpayer has the right to submit objections to the act. 4. Decision based on the results of the tax audit: After reviewing the objections and audit materials, the head (deputy head) of the tax authority issues a decision on holding the taxpayer liable for committing a tax offense. This decision specifies the amounts of arrears, penalties, and fines. 5. Forwarding materials to the IC: As noted above, if the decision of the tax authority has entered into force and the taxpayer has not paid the additionally assessed amounts within 75 days, the audit materials are forwarded to the Investigative Committee of the Russian Federation to decide on initiating a criminal case under Article 199 of the RCC.

Tax audit materials as evidence in a criminal case:

Tax audit materials (acts, decisions, interrogation protocols, expert conclusions, seized documents) can be used as evidence in a criminal case. However, their procedural status and evidentiary value in criminal proceedings have their own specifics: * The investigator is obliged to verify the legality and validity of the tax authority's conclusions. * Documents obtained during the tax audit must be properly attached to the criminal case file and examined in accordance with the rules of the Russian Criminal Procedure Code. * The conclusions of the tax audit are not prejudicial to the criminal court, meaning the court is not bound by them and must independently evaluate all evidence.

Interrogation during a tax audit vs. interrogation in a criminal case:

This is one of the key differences that taxpayers often underestimate: * Interrogation during a tax audit (Article 90 of the Russian Tax Code): The person is interrogated in the status of a witness. They are obliged to testify but have the right not to testify against themselves and their close relatives (Article 51 of the Russian Constitution). However, tax inspectors typically do not fully explain this right. Testimony given at this stage can become the basis for charges in a criminal case. * Interrogation in a criminal case (Articles 187-190 of the Russian Criminal Procedure Code): A person may be interrogated in the status of a witness, suspect, or accused. The rights of a suspect/accused are significantly broader: the right to a defense attorney from the moment of actual detention or the first interrogation, the right to remain silent, the right to review case materials, and file motions.

Rights during the audit stage vs. rights in criminal proceedings:

* During the tax audit stage: The taxpayer has the right to review audit materials, submit objections, appeal the act and decision, and have their representative (attorney) present during interrogations. However, the attorney has limited powers at this stage. * During the criminal proceedings stage: From the moment a criminal case is initiated and a suspect/accused appears, all guarantees provided by the Russian Criminal Procedure Code and the Russian Constitution come into effect, including the right to qualified legal assistance from a defense attorney, who has significantly broader powers.

Ignoring these differences and underestimating the risks at the tax audit stage often leads to individuals who later become accused giving testimony that is then used against them in the criminal case.

Defense Strategy in a Tax Criminal Case

An effective defense strategy in a tax criminal case requires a comprehensive approach and the timely involvement of a qualified attorney. The mistake many make is seeking help only after a criminal case has been initiated, when a significant portion of the evidence has already been collected by the investigation.

The importance of involving an attorney AT THE TAX AUDIT STAGE: This is a key thesis. An experienced tax and criminal attorney can: * Prevent the forwarding of materials to the IC: By challenging the act and decision of the tax authority, submitting amended returns, and voluntarily paying arrears (if appropriate and possible). * Control the interrogation process: Be present during interrogations of employees and management, explain rights, adjust wording, and prevent the giving of testimony that could be used against the client. * Collect evidence of innocence: A tax audit is not only the collection of prosecution evidence but also an opportunity for the defense to collect its own evidence that can refute the arguments of the tax authority. * Assess risks: An attorney can assess the likelihood of a criminal case being initiated in advance and develop preventive measures.

Stage 1: Defense at the tax audit stage (preventing criminal prosecution): * Analysis of the act and decision: Thorough review of the tax authority's act and decision, identifying procedural violations, calculation errors, and unfounded conclusions. * Preparation of objections: Drafting reasoned objections to the audit act, supported by documents and legal positions. * Appealing the decision: Appealing the tax authority's decision to a higher authority and (or) to an arbitrazh court. Successfully challenging the decision can completely eliminate the grounds for initiating a criminal case. * Voluntary clarification of obligations: In some cases, if the risks are high, it is advisable to file amended returns and pay the arrears, penalties, and fines to avoid criminal prosecution.

Stage 2: Working with the investigation (after the initiation of a criminal case): * Reviewing case materials: Studying the resolution initiating the case, interrogation protocols, expert conclusions, and other evidence. * Participation in investigative actions: The attorney's presence during interrogations, confrontations, searches, and seizures. * Commissioning expert examinations: Initiating independent accounting, tax, and financial-economic expert examinations to challenge the investigation's calculations. * Collecting defense evidence: Finding and presenting documents and witness testimony that refute the charges or mitigate guilt. * Building a line of defense: Challenging the objective side (absence of a criminal event, failure to reach a large scale) or the subjective side (absence of direct intent). * Motions and complaints: Filing motions to terminate the criminal case, change the preventive measure, and appealing the actions (inaction) of the investigator to the prosecutor's office or court. * Negotiating damage compensation: If guilt is obvious, focusing on full compensation for damages (arrears + penalties + fines) before a court hearing is scheduled to terminate the case under Note 2 to Article 199 of the RCC.

Stage 3: Court defense: * Representing interests in court: Active participation in court hearings, interrogating witnesses, presenting evidence, and participating in the parties' pleadings. * Challenging prosecution evidence: Identifying violations in the collection of evidence and their inadmissibility. * Focusing on mitigating circumstances: Presenting all possible mitigating circumstances to the court to secure the minimum possible penalty. * Achieving exemption from liability: If damage compensation occurred before the court hearing was scheduled, seeking the termination of the criminal case.

Tactics: voluntary compensation vs. challenging the elements of the crime: The choice of tactics depends on the specific circumstances of the case. * If the evidence of guilt is irrefutable and the amount of arrears is confirmed, it is advisable to focus on voluntary compensation for damages to terminate the case. * If there are grounds for a challenge (e.g., absence of intent, errors in the tax authority's calculations, failure to reach a large scale), the defense should be aimed at proving the absence of the elements of the crime.

In any case, timely and qualified legal support is the key to a successful defense.

Liability of Accountants and Other Persons

Criminal liability under Article 199 of the RCC, although it concerns evasion of taxes by an organization, is always personalized and imposed on specific individuals. In addition to the executive, other persons involved in the financial and economic activities of the company can also be held liable.

Chief Accountant: The chief accountant is one of the most frequent subjects of criminal prosecution under Article 199 of the RCC, along with the executive. Their liability arises when they: * Act as the perpetrator of the crime: Directly enter knowingly false information into tax returns, maintain double bookkeeping, conceal income, or overstate expenses, being aware of the illegality of their actions and desiring tax evasion. * Act as an accomplice: Assist the executive in committing the crime (e.g., prepare fictitious documents or generate false reporting on the executive's instructions). * Act as an organizer: In rare cases, if the chief accountant actually directs the evasion process, develops schemes, and induces the executive to implement them.

To hold a chief accountant liable, it is necessary to prove their direct intent to evade. A simple mistake, negligence, or following the executive's instructions without realizing their illegality are not grounds for criminal liability. However, if the chief accountant knew about the illegality of the actions and actively participated in them, their liability can be equated to that of the executive.

Outsourced Accountant: Holding an accountant providing services under an outsourcing agreement criminally liable has its own specifics. * Liability under the contract: First and foremost, their liability is regulated by the terms of the accounting services agreement. * Criminal liability: To hold an outsourcer criminally liable, it must be proven that they did not merely fulfill their contractual duties but also had direct intent to evade taxes, actively participated in the development and implementation of criminal schemes, and did not just enter data into reports on the client's instructions. As a rule, this requires evidence of their direct involvement in making decisions about evasion, rather than just technical execution. In most cases, an outsourcer is not a subject of Article 199 of the RCC if they were not aware of the client's criminal intentions or did not participate in their implementation.

Founder (Owner) of the organization: A founder or owner of an organization can be held criminally liable under Article 199 of the RCC if they: * Act as the de facto executive: Despite the absence of a formal position as director or chief accountant, the founder actually managed the financial and economic activities of the organization, made key decisions on tax evasion, and gave instructions to executors. The concept of a "de facto executive" is actively applied in judicial practice. * Act as an organizer or instigator: Developed an evasion scheme and induced the executive or chief accountant to implement it.

Case study: In one case reviewed by a court, the founder of a company, who formally held no positions, was recognized as the de facto executive and held liable under Part 2 of Article 199 of the RCC. It was established that they made all key decisions on concluding fictitious transactions, controlled cash flows, and gave instructions to the director and chief accountant on generating false reporting. Their guilt was proven by witness testimony, correspondence, and analysis of banking operations.

Group of persons by prior conspiracy: Tax evasion committed by a group of persons by prior conspiracy is a qualifying feature of Part 2 of Article 199 of the RCC, which entails a more severe penalty. * Prior conspiracy: This means that two or more persons (e.g., the executive and the chief accountant, or the executive and the founder) agreed in advance to jointly commit the crime. The conspiracy can be expressed in any form — oral, written, or through conclusive actions. * Proving: To prove a conspiracy, the investigation and the court analyze the coordination of actions, the distribution of roles, the common goal, and each participant's awareness of the others' criminal intentions.

Understanding these nuances allows for a proper assessment of risks and the building of an adequate defense for each potential subject of liability.

Law Enforcement Trends 2024-2026

Law enforcement practice regarding tax crimes is constantly evolving, adapting to changes in legislation, the emergence of new evasion schemes, and the improvement of control methods. Several key trends can be highlighted for the period 2024-2026.

1. Shift in focus to larger and more systemic evasion schemes following the increase in threshold amounts (Federal Law No. 78-FZ): Federal Law No. 78-FZ of March 18, 2023, significantly increased the threshold amounts for large and especially large scales (to RUB 18.75 million and RUB 56.25 million, respectively). This will not necessarily lead to an increase in the number of initiated cases, but it will definitely shift the focus of law enforcement agencies to more massive and systemic cases of evasion. Smaller amounts will likely remain within the purview of tax control without initiating criminal cases. This means that every initiated criminal case will involve truly large amounts and generally more complex schemes, requiring deeper preparation from both the investigation and the defense.

2. Focus on VAT fraud and "paper" VAT: Combating VAT fraud remains a top priority. Thanks to the implementation of the automated VAT control system (ASK NDS-2), tax authorities are able to identify "gaps" in VAT payment chains in real time and identify companies using "paper" VAT schemes (where deductions are claimed based on fictitious documents without actual movement of goods or services). * ASK NDS-2 (FTS automated VAT control system): This system allows the FTS to see the entire chain of movement of goods and services, identify discrepancies between the returns of buyers and sellers, and identify companies that do not pay VAT to the budget while their counterparties claim deductions. * Consequences: Identified "gaps" become grounds for in-depth audits, requests for explanations, and subsequently field tax audits, which often end with materials being forwarded to the IC.

3. Strengthening interagency cooperation between the FTS and the IC: Cooperation between the Federal Tax Service and the Investigative Committee of the Russian Federation will only intensify. This manifests in: * Information exchange: Regular exchange of data on identified violations and suspicious transactions. * Joint activities: Conducting joint field audits and operational-search activities. * Coordination of actions: Creating joint working groups and holding meetings to develop unified approaches to identifying and investigating tax crimes.

4. Use of analytical tools and digitalization of control by the FTS: The FTS will continue to actively develop and implement new analytical tools and technologies to identify tax offenses. * Big Data and analytical systems: Analyzing large volumes of data, identifying anomalies in companies' financial activities, and forecasting risks. * Traceability of goods: Expanding the goods traceability system, which will allow for more effective control over the movement of imported products and the identification of evasion schemes. * Digitalization of document flow: Transitioning to electronic document management and implementing online cash registers, making it practically impossible to conceal revenue.

5. Focus on beneficiaries and de facto executives: Law enforcement agencies will increasingly seek to hold liable not only formal directors and accountants but also the real beneficiaries of the business who stand behind the evasion schemes and receive the main benefit. Proving the status of a "de facto executive" or "organizer" will be one of the priority areas for the investigation.

These trends indicate that taxpayers need to be as vigilant as possible, strictly comply with tax legislation, and seek qualified legal assistance in a timely manner at the slightest sign of tax risks.

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