Recently, the tax authorities have been paying more and more attention to auditing contractors of taxpayers (with a view to identify null transactions or other facts required to challenge the taxpayers’ right to input VAT or deductible expenses). If your enterprise makes money in that it buys goods and resells them at a higher price to other business entities, the conduction of such audits could be devastating for your business.There are some situations in practice where such audits can result in the disclosure of the information on the suppliers of the taxpayer and the prices at which it buys goods from them to the customers (buyers) of the taxpayer. On the receipt of this information, it no longer makes sense for the customers (buyers) of the taxpayer to deal with the taxpayer and they may begin to purchase goods directly from the suppliers of the taxpayer. As a result, the taxpayer’s revenues can sharply decrease. In particular, this situation may occur when the tax authorities carry out a documentary audit of a customer (buyer) of the taxpayer and reflect in the audit report the movement of goods from the suppliers of the taxpayer to this customer (buyer).
To avoid a similar situation, it seems reasonable to take advantage of the legislation protecting trade secrets from disclosure by the tax authorities. The Tax Code unambiguously stipulates the right of a taxpayer for nondisclosure of trade secrets by the state controlling bodies (p17.1.3).
The following actions may be suggested to protect the interests of the taxpayer:
- Setting out in the internal documents of the taxpayer the list of information constituting trade secrets as well as the mechanism covering the protection of such information - the right of a taxpayer to trade secrets does not occur by itself and requires that certain formalities are complied;
- A written notice to the tax authorities that the information on the suppliers of the taxpayer and the prices of goods at which they are sold to the taxpayer makes up the trade secrets of the taxpayer (with confirming internal documents enclosed);
- Compliance during the documentary on-site tax audits with the requirement of the Tax Code to hand over documents containing trade secrets (such as contracts with the suppliers) to the tax authorities based on an acceptance certificate only (p 85.3); the acceptance certificate must clearly indicate that these documents contain the trade secrets of the taxpayer;
- A written warning to the tax authorities that in the case of the disclosure of the trade secrets, including information on the suppliers of the taxpayers and the prices at which the goods are purchased from them, the taxpayer will have to (a) appeal to the prosecution office to hold the tax officials concerned criminally liable for breaching its trade secrets (2) apply to the administrative court for the recovery of damages caused by the disclosure of trade secrets committed by the tax authorities.
No comments:
Post a Comment