In an interview to “Izvestia”, Elena Leonenko, Deputy Chairman of the Investigative Committee, Colonel-General of Justice, expressed a proposal to toughen criminal liability for tax evasion of individuals including individual entrepreneurs, especially in large amounts. Namely, she focused on the need to equate the sanction under this article with the sanction established for evasion of taxes payable by the organization.

The need to increase the statute of limitations is put forward as an argument for this proposal, i.e. factual time required for law enforcement agencies to identify and investigate the circumstances of the crime committed.

On the one hand, limiting to domestic Russian activities, this proposal is excessive. For the suppression of criminal activity, the size of the punishment is not that important compared to its inevitability. In case of tax evasion by the organization, the criminal scheme is (using ephemeral firms, etc.) as a rule more complex not only in terms of its design but in terms of its identification and proof.

The taxation of individuals (individual entrepreneurs) is much simpler, which corresponds with less reporting. Accordingly, in most cases, the evasion of individuals is less difficult, and its detection is easier than in the case of legal entities. Thus, cases of termination of a criminal case due to the expiration of the statute of limitations may indicate the ineffectiveness of law enforcement agencies. It should be borne in mind that, first of all, a significant amount of data indicating the existence of an objective aspect of crime is collected by tax authorities and subsequently passed on to the investigation.

Today, the FTS capacity in terms of disclosure has grown significantly due to launching of the AIS Tax-3 system and data processing center in Dubna. Moreover, a change in the category of a crime entails the possibility to apply measures of restraint to an individual under investigation related to the restriction of freedom, which can also contribute to a greater workload of the penal system. In his message to the Federal Assembly in 2019, the President emphasized an actual challenge related to arrests of entrepreneurs and long terms of detention.

On the other hand, this proposal can be useful when facts of tax evasion are objectively revealed with a significant delay, for example, when the activity is cross-border, in particular, in connection with the ownership (participation in) by a controlled foreign company (and) in the absence of due notifications.

Anna Bogatyreva, Junior researcher, IAES RANEPA Department of Tax System Development;

Elisey Leonov, Researcher, IAES RANEPA Department of Budget Policy Research