Russian Tax Administration
Federal Tax Service (FNS)
The Federal Tax Service (Federalnaya Nalogovaya Sluzhba, FNS) is the federal executive authority responsible for tax administration, tax control, and tax liability enforcement in the Russian Federation. The FNS operates under the supervision of the Ministry of Finance of the Russian Federation (Minfin) and exercises the functions of: (1) tax registration and taxpayer identification; (2) maintenance of the Unified State Registers of Legal Entities (EGRUL) and Individual Entrepreneurs (EGRIP); (3) conducting tax audits (nalogovye proverki); (4) collection of tax arrears; (5) administration of state duties (gosudarstvennye poshliny); (6) processing of tax returns and tax payments; and (7) management of bankruptcy procedures for state claims. The FNS is headed by a Director appointed by the Government on the recommendation of the Minister of Finance.
The FNS structure includes interregional inspectorates for largest taxpayers (mezhregionalnye inspektsii po krupneyshim nalogoplatelshchikam), which administer the tax obligations of the largest Russian companies (defined by revenue and asset thresholds). The FNS also operates the Unified State Automated Information System (EGAIS) for tax administration, which processes taxpayer data, tax returns, and payment information in real time. The FNS has been recognised internationally for its digitalisation efforts, having achieved near-complete automation of tax administration processes.
Tax Registration
Tax registration (nalogovaya registratsiya) is governed by Articles 83–86 of the Tax Code (NK RF). Legal entities must register with the FNS at their legal address within 30 days of state registration. Individual entrepreneurs register at their place of residence. Foreign organisations conducting business in Russia through a permanent establishment (postoyannoe predstavitelstvo) must register within 30 days of commencing activities. The registration is evidenced by the Unified State Register entry (zapis v EGRUL or EGRIP) and the issuance of a Taxpayer Identification Number (INN — Identifikatsionny Nomer Nalogoplatelshchika) and a Reason Code for Registration (KPP — Kod Prichiny Postanovki na Uchyot).
The FNS maintains the Unified Taxpayer Register (Ediny Reestr Nalogoplatelshchikov) and the Register of Personal Accounts (Lichnye Scheta), which record all tax obligations, payments, and arrears for each taxpayer. Taxpayers must report changes in registration details, including changes of legal address, management, or ownership structure, within three business days.
Desk Audits (Kamerlany Proverki)
Desk audits (kamerálnye nalogovye proverki) are conducted at the FNS premises without a special decision from the tax authority head. Governed by Articles 88 of the NK RF, desk audits commence automatically upon the submission of a tax return or other tax document and typically last three months (extendable in certain cases). The FNS examines the tax return for: arithmetic and logical consistency; completeness of declared information; compliance with the declared tax regime; and consistency with other tax returns and information from third parties.
The FNS may request additional documents and explanations from the taxpayer where inconsistencies or errors are identified. Taxpayers must respond to such requests within five working days. The widespread use of the FNS Automated Control System for VAT (ASK VAT-2) and the Automated System for Risk Analysis of Taxpayers (AS RISK) has significantly increased the effectiveness of desk audits. ASK VAT-2 reconciles VAT returns across the supply chain, identifying discrepancies between input and output VAT declarations. Where discrepancies exceed risk thresholds, the FNS issues automated notifications requiring explanations or corrective declarations.
Field Audits (Vyezdnye Proverki)
Field audits (vyezdnye nalogovye proverki) are conducted at the taxpayer’s premises on the basis of a reasoned decision (reshenie) of the head (or deputy) of the FNS inspectorate. Governed by Articles 89–91 of the NK RF, field audits are generally limited to one per taxpayer per tax period and may cover up to three consecutive tax periods. The duration of a field audit is up to two months, extendable to four months (or six months in exceptional cases). Field audits are conducted on the basis of a Risk-Based Approach Plan (Plan Vyborochnykh Proverok), which selects taxpayers based on criteria including: (1) low tax burden relative to industry averages; (2) significant discrepancies in VAT returns; (3) losses declared for multiple consecutive periods; (4) high share of VAT deductions; and (5) transactions with shell companies (odno dnevki).
During a field audit, FNS inspectors have the right to: (1) examine the taxpayer’s premises, documents, and assets; (2) seize documents and objects (Article 94 NK RF); (3) conduct interrogations of the taxpayer’s employees and counterparties; (4) appoint tax examination experts (ekspertiza); and (5) request information from banks and other third parties. Upon completion, the inspectors draw up a Field Audit Report (Akt Vyezdnoy Nalogovoy Proverki), which the taxpayer may contest through written objections within one month.
Tax Liabilities and Penalties
Tax liability (nalogovaya otvetstvennost) is governed by Articles 116–129 of the NK RF and the Code of Administrative Offences (KoAP RF). Tax sanctions include: (1) penalties (peni) — calculated at 1/300 of the Central Bank key rate per day of arrears; (2) fines (shtrafy) for tax offences — ranging from 20% of the unpaid tax amount for non-intentional violations to 40% for intentional violations (Article 122 NK RF); and (3) administrative fines for officials — under Articles 15.3–15.12 KoAP RF, ranging from 2,000 to 20,000 RUB.
Tax arrears are collected through: (1) compulsory collection from bank accounts (bespornoe spisanie) based on the FNS collection order (inkassovoe poruchenie); (2) collection from the taxpayer’s property (through bailiff enforcement under Federal Law No. 229-FZ); and (3) suspension of bank account operations (priostanovlenie operatsiy po schetam) as a coercive measure. The FNS may also apply to the arbitration court for the recovery of tax arrears through the insolvency of the taxpayer.
Tax Crime
Tax crime (nalogovye prestupleniya) is addressed in the Criminal Code (UK RF). Article 198 criminalises tax evasion by individuals (up to 300,000 RUB arrears for a large amount, 500,000 RUB for an especially large amount), with penalties of up to three years’ imprisonment. Article 199 criminalises tax evasion by organisations (large amount — 5 million RUB for three years, especially large — 15 million RUB), with penalties of up to six years’ imprisonment. Article 199.1 addresses non-performance of tax agent duties. Criminal proceedings for tax crimes are initiated by the Investigative Committee (SK RF) based on materials submitted by the FNS. Full payment of arrears, penalties, and fines before the court hearing may lead to termination of criminal proceedings.
FNS Digitalisation and VAT Monitoring
The FNS has implemented an extensive digitalisation programme, the FNS Digital Transformation 2020–2030 strategy, which has made Russian tax administration one of the most technologically advanced in the world. Key digital systems include: ASK VAT-2 — automated VAT reconciliation across all transactions; AS RISK — automated risk profiling of taxpayers; AIS Nalog-3 — the unified tax administration information system processing all tax types; Online Cash Registers (KPK — Kontrolno-Kassovaya Tekhnika) — transmitting sales data to the FNS in real time; and VAT Monitoring (NDS-monitoring) — a real-time tax compliance system for large taxpayers.
VAT monitoring, introduced by Federal Law No. 348-FZ of 2020, allows large taxpayers (with annual VAT exceeding 1 billion RUB) to voluntarily transition to a real-time tax monitoring regime. Participating taxpayers grant the FNS remote access to their accounting systems and transaction data, enabling continuous tax compliance verification. The benefits include: (1) exemption from standard desk and field audits; (2) accelerated VAT refunds (within 10 working days); (3) binding tax authority opinions on transaction classification; and (4) reduced administrative burden. As of 2026, approximately 500 major Russian companies participate in VAT monitoring.