An FTS audit is rarely a bolt from the blue — the tax authority flags companies with a risk model before it acts. If you've had contact, knowing what kind of audit it is, your rights, and how to respond without making it worse, is what matters.
Reviews a specific return or refund from the FTS's desk — narrower, but a refund claim reliably triggers one.
Is broader and on-site, covering multiple taxes and years — more serious, and worth being represented for from the start.
A tax audit from the Russian Federal Tax Service (FTS) is one of the most consequential events in the life of a foreign-owned Russian company. The process differs significantly from what most international finance teams experience in their home jurisdictions — it is more intrusive, longer, and the stakes are higher. Understanding how Russian tax audits work, what triggers them, what rights the company has, and what practical steps to take is essential for any foreign company operating in Russia.
The Russian Tax Code provides for two main types of audit:
A desk audit is conducted automatically for every tax return filed. The FTS reviews the return and supporting data in its systems without visiting the taxpayer's premises. The desk audit period is three months from the date of filing (six months for VAT returns from foreign digital service providers). The vast majority of desk audits conclude without any findings. Where the FTS identifies a discrepancy, it sends a written request for clarification — the taxpayer has five business days to respond.
Desk audits that result in findings proceed to a formal act (акт камеральной проверки). The taxpayer has one month to file written objections before the FTS issues a final decision.
A field audit is the serious one. The FTS sends inspectors to the taxpayer's premises (or the FTS office if the taxpayer has no suitable premises) to examine primary documents, accounting records, contracts, bank statements and correspondence. Field audits can cover up to three calendar years preceding the year in which the audit decision is made.
Pick your situation — we'll tell you where you stand:
The standard field audit period is two months from the date of the audit decision, but can be extended to four months (in complex cases) or six months (for the largest taxpayers or where significant documentary requests are outstanding). In practice, field audits routinely last 6–12 months once extensions and suspensions are counted.
The FTS has the right to suspend a field audit for up to six months (in aggregate) to request documents from counterparties, obtain translations of foreign-language documents or conduct forensic examinations. During suspension, inspectors leave the premises and document requests are paused. However, the audit remains open and the limitation period does not run during suspension. Total field audit duration including suspensions: up to 18 months in practice.
The FTS uses a risk assessment system (концепция системы планирования выездных налоговых проверок) to select taxpayers for field audit. The key risk criteria:
Tax burden below industry average — the FTS publishes annual statistics on average effective tax rates by industry. A company with a significantly lower effective rate is flagged.
Losses for two or more consecutive years — persistent losses raise questions about genuine commercial activity.
High share of VAT deductions — input VAT recovery above 89% of output VAT (the FTS threshold) triggers review.
Salary below regional minimum — indicates potential undeclared payroll.
High volume of intercompany transactions — particularly with foreign related parties. Transfer pricing risk is a primary audit trigger for foreign-owned companies.
Frequent changes of registered address — a migration between tax offices is an audit trigger.
Significant discrepancy between revenues and assets — indicating potential undeclared income.
Use of counterparties with signs of "fly-by-night" companies (фирмы-однодневки) — the FTS screens all counterparties for genuine business activity.
Foreign-owned Russian companies face elevated audit risk in three specific areas: (1) intercompany payments — management fees, royalties, interest — which the FTS scrutinises as potential profit shifting; (2) dividend distributions and cross-border payments to related parties; and (3) permanent establishment risk where the foreign parent has commercial activity in Russia beyond what the registered entity officially does.
The Russian Tax Code gives taxpayers substantive rights during both desk and field audits:
Right to be present — company representatives have the right to be present during all audit procedures on their premises
Right to receive copies — of all documents drawn up by inspectors (protocols, acts)
Right to provide explanations — both written and oral, at any stage
Right to appeal — any audit decision can be appealed to the superior tax authority before going to court
Right to engage representatives — including external tax advisers and legal counsel. Inspectors cannot refuse access to authorised representatives with a valid power of attorney
Right to challenge document requests — requests for documents that are not related to the period or taxes under audit can be challenged
Audit decision (решение о проведении) — the FTS issues a formal decision naming the taxpayer, the taxes covered and the period. This is served on the taxpayer's authorised representative.
Inspectors arrive — typically 2–4 inspectors. They present their credentials and the audit decision. They are entitled to access the taxpayer's premises and documents.
First establish whether it's a desk audit (a review of a specific return, from the FTS's office) or a field audit (broader, on-site, multiple taxes and years). The type sets your exposure and how to respond — so identifying it is the first step before answering anything.
You have defined rights — to be informed, to provide explanations, to object to findings and to appeal. Using them, rather than simply complying with every request unrepresented, is what shapes the outcome. Being represented from the first contact protects the position.
By responding correctly — providing what's required, objecting where the finding is wrong, and remediating a genuine problem cleanly. The earlier proper representation is involved, the more room there is to reduce the outcome.
This walks through how FTS audits work — desk versus field, the process, the penalties. Your question is more immediate: you've had contact from the FTS, and you need to know what kind of audit it is, what your rights are, and how to respond without making it worse.
Had contact from the FTS? Tell us what you've received — we'll tell you what it is and what to do.
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