On 25 January 2007, the Constitutional Court refused to consider an application relating to alleged discrimination in the field of tax compliance. The applicant claimed that the Tax Code provisions in respect of tax audit procedures discriminate against private entrepreneurs in contrast to legal entities. Under the Tax Code, in the case of private entrepreneurs, tax audits may continue to be performed, even though the individual has deregistered as a private entrepreneur. However, legal entities cannot be audited after their liquidation. The applicant found this provision discriminatory.
The Court rejected the applicant's arguments and clarified that legal entities and individuals are subject to tax audits, irrespective of any special status. This means that just as it is not possible to carry out tax audits of legal entities after their liquidation, no tax audits of individuals (private entrepreneurs) can be performed after they die or are announced dead.
Ministry of Finance clarifies taxation of gains resulting from decrease of registered capital
On 9 April 2007, the Ministry of Finance issued a letter clarifying when taxpayers must record a taxable gain due to a decrease of their registered capital.
Under the Tax Code, a decrease of registered capital may give rise to a taxable gain if the amount, by which the capital was decreased, is not paid back to the shareholders of the company. The Ministry clarified that taxpayers must reflect such gains in their tax accounting after an amendment to the articles of incorporation has been registered with the relevant state authorities.