The Federal Tax Service issued recommendations on the application of an amnesty for business fragmentation

The tax amnesty exempts from paying taxes for the period 2022-2024 and also cancels sanctions and fines for violations related to the division of companies. However, this requires abandoning fragmentation in 2025 and 2026 and meeting a series of conditions.

In its recommendations, the Federal Tax Service outlined an algorithm of actions for voluntary rejection of fragmentation, both with and without a change in the organizational structure. “Without changing the structure of the business, participants in business fragmentation can switch to a common tax system or transfer activities to one of the group companies,” explained the Federal Tax Service.

A change in the organizational structure may be necessary to combine formally independent legal entities into a single company with the possible creation of separate divisions at the place of activity. The amnesty applies automatically as long as fragmentation is rejected after 2025.

• In September, the Federal Tax Service announced that it would prepare answers to the most frequently asked questions about the tax amnesty, as entrepreneurs need clarifications on certain provisions and terms.
• Irina Egorova, head of corporate and tax practice at Intercession, previously expressed doubts that clear criteria for business division can be set in the tax code.