How to Protect Your Business from Tax Authority Claims of “Artificial Splitting”

The Russian Federal Tax Service (FTS) is paying increasing attention to companies suspected of “artificial business splitting.” Inspectors now scrutinize everything — from intercompany ties and IP addresses to contractor chains and day-to-day operations.

In an article for Monocle, Marina Tokmakova, Partner at Duvernoix Legal, shares her recommendations on how entrepreneurs can build a solid defense and minimize risks.

“If each legal entity has its own independence, different employees, suppliers, offices, and financial flows — and most importantly, a genuine business purpose — then the company has a chance to prove the legality of its chosen model,” notes Marina Tokmakova.
She emphasizes that the key element of protection is preparing an evidence base before a dispute arises. Among the necessary documents are business plans, board minutes, and materials on the company’s structure and development history.

According to Tokmakova, such proactive work helps convincingly demonstrate that business separation is economically justified rather than a mere tool for tax optimization.