Damage is an elastic concept – Newspaper Kommersant No. 57 (7502) dated 04/04/2023
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The authorities continue to make targeted adjustments to criminal legislation to reduce pressure on businesses. Thus, State Duma deputies initiated an increase in damage thresholds to bring entrepreneurs to criminal liability for tax crimes and violations of antitrust laws. The government has already approved the bill, but fears that a significant part of tax violations will fall out of the scope of the Criminal Code. Experts support the general trend to reduce the burden, but offer alternative mechanisms for more equitable law enforcement.
The draft amendments to the Criminal Code, designed to raise the thresholds for “large” and “especially large” damage (income, debt) for qualifying crimes in the field of economic activity, were submitted to the State Duma by deputies of the New People faction. In particular, in case of violations of antimonopoly legislation, it is proposed to increase the thresholds for major damage from 10 million to 16 million rubles, and especially large – from 30 million to 47.5 million rubles.
Thresholds for tax evasion, fees and social contributions for three years in a row are proposed to be increased from 15 million to 35 million rubles. (large size) and from 45 million to 100 million rubles. (especially large).
The authors explain the need to revise the thresholds by inflation. Earlier, the RSPP insisted on raising the damage thresholds by 50%, because inflation since the last amendments in 2016 amounted to almost 35%. Later, amendments to such an increase were introduced by the Ministry of Justice (see “Kommersant” dated August 5, 2022). The deputy’s bill suggests a more noticeable increase in the thresholds. At the same time, the White House approved it, however, warning about the risks of removing tax violations from the scope of the Criminal Code, which will require justification.
Experts and businesses support the liberalization of the Criminal Code for business, but the amendments also raise questions in them.
Ekaterina Avdeyeva, head of the Delovaya Rossiya Criminal Law Policy Expert Center, considers it appropriate to increase the thresholds by an average of 50% or more (Article 170.2, Article 178, Article 180 of the Criminal Code of the Russian Federation). “At the same time, the initiators of the bill propose to increase in Art. 199 the threshold amount is more than 2.3 times (more than 130%), despite the extraordinary level of damage that tax crimes cause to the interests of both society and the state,” she says.
IEF LEGAL partner Alexander Erasov considers a double test system to be fairer – taking into account the minimum threshold from which tax evasion is criminal, and then comparing the damage with the total amount of taxes of a particular taxpayer. In the meantime, large companies with a large turnover may not pay only 1% of their taxes, but exceed the damage threshold. Small companies that do not pay at all, but have not reached the threshold amount, are not violators of the Criminal Code in this logic. “That is, many companies can enter knowingly false information in declarations without fear of a criminal offense, which forms the wrong attitudes for businesses,” adds Vadim Zaripov, head of the analytical service at the Pepeliaev Group law firm. According to him, raising the thresholds in Art. 199 also exacerbates the problem of discrimination against individual entrepreneurs: for them, as for individuals, the thresholds are set in Art. 198 is 2.7 and 13.5 million rubles. “Now this is balanced by softer sanctions, a shorter statute of limitations, but the gap is becoming too noticeable,” he said.
According to Vadim Zaripov, it is logical to extend the increase in thresholds to st. 194 of the Criminal Code (evasion of customs payments). “Now there are certain thresholds for taxes, and completely different thresholds for non-payment of customs duties, although the social danger is, in fact, the same,” agrees Alexander Erasov. The vice-president for legal regulation of the RSPP, Alexander Varvarin, also expects to adjust the damage thresholds for other crimes in the field of economic activity that are not included in Chapter 22 of the Criminal Code of the Russian Federation, but are related to entrepreneurial (see more “Kommersant-Online”).
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Member of the General Council of Delovaya Rossiya, head of the Expert Center for Criminal Law Policy and Enforcement of Judicial Acts, Ekaterina Avdeeva believes that the bill has not yet fully come close to solving the systemic problems of law enforcement practice. “It is important to assess the degree of public danger of a crime in order to establish a threshold that will allow qualifying an act with a similar degree of public danger, taking into account inflation,” she warns. In particular, raising the thresholds for tax structures can significantly reduce the protective and preventive functions of criminal law when qualifying tax structures.
At the same time, it is advisable to subject art. 198 of the Criminal Code of the Russian Federation, Ms. Avdeeva believes. Despite the fact that the article provides for liability for tax evasion, fees from individuals, the vast majority of cases indicate the involvement of individual entrepreneurs under it. “That is, depending on the chosen form of doing business, the subject of the legislative initiative proposes to increase the gap in the thresholds by more than ten times, which does not seem logical and expedient, like the revision of tax crime thresholds in such a significant amount,” the expert notes.
According to her, the Criminal Code should be changed consistently, logically, taking into account related compositions, therefore, it is necessary, first of all, to focus on solving current problems and challenges, in particular, address the issues of revising the fineness thresholds under Art. 159, Art. 160 of the Criminal Code of the Russian Federation (fraud and misappropriation or embezzlement).
In turn, the vice-president for legal regulation and law enforcement of the RSPP, Alexander Varvarin, proposes to revise the thresholds for the compositions provided for in Art. 146 of the Criminal Code of the Russian Federation “Violation of copyright and related rights” and Art. 147 of the Criminal Code of the Russian Federation “Violation of invention and patent rights”, part 5 of Art. 159 of the Criminal Code of the Russian Federation “Fraud” (deliberate failure to fulfill contractual obligations in the field of entrepreneurial activity), Part 1 and Part 2 of Art. 194 of the Criminal Code of the Russian Federation “Evasion of customs payments, special, anti-dumping and (or) countervailing duties levied on an organization or individual.” In addition, it is necessary to establish in Art. 201 of the Criminal Code of the Russian Federation “Abuse of authority” the amount of large and especially large damage. “The current version of Art. 201 of the Criminal Code of the Russian Federation, pointing to socially dangerous consequences in the form of “significant harm to the rights and legitimate interests of citizens or organizations or the legally protected interests of society or the state,” does not meet the criterion of certainty of the criminal law and is arbitrarily applied in practice,” Alexander Varvarin notes.
Boris Titov, Commissioner for the Protection of Entrepreneurs’ Rights, recalls various configurations for a possible reduction in criminal pressure on businesses, proposed by both the government and deputies. We are talking about both raising criminalizing thresholds and completely decriminalizing certain articles. As regards Art. 178 of the Criminal Code of the Russian Federation (restriction of competition), the business ombudsman proposed to decriminalize cartel conspiracies on commodity markets. According to him, criminal sanctions are excessive and it is necessary to suppress cartels in the commodity markets exclusively by economic sanctions.
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