Justification of representative expenses in order to reduce income tax

[alexa]

I propose to discuss the important topic of the organization's expenses included in the costs of production and circulation, which affect the size of the income tax base.

The issue concerns specifically the representation expenses provided for in paragraph 2 of Article 264 of the Tax Code of the Russian Federation. The organization regularly holds corporate events, such as presentations of new products, negotiations with potential partners and customers, however, it becomes difficult to document the validity of the expenses incurred for tax accounting purposes.

What is the list of documents required to confirm travel expenses? What criteria does the Federal Tax Service of Russia set for assessing the appropriateness of these expenses?

Please share your experience and recommendations regarding the optimal strategy for managing such expenses in order to minimize tax risks and optimize taxation.

[ogb]

Representation plays a key role in the business activities of organizations, providing communication with partners, customers and the public. However, it is important to remember that the tax authorities closely monitor the validity and documentary evidence of such costs.

To confirm the representative expenses, the organization must submit a whole package of documents, among which are mandatory:
- Invitations to event participants,
- Banquet menus, conference and seminar programs,
- Accounting documents (invoices, invoices),
- Reports of the heads of departments on the activities carried out,
- Primary accounting documents (acts of completed works).

The Federal Tax Service (FTS) of Russia imposes strict requirements for assessing the expediency of representative expenses. It checks the compliance of expenses with a number of criteria:
- Reasonableness: expenses should be consistent with the organization's statutory activities and contribute to business development.
- Confirmation by primary documents: availability of all necessary papers to confirm the fact of the expense.
- Economic justification: the reasonableness and necessity of the expenses incurred to achieve the goals of the representation.