The Business Purpose Doctrine versus the Fiscal Interest: A Critical View of the Qualification of Unfair Tax Optimization as Tax Evasion

The article critically analyzes the transformation of the business purpose doctrine, which was originally established as an instrument protecting taxpayers from arbitrary imputation of bad faith, into an independent ground for establishing direct intent to evade taxes under Articles 198–199 of the Criminal Code of the Russian Federation. Based on a comparative legal analysis of the experience of the United States, the European Union, France, and Germany, it is demonstrated that in most foreign legal orders, the absence of a business purpose for a transaction entails exclusively tax-law consequences and is not automatically equated with criminal intent. The author concludes that Russian judicial and enforcement practice in “business splitting” cases demonstrates an erosion of the institutional boundary between tax reconstruction and criminal prosecution, and formulates proposals for its restoration.