The principle of good faith and its manifestations in Russian law as a means of "smart regulation"

Usenkov Ivan Alekseevich Volgograd State University 400002, Russia, Volgograd region, Volgograd, Universitetskiy ave., 100 i.usenkov@volsu.ru Other publications by this author

The concept of "smart regulation" assumes that a legal norm should work independently, attracting the least amount of resources and leading to the most favorable result ^{[1, p. 15]}. To comply with such norms, there is a mechanism for pushing and encouraging, on the basis of which it is more profitable for the bearer of certain rights and obligations to comply with the norm than not to comply.

In the context of this concept, it seems interesting to consider the category of legal good faith: whether it can act as a "smart regulation" and, if so, what conditions should be met.

Today, both in foreign and domestic scientific literature, the position prevails, according to which good faith is a general legal principle that permeates both private law and public law relations [Larenz, K. (1987). Lehrbuch des Schuldrechts. Bd. I: Allgemeiner Teil. 14. Aufl. Munchen, 127; 2].

Historically, the principle of good faith was formed in German civil law under the influence of Roman law, in which purely legal, formal requirements were accompanied by ethical requirements for the actors of legal relations and a rule was formulated in general, according to which good faith was assumed unless malicious intent was proved ^{[3, p. 32]}.

In the future, the principle of good faith was extended to other, including public (criminal, tax, administrative), branches of law, and also fixed (or revived) in other legal systems, including in France, Austria, Italy, the Netherlands and Russia, as well as in international law ^{[2, p. 181]}.

The principle of good faith has several functions:

1. Concretizing. This function sets the context, the framework for the exercise of rights and obligations, and in case of doubt about their actual meaning, pushes them to the option that meets the requirement of good faith.

2. Complementary. Supplements the list of rights and obligations with those that are not directly provided for by anything, but are assumed, expected from a bona fide party that cares about the interests of the counterparty.

3. Restrictive. Opposes the formally legitimate realization of subjective rights, which essentially contradicts the goals of legal regulation.

4.                  Corrective. This function allows you to protect the interests of the debtor (limit, change or terminate his obligation) when, due to circumstances, the performance of the obligation becomes unacceptable.

These functions have a pronounced civil law orientation, which is determined by the origin of the principle, but they are also implemented in public law branches of law.

Among the latter, they are particularly pronounced in tax law. For him, despite the state-power nature of relations, the ambivalent application of the principle of good faith is also characteristic: not only the taxpayer who fulfills legislative obligations in accordance with their meaning and purpose should be conscientious, but also the state represented by legislative and law enforcement bodies that establish and levy taxes in a fair, reasonable and not excessive amount and order. In addition, the presence of a creditor and a debtor in tax legal relations gives them a similarity with binding civil law relations and contributes to the implementation of the principle of good faith in tax law.

Meanwhile, in the Russian scientific and practical literature, the category of "good faith" in tax law is used very differently, which, in our opinion, is facilitated by the lack of regulatory consolidation in the presence of a large number of inherently similar terms. Among other things, under "good faith" in tax law, it is proposed to understand:

1.                      Principle. For example, how does Tyutin D.V. write about the principle of good faith, while often synonymizing the categories "principle" and "presumption" or using the wording "principle of presumption" (Tax law: a course of lectures / D. V. Tyutin; State educational institution of higher Prof. Education Russian Academy of Sciences. justice. - Moscow : RAP : Eksmo, 2009. 427, ^[2] p.). In judicial practice, the integrity of the taxpayer as a principle of tax law independently, without reference to any legislative norm, was recorded in the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 2 (2015).

2.                      Presumption (Tax Law [Text] : textbook for universities : for students of educational organizations studying in the field of Law, qualification (degree) "bachelor" / [Pepelyaev, S. G. et al.]; ed. by S. G. Pepelyaev; Moscow State University named after M. V. Lomonosov, Legal Faculty, Department of Financial Law. - Moscow : Pepeliaev group : Alpina Publisher, 2015. 795 p.). Thus, S. G. Pepeliaev categorizes "good faith", for example, noting that this presumption does not coincide in its scope with the presumption of innocence, and refers primarily to the definition of the tax base, the substance of the taxpayer's transactions and the types of its activities. The presumption of good faith from the content of Clause 7 of Article 3 of the Tax Code of the Russian Federation (on the interpretation of legislation on taxes and fees in favor of the taxpayer) was deduced at various times by the Constitutional Court of the Russian Federation (Ruling of the Constitutional Court of the Russian Federation of 04.12.2003 N 442-O) and the Presidium of the Supreme Arbitration Court of the Russian Federation (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation of 22.12.2009 N 11175/09 in case N A44-109/2008).

3.                  Independent Institute of Tax Law. In this capacity, M.B. Napso suggests understanding and developing tax integrity, which considers it necessary to consolidate the concept of good faith, its composition, procedure and legal consequences of recognizing a taxpayer as conscientious or unscrupulous ^{[4, p. 12]}.

4.                  Legal category, concept. Tax integrity is considered as a concept of tax law, for example, M.K. Suleimenov ^{[5, p. 33]}, T.I. Abdreev ^{[6, p. 6]}.

At the same time, it should be noted that all these interpretations are usually connected with the understanding of good faith as a principle of tax law. Thus, at the moment there is a generally recognized, contextual understanding of good faith as a principle of tax law. At the same time, its origin – from the general legal nature of this principle, from specific norms of tax law or established law enforcement practice – is not decisive.

The discussion about the extent to which the principle of good faith can act as a direct or indirect regulator of tax relations is more practically significant. Usually, the norms-principles are not applied directly, but serve, largely due to their generality, as a basis for building stable legislative regulation, interpretation of specific regulatory prescriptions. For example, the principle of good faith finds its concretization in Article 80 of the Tax Code of the Russian Federation, which establishes the presumption of the reliability of the amount of tax declared by the taxpayer.

However, not in all its manifestations, the principle of good faith is sufficiently detailed, defined and coordinated with the principles of tax legislation defining guarantees of taxpayer rights. In particular, the specifics of tax law, which consists in the constant struggle of a public entity that sets and collects taxes, and taxpayers looking for tax optimization options, often aimed solely at circumventing tax legislation, prompted many states to create so-called "anti-tax rules" based on the principle of good faith ^{[7, p. 11]}.

At the same time, in foreign countries, anti-bending rules in particular and the principle of good faith in general fully fall under the definition of "smart regulation". Thus, anti-rejection rules establish requirements for the behavior of a party to a legal relationship, and altruistic behavior, involving concern for the interests of the other party, taking on additional responsibilities and limiting their rights, not conditioned by anything other than largely ethical, and not legal, ideas about conscientious and unscrupulous behavior (Budylin S.L. When both counterparties are unscrupulous: Solomon's solution. // URL: https://zakon.ru/blog/2018/12/11/kogda_oba_kontragenta_nedobrosovestny_solomonovo_reshenie). At the same time, the application of these rules by the competent authorities, including the revaluation of tax liabilities, in Western jurisdictions is quite rare, has the character of an exception to the rule ^{[8, p. 17]}. Thus, minimal legislative regulation effectively directs the behavior of the majority of subjects in the right direction, and at the same time – is guaranteed by the possibility of state intervention.

In Russian tax law, anti-tax rules have developed in their own unique way. Initially, they were not established by law, but found their (very detailed) consolidation in the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of October 12, 2006 No. 53 and were specified in judicial practice (Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation of October 12, 2006 No. 53 "On the assessment by arbitration courts of the validity of a taxpayer's tax benefit"). Subsequently, the anti-rejection rule was fixed in Article 54.1 of the Tax Code of the Russian Federation. This article in the most general form defines a list of actions unacceptable for a bona fide taxpayer when calculating the tax base and (or) the amount of tax, fee, insurance premium (misrepresentation of information about legally significant circumstances for their calculation, transaction, first of all, in order to reduce the tax burden and / or other counterparty).

On the one hand, such a formulation of an anti-tax rule accumulates the accumulated experience of combating tax evasion and contains a potential similar to that of a foreign one: the presence in the legislation of a certain, albeit abstract, standard of conduct guiding the actions of taxpayers, supported by the possibility of direct application in exceptional cases that do not fall under specific tax offenses.

However, such implementation of Article 54.1 of the Tax Code of the Russian Federation would be possible only with the parallel introduction into legislation of specific tax offenses related to tax evasion. In this case, the most common "tax schemes" that have been repeatedly reviewed by law enforcement practice and familiar to any lawyer, tax inspector or judge would fall under these compositions ("Top 6 tax schemes that should be abandoned" // URL: https://pravo.ru/story/248479 /), whereas Article 54.1 of the Tax Code of the Russian Federation itself would apply when new ways of circumventing the law arise.

In the absence of such norms, the anti-rejection rule received its detailed specification in the explanatory documents of the Federal Tax Service of Russia (for example, the Letter of the Federal Tax Service of Russia dated 31.10.2017 N ED-4-9/22123@ "On recommendations for the application of the provisions of Article 54.1 of the Tax Code of the Russian Federation", the Letter of the Federal Tax Service of Russia dated 19.01.2018 N ED-4-2/889 "On the assessment of the integrity of the taxpayer during tax audits"), largely in favor of the tax authorities formulated specific requirements for the behavior of the taxpayer, and acquired signs of the composition of a tax offense, with its own subject of proof and sanction ^{[7, p. 13]}.

In our opinion, such a state of affairs is a distortion of the essence of the principle of good faith of the taxpayer, when a very wide composition of the anti-tax rule is divided into several specific compositions by the tax authority, but is not limited to them. In this regard, we should agree with the authors who express skepticism about the application of the principle of good faith in tax law ^{[9, p. 13; 10, p. 35]}, however, not that it should not exist at all, but that it cannot be implemented everywhere, be an exception raised to the rule.

Thus, the principle of good faith in tax law today has moved away from its, in our opinion, organic role of "smart regulation". The situation when the legal principle, among its other manifestations, is implemented in the form of a very general norm, and the prohibitions enshrined in it are specified in the explanations of tax authorities and courts, but are not exhausted by them, contradicts the legal nature of the Russian state. In this regard, it seems reasonable to include in the tax legislation the composition of specific offenses related to tax evasion, while maintaining the anti-tax rule as a guide of behavior and a direct regulator for exceptional cases.

The concept of good faith for civil law is more natural. In domestic civil legislation, it is fixed as a principle (paragraph 3 of Article 1 of the Civil Code of the Russian Federation (hereinafter also referred to as the Civil Code of the Russian Federation)) and presumption (paragraph 5 of Article 10 of the Civil Code of the Russian Federation). However, their content is not limited to the current state of regulation in this area. In particular:

1.                  In judicial practice, the main criteria of good faith are formulated. Failure to comply with them makes it possible to refuse protection of the right to the person abusing it. These criteria include discretion in choosing and interacting with counterparties, the absence of bonded conditions in the agreement, negotiating without sudden and groundless withdrawal from them, and so on.

2.                  In the Civil Code of the Russian Federation, the statuses of "bona fide acquirer", "bona fide mortgagee", etc. were fixed. Similarly, the legislator defines standards of behavior for certain situations, and depending on their implementation, provides a person with additional legal protection or reduces the guarantees of this protection or denies it altogether.

A striking example of the organic use of the principle of good faith as a means of "smart regulation" is the institution of challenging transactions in bankruptcy proceedings. In particular, such a challenge is allowed both on special grounds provided for by the Federal Law "On Insolvency (Bankruptcy)" dated 26.10.2002 No. 127-FZ (hereinafter also referred to as the "Bankruptcy Law") and on general grounds – Articles 10 and 168 of the Civil Code of the Russian Federation.

The need for the possibility of challenging on general grounds is determined by the variety of options for unfair behavior of debtors who intentionally improve their positions in the bankruptcy procedure – and thereby worsen the position of creditors. At the same time, as the Supreme Court of the Russian Federation has rightly and repeatedly stated, contesting on general grounds should remain an exclusive tool, and contesting on special grounds has priority over it (for example, the Definition of the SCES of the RF Armed Forces of 09.03.2021 N 307-ES19-20020(8.10) in the case N A56-18086/2016; The definition of the SCES of the RF Armed Forces of 09.03.2021 N 307-ES19-20020(8.10) in the case N A56-18086/2016; The definition of the SCES of the RF Armed Forces of 09.03.2021 N 307-ES19-20020(8.10) in case N A56-18086/2016).

Attempts by participants in bankruptcy proceedings to replace the contesting of transactions on special grounds of the Bankruptcy Law with contesting under Articles 10 and 168 of the Civil Code of the Russian Federation are constantly being made, but are successfully suppressed by the courts ^{[11, p. 40]}. Thus, the appeal of transactions in bankruptcy cases is currently possible on two groups of grounds:

1. Special. Specific formulations of invalidity that have priority in application.

2.                  Common. The rules on good faith and abuse of law, which have the greatest breadth and subjectivity, and can only be applied vicariously, in connection with which most of their functionality has a deterrent, preventive nature.

In our opinion, such implementation of the principle of good faith in this area fully corresponds to the concept of "smart regulation", demonstrates an actual and effective version of its application in Russian legal reality.

Thus, the manifestations of "smart regulation" are not always innovative and poorly studied legal institutions. Finding them among the usual, ubiquitous legal means is no less important for the most effective, accurate use of the latter. For example, a correct understanding by the judicial authorities of the role of the general grounds for challenging transactions in bankruptcy (prevention and exclusive application) leads to the formulation of legal positions on their subsidiarity, preventing the use of this tool as ubiquitous. On the other hand, the consolidation of the anti-deviation rule in the tax legislation is generally correct, but not enough: there are no specific compositions of "evasive" offenses, which normalizes the widespread use of Article 54.1 of the Tax Code of the Russian Federation and the excessive detail and significance of the explanations of the tax authorities. The idea of these institutions as "smart regulation" will make it possible to achieve their greatest effectiveness with the least legislative and law enforcement intervention.