C Cases has prepared an analysis of the amendments to the Tax Code of the Russian Federation (the "Tax Code") that will affect many participants in the legal services market, as well as businesses and ordinary citizens.

On 23 July 2024, the State Duma adopted in the second and third readings a law amending the Tax Code that will significantly change the amount of state duty payable when going to court.

We will not list all the changes, only the most significant ones.

Claims

Property claims. For civil and administrative cases, the minimum duty will increase tenfold (from RUB 400 to RUB 4,000) and the maximum fifteenfold (from RUB 60,000 to RUB 900,000).

For comparison, a claim of RUB 8,500,000 currently attracts a state duty of RUB 50,700; once the law is adopted, it will be RUB 81,750.

For non-property claims, the duty will rise from RUB 300 to RUB 3,000 for individuals and from RUB 6,000 to RUB 20,000 for legal entities.

Arbitrazh proceedings

The most significant changes affect arbitrazh (commercial court) proceedings.

The minimum duty will increase fivefold (from RUB 2,000 to RUB 10,000) and the maximum fiftyfold(!) (from RUB 200,000 to RUB 10,000,000).

Filing a claim for RUB 20,000,000 now costs RUB 123,000; after the changes, the duty will be a modest RUB 425,000.

Appeals

For individuals, the duty for appealing a court order will be RUB 3,000 instead of RUB 150 in civil and administrative cases, and RUB 10,000 in arbitrazh cases. For businesses, it will rise from RUB 3,000 to RUB 15,000 and RUB 30,000 respectively.

Duties for cassation appeals will rise for individuals from RUB 150 to RUB 5,000 in civil and administrative cases and to RUB 20,000 in commercial disputes. For legal entities — from the current RUB 3,000 to RUB 20,000 and RUB 50,000 respectively.

For a petition to declare a debtor insolvent (bankrupt), the duty for individuals will increase 33-fold — from RUB 300 to RUB 10,000 — and for legal entities from RUB 6,000 to RUB 100,000.

The law provides for significant increases in state duties for filing all kinds of applications and appeals, but we see no practical need to list them all.

The advantages and disadvantages of the upcoming changes.

Disadvantages of the changes

1. Restricting citizens' and businesses' access to justice. Simply put, high duties will leave many people (especially in Russia's regions) and micro and small businesses with less opportunity to go to court and appeal unlawful decisions.
2. Higher state duties will significantly increase the overall cost of litigation, since in addition to the duty one has to pay for legal services and often for expensive expert examinations.
3. Private representatives and small law firms, especially in the regions, will lose a large number of clients (which follows from the first two points), which in turn will have a negative economic effect.

Advantages of the changes

1. Reducing the workload of courts and individual judges, especially in Moscow and other large cities, will lead to more detailed and correct consideration of cases (in theory). Currently, about 50% of decisions are appealed (around 400,000 cases!), and then another 40% of those cases go to cassation (around 170,000 cases), although appeals succeed in only about 10% of cases.
2. Hearings being postponed for months, delays of several hours at hearings and waiting 2–3 months for judgments to be written should also become a thing of the past.
3. The number of unfounded or obviously inflated claims will fall significantly, which will also have a positive effect on the work of the courts and qualified representatives.
4. The role of mediation and arbitration will grow. People will settle many everyday matters more often. Businesses will prefer arbitration, as proceedings there are faster and of higher quality than in state courts. Many used to be put off by the high arbitration fee, which has now become equal to the state duty and in some cases lower.
5. The role of highly qualified representatives will be strengthened, since representatives will now need to pay extra attention to arguments and documents when formulating claims in order to save the client's money.

It is hard to predict what changes the new law will bring, but C Cases lawyers are confident that it will not have a negative effect on our practices, since we always assess the prospects of a case objectively and do not commit clients to unjustified costs.