The absence of a business purpose in the model of entrepreneurship as a sign of business fragmentation

The article examines the category of business purpose, widely used in tax disputes regarding the unjustified tax benefits. The author considers the business purpose in the context of the signs of business fragmentation. The question of proving the absence of a business purpose in the models of entrepreneurial activity chosen by taxpayers is relevant in science and law enforcement practice when addressing issues of business fragmentation, as the substantive meaning of the business purpose category is little studied. The author studies the genesis of the law enforcement approach to proving the absence of a business purpose, with reference to foreign law enforcement practices reflecting the formation of the judicial doctrine of business purpose, as well as analyzing the formation of concepts of business purpose in Russian law enforcement practice related to tax benefit cases. Key views of legal scholars on business purpose in identifying tax abuses aimed at obtaining unjustified tax benefits through business fragmentation are listed. The author applies general scientific methods, among which the main research method is analysis: its use in the work is related to the study of doctrinal sources. Induction is used to study law enforcement practices and case law related to the subject of research. The author identifies the absence of a unified standard for proving business purpose in tax disputes over business fragmentation. To solve the stated problem, the substantive meaning of business purpose and the aspects subject to verification to establish the presence or absence of business purpose were identified. Based on this, a methodology for researching business purpose in the model of entrepreneurial activity was proposed. Conclusions were made about business purpose as a legal category, guiding a step-by-step assessment of taxpayers' business intentions when making a transaction (operation) and the economic effect obtained from their implementation; about the inadmissibility of establishing business purpose through another attribute—the lack of independence of taxpayers participating in business fragmentation; about the list of actions for the law enforcer when checking business purpose and direct and indirect aspects proving or disproving the presence of business motives in the taxpayer's behavior when forming the business structure.

tax benefit, business fragmentation, signs of business fragmentation, business purpose, economic justification, judicial doctrine, tax disputes, judicial practice, economic effect, taxation system