Transfer pricing

Russian legislation, in particular the Tax Code of the Russian Federation and Law No. 227-ФЗ “On Amendments to Certain Legislative Acts of the Russian Federation due to Improvement of the Principles of Determining Prices for Tax Purposes”, following international practice, and using recommendations of Organization of the Economic cooperation and development; from 01.01.2012 obliges taxpayers to notify tax authorities about controlled transactions and provide reports on transfer pricing methods used in operations with interdependent parties confirming that the transaction was carried out at market prices.

Interdependent parties are parties who, due to the nature of their relationship, can influence

the terms of transactions;
transaction results;
economic performance.

As a general rule, transactions between interdependent residents of the Russian Federation and foreign trade transactions (import and export of goods) between related parties are recognized as controlled transactions, regardless of the amount of income received from such transactions.

In accordance with the requirements of the legislation, companies conducting controlled transactions shall be obliged:

Annually before May 20, submit to the tax authorities a notice of the controlled transactions performed;
At the request of the tax authorities, provide transfer pricing documentation (prepared in accordance with the new transfer pricing rules).

Ignoring by the companies of the requirements of the Russian transfer pricing rules can lead to significant tax risks, as well as significant fines.

OFFERED SERVICES

We offer services on the qualified preparation of a notice of controlled transactions, completed in accordance with the requirements of tax legislation, as well as services on preparation of documentation for tax control purposes and consultancy in transfer pricing.

Project description and results

Within the scope of our offer, we will analyze transactions; prepare a complete package of documents on controlled transactions and notification for the tax control for the reporting period.

Work will be carried out in three stages:

Inventory of transactions, identification of controlled transactions for the reporting period.
Preparation and provision of notification on controlled transactions for the reporting period.
Preparation and provision of documents on controlled transactions for tax control purposes for the reporting period.

Description of the work stages

Inventory of transactions, identification of controlled transactions for the reporting period.

At this stage, an analysis of the structure of interaction between the company and its counterparties will be carried out in order to identify interdependent entities. Based on the results of the analysis, an inventory of transactions will be conducted. The result of the inventory is the identification of controlled transactions, which is crucial for the preparation and submission of documents and notification of the controlled transactions.

Notification of controlled transactions

The final document presented on the results of work at this stage will be a notification of controlled transactions. The notification will be prepared and provided in accordance with the current requirements of the tax legislation of the Russian Federation.

Documentation on controlled transactions

Documentation on controlled transactions is a study of the compliance or non-compliance of prices in conducted transactions with a market condition. Documentation must be drafted at the time of the transaction. The package of prepared documents will be based on information on global operations and transfer pricing approaches used in the group of companies and will include:

Description of goods that are the subject to a controlled transaction;
Description of the market where the company operates;
Description of the ownership structure of the Group, which includes parties influencing the pricing;
Description of the competitive advantages of the Group;
Analysis of the comparability of the commercial and financial conditions of transactions;
Functional analysis;
Description of pricing methods for controlled transactions;
Justification of the pricing method;
Description of the used information sources;
Economic analysis;
Calculation of the range of market prices (profitability range);