Transfer pricing in Russia, 2014
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Transfer pricing in Russia, 2014






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Transfer pricing in Russia, 2014 Transfer pricing in Russia, 2014 Presentation Transcript

  • Russian Transfer Pricing 2014 Update Anton Kabakov Partner Hellevig, Klein & Usov Llc 20.05.2014
  • • Tax authorities rely on TP Rules to fight capital outflow • 4,600 notifications in 2012. Much or too little? • Head of Tax Service: approx. 300 reported transactions raised suspicion • Filling in gaps in TP regulations? TP First results
  • • All related-party cross-border transactions are now subject to transfer pricing rules. NO EXCEPTIONS. • More administrative burden: documentation and reporting obligations. • Transfer pricing audits. Deadline for initiating audits for 2012 is June 30, 2014. First audits are expected shortly More control
  • Reporting • To be filed by May 20 of the year following the reporting year • Requires a lot of efforts to collect the required information. The content of TP report is under Supreme Commercial Court consideration with a view to decrease the volume of information to be reported
  • Reporting. Content AS PER TAX CODE ADDITIONAL TAX SERVICE REQUIREMENTS • Year of transactions • Subject of transactions • Basic information about the parties to transactions • Revenue derived from or losses incurred under such transactions • Grounds for qualifying transactions controlled transactions • Delivery terms and measurement units • Country of origin of goods • Place of transaction and shipment of goods • Product unit price and quantity • Additional information about the parties to transactions • Transfer pricing methods (Optional) • Information sources used for benchmarking (Optional)
  • Price control • Controlled transactions? Of course! • If a transaction is not subject to TP rules (uncontrolled), is there any price control? Ministry of Finance: Yes, under general tax anti-avoidance rule.
  • Intragroup financing • NOW: 3 sets of regulations • Transfer pricing rules plus • Thin capitalization rule plus • General deductibility rate rule • PLANNED: Thin capitalization rule plus transfer pricing if interest rates are above set safe harbors only • FROM 2015: Thin capitalization rule plus transfer pricing (TP safe harbors are set for financing transactions with banks)
  • Intragroup financing • Are interest free loans now allowed? Not really, but they are no longer absolutely prohibited. • TP reporting and documentation requirements are waived for loans, credits, sureties, bank guarantees concluded before 2012, unless revised after 2012
  • How can companies protect themselves? If tax authorities contest the price and charge additional taxes • Late payment interest (1/300 of refinancing rate (8.25%)) • Penalty 20% of unpaid taxes in 2014-2017 • Penalty 40% of unpaid taxes from 2017 onwards What can be done? • Transfer pricing self- adjustment + payment additional tax prior to TP audit • Provide tax authorities with transfer pricing documentation
  • Thank you Anton Kabakov Partner at Hellevig, Klein & Usov Llc +7 921 39 711 93 The content of this presentation cannot substitute legal counseling, which, to be duly rendered, always requires actual and specific knowledge of the client’s particular situation.