2. • 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
3. • 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
4. 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
5. 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)
6. 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.
7. 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)
8. 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
9. 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
10. Thank you
Anton Kabakov
Partner at Hellevig, Klein & Usov Llc
anton.kabakov@awaragroup.com
+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.
