Transfer pricing legislation around the world has a single key goal: to ensure that the tax base is properly calculated, when the parties to a transaction have the ability to manipulate such prices.
In Russia, the source of regulation is Section V.1 of the Tax Code, which introduces the concept of controlled transactions, as well as specific requirements for taxpayers in terms of justifying the compliance of prices used in such transactions with the market level.
Transfer pricing rules are relevant for companies performing the following types of transactions:
The obligations of a company acting as a party to a controlled transaction include filing a notification of controlled transactions annually by May 20 of the year following the year of the transaction, and submitting documentation for tax control purposes at the request of the tax authority.
The absence of tax documentation that reliably confirms the compliance of the price in a controlled transaction with the market level entails for the company the risk of additional tax on the transaction and prosecution in the form of a fine of 40% of the unpaid tax amount.
Since 2017, Russian taxpayers who are part of international groups of companies (IGCs) are also subject to additional requirements for the disclosure of information on the conditions and results of the group's cross-border activities. The documentation submitted by the IGC members includes the notice of participation in the IGC, the country report (CbC report), global documentation (master file) and national documentation (local file). You can learn more about the procedure for submitting cross-country reporting in our overview.
*If the established thresholds for the sum of turnover for the calendar year and the «asymmetry» of taxation of the parties to domestic transactions are exceeded
**If the threshold value of 60 million rubles is exceeded in terms of the amount of turnovers with this counterparty for a calendar year
The experts of our company provide a full range of services related to the application of the transfer pricing legislation:
✔Preparation of tax documentation for the transaction, including justification of the methodology and compliance of the applied prices with the market level
✔Preparation of documentation for international groups of companies
✔Methodological support and consulting on the application of the transfer pricing legislation
✔Diagnostics of controlled transactions
✔Preparation of statistical research (benchmarking)
✔Assistance in litigation with the Federal Tax Service
✔And much more
Our industry experience
Our transfer pricing clients include international and Russian groups of companies in the following industries: