Tax authorities are entitled to request documentation for controlled transactions from June 1st following the reporting year. When companies receive such requests, they must submit appropriate documentation within 30 days, and since it takes over a month to prepare such documentation for even only a few transactions, we recommend addressing this issue in good time.
If tax authorities find that the prices applied under controlled transactions are not in line with market level, then they will impose fines and penalties.
Which transactions are subject to transfer pricing rules?
- All cross-border transactions between related parties (since 2014);
- Cross-border transactions exceeding RUB 60 million with independent parties – offshore companies as listed by the Russian Ministry of Finance;
- Transactions exceeding RUB 1 billion with related parties in Russia;
- Other transactions as specified in Article 105.14 of the Russian Tax Code.
Why is it important for companies to prepare transfer pricing documentation?
- Companies remain aware of market prices for controlled transactions;
- Companies monitor and adjust the prices applied under controlled transactions, and this helps minimize tax payments;
- Companies end up with a single approach to pricing and financial planning;
- Companies find out about their tax risk amount and get the opportunity to minimize tax risks through various instruments.
Our transfer pricing services:
We identify controlled transactions, conduct a legal analysis and draft a report on possible risks
We verify whether pricing procedures comply with applicable law, as well as develop and implement new pricing procedures
We check whether the prices applied under controlled transactions are within market price range
We prepare the documentation for controlled transactions (transfer pricing documentation)
We provide support for submission of documentation for controlled transactions as requested by tax authorities
We provide support in case of disputes with tax authorities, defending the pricing procedure selected by clients and their position
Drawing from their extensive experience, Interccomp tax experts professionally and thoroughly check already prepared documentation for controlled transactions. The reports drafted after such verification outline the deficiencies found in the existing documentation as well as provide recommendations to rectify the identified deficiencies before submitting the requested documentation to tax authorities.