Transfer pricing (controlled transactions, interdependent persons, section V.1. of the Tax Code of the Russian Federation)
Main stages of provision of our services are:
1. Preparation of a notification about controlled transactions to be submitted to the tax authorities:
- we will create a list of related parties, taking into account the criteria established by the Tax Code of the Russian Federation;
- we will create a register of controlled transactions on the basis of an analysis of provided agreements (including mixed contracts, containing different types of obligations);
- we will create the notification in accordance with the form, established by the Order of the Ministry of Finance of the Russian Federation of 27 July 2012 No. MMB-7-13/524@.
2. Selection and justification of the method of pricing
2.1. We will carry out a functional analysis of controlled transactions, including an analysis in terms of the comparability of commercial and/or financial conditions:
- we will determine the criteria of comparability of commercial and/or financial conditions of the controlled transactions;
- we will carry out an analysis of the functions performed by the parties to the transactions, including of the characteristics of the assets used by the parties to the transactions, the risks accepted by them, as well as the distribution of responsibility between the parties to the transactions.
2.2. We will carry out statistical studies in accordance with the provisions of section V.1. of the Tax Code of the Russian Federation:
- we will create a list of comparable transactions or comparable organisations on the basis of publicly available sources of information (statistical databases);
- we will distinguish groups of controlled transactions for the purpose of justifying the conformity of their prices with market one;
- we will investigate the market price range (market profitability range) and assess the conformity of the prices (profitability) in the controlled transactions, using the selected range.
2.3. We will select a method of pricing for taxation purposes for each transaction and/or for each type of transactions:
- we will carry out an analysis of the pricing methods actually used by the client when carrying out transactions with related and third parties, to verify that such methods comply with those established by the Tax Code of the Russian Federation;
- we will select a method of pricing for taxation purposes.
3. Preparation of a package of documents, justifying the prices relating to controlled transactions, to be submitted to the tax authorities.
We will prepare the necessary information, required by Article 105.15 of the Tax Code of the Russian Federation, on the client’s activity, as well as the rationale behind the pricing methods used, in relation to controlled transactions.