The first year under the new rules: a review of the Russian Finance Ministry clarification on transfer pricing
2013 was an important milestone in the implementation of Russia's international principles of transfer, ie, intra-,pricing, developed by the Organization for Economic Cooperation and Development, the observance of which is intended to bring Russia closer to the international community in monitoring transactions between related parties.
Since January 1, 2012 Act came into force , replacing the Articles 20 and 40 of the Tax Code of the Russian Federation, section VI "Interrelated persons. General provisions on pricing and taxation. Tax control in connection with the commission of transactions between related parties. Pricing agreements" containing detailed regulation of conditions and procedures for exercising state control transactions between parties if one of them may be due to any circumstances influence the conditions and (or) the results of the transactions made between the parties, and (or) economic results of their activities.
First controlled transactions under the new rules were made in 2012, but in fact their consequences Russian organizations and individual entrepreneurs faced in 2013. At the same time, and first revealed the difficulties associated with the implementation of legislative provisions.
Recall that the perpetrators of controlled transactions in accordance with Chapter 14.4 of the Tax Code of the Russian Federation, the following responsibilities:
1. At the request of the tax authority to provide information confirming that the commercial and (or) financial conditions of controlled transactions are consistent with those that took place in comparable transactions, taking into account the adjustments made to ensure comparability of commercial and (or) financial conditions matched transactions, parties are individuals not recognized as interdependent with the terms of the controlled transaction (documentation for tax transfer pricing control) .
2. Not later than 20 May of the year following the year of the commission of controlled transactions, notify them about the tax authority in the manner prescribed by the Tax Code.
If the first obligation does not arise automatically, but only in the case of receipt of the claim authorized tax body, the second was a real test of character for the management of participating companies controlled transactions. By the time it was necessary to start the preparation of notifications were not approved by their shapes and sizes (by the way, they were approved only by the end of July ). Only 5 April 2013, given the situation, the legislature extended the deadline for notification of transactions made in 2012, to 20 November 2013 inclusive .
With the challenges participants faced another level of controlled transactions, to begin preparations for the transfer documentation, without waiting for checks. Throughout the past year, such persons are actively traded in the authorized bodies of executive power. Here are the most important explanations provided by the Ministry of Finance of the Russian Federation on transfer pricing in 2013.
A unified formula for determining interests to establish the fact of the interdependence of the contracting parties
Russia's Finance Ministry has developed and brought to the attention of taxpayers technique that can be used to determine the interests of parties to transactions in the share capital of each other. Methodology encompasses methods of establishing stakes for different interdependence, including resulting from indirect participation of the authorized capital of each other in various ways. Here are a few examples:
1. Calculation of the share participation of each other in " crossover " participation. Schematically "cross " the participation of organizations in the authorized capital of each other can be represented as follows (values given conditional)
To determine the percent of "cross " participation calculate the interest of the two in itself :
60 % * 50% = 30% = 0.3
Win " cross " participation distributed between external participants in proportion to their share. For this purpose, the nominal percentage of participants must be increased by a factor of 1.429 = 1 / (1-0,3).
Thus, the actual shareholding in Organizations 2 and 4 (connected " cross " participation) as follows:
- in the share capital of the two:
Organization 1 - 28.6%
Organization 3 - 42.8%
Organization 5 - 28.6%
- in the share capital of the 4:
Organization 1 - 17.2%
Organization 3 - 25.7%
Organization 5 - 57.1%
2. Calculation of the share participation of each other in " ring " participation. Schematically, a "ring " participation by organizations in the authorized capital of each other can be represented as follows (values given conditional)
To determine the percentage of " ring " participation calculate interest each of Organizations 1, 2 and 3 in themselves :
80 % * 50 % * 30% = 12%
Win " ring " participation distributed between external participants in proportion to their share. For this purpose, the nominal percentage of participants must be increased by a factor of 1.136 = 1 / (1-0,12).
Thus, the actual shareholding in Organizations 1, 2 and 3 (connected " ring " participation) as follows:
- in the share capital of the 1:
Organization 4 - 79.5 %
Organization of 5 - 3.4%
Organization of 6 - 17.1%
- in the share capital of the two:
Organization 4 - 63.6%
Organization 5 - 22.8%
Organization of 6 - 13.6%
- in the share capital of the 3:
Organization 4 - 31.8%
Organization 5 - 11.4%
Organization of 6 - 56.8 %
Despite the fact that the respective formulas have been developed for use by banks taxpayer is recommended to apply analogous methods, as they plan for use during inspection and representatives of the tax authorities.
Defines "date of transaction" for the purposes of notification controlled transactions and the transfer documentation
The Tax and Customs Tariff Policy of the Russian Finance Ministry confirmed that for the purposes of the definition of " date of transaction " should be used definition of transaction in accordance with the civil legislation of the Russian Federation. Transactions are actions of citizens and legal entities, aimed at the establishment, modification or termination of civil rights and obligations.
Since the transaction pursuant to a contract concluded in writing by the parties may be concluded orally, if it is not against the law, other legal acts and contract as the date of the transaction pursuant to a contract concluded in writing, can be considered the date of transactions in execution of the transaction, aimed at the establishment, modification or termination of civil rights and obligations.
In other words, each operation under a single contract, which the commission says about the establishment, modification or termination of certain rights and obligations of the parties hereto shall be recognized independent transaction.
The conditions for the recognition of regulated prices by market transactions
Russia's Finance Ministry has expressed its opinion on the price of transactions in respect of which provided for by regulation or pricing approval of an authorized executive authority of the pricing formula, the establishment of maximum and (or) the minimum price limits, the price markups or markdowns or by other restrictions on profitability or profit. prices of such transactions are recognized market for tax purposes, taking into account individual characteristics.
If the transaction does not set minimum and (or) the maximum price and the minimum and (or) the maximum price premiums or discounts to set prices or other restrictions on the dimensions of profitability or profit, the market price intervals (intervals of profitability), determined in accordance with general procedure, subject to adjustment based on the controlled range.
At the same time, according to the Department of Tax and Customs Tariff Policy of the Russian Finance Ministry, approved the presence of federal programs aimed at the development of certain industries and the priorities, not in itself constitute grounds for the recognition of market prices.
For purposes of determining the profitability of comparable transactions is permissible to use accounting data of the parties without further adjustments.
Margins and other financial measures for transfer pricing purposes defined for Russian organizations on the basis of accounting (financial) statements, which are prepared in accordance with Russian legislation on accounting.
For foreign companies, these financial indicators are defined on the basis of the accounting (financial) statements, which are prepared in accordance with the laws of foreign countries. Moreover, for purposes to conform to the accounting (financial) statements, which are prepared in accordance with Russian legislation on accounting, the adjustment is carried out such data.
In determining the profitability of other persons for the purpose of comparison with market profitability interval may be guided by profitability indicators (other financial indicators), defined on the basis of accounting (financial) statements of other persons subject to the accessibility requirements specified reporting.
Thus, in the case of calculating profitability on the basis of accounting (financial) statements of other persons, according to the Department of Tax and Customs Tariff Policy of the Russian Finance Ministry, with the specified parameters can be mapped margins in respect of analyzed transactions or groups.
Confirmed the right of organizations to use as a source of information on comparable transactions data on transactions between third parties, are not related
The Tax and Customs Tariff Policy of the Russian Finance Ministry explained that the preparation of documentation and justification of the pricing method in the controlled transaction is possible to use the information of the counterparty, including pricing counterparty with independent individuals, provided the possibility of obtaining similar information by the tax authority, if such information is correct requirements of the Tax Code of the Russian Federation.
The possibility of obtaining the tax authority of the above information, in particular, can be achieved by providing a taxpayer within the documentation concerning the specific transaction (group of similar transactions) information indicating the sources of information used, with the application source of such information.
The procedure for the calculation of income from controlled transactions, if at the time of notification the exact amount of income the counterparty can not be determined
The Tax and Customs Tariff Policy of the Russian Finance Ministry clarified that if the taxpayer has no information on the amount of income of another party, for the purpose of determining the amount of income from transactions in a calendar year may be used by the calculated value of the amount of income that participant, determined based on the order established for the purposes of calculating the tax on profit, using the accrual method .
Specified conditions for the formation of homogeneous groups of transactions in providing accountability for transfer pricing purposes
The Tax and Customs Tariff Policy of the Russian Finance Ministry explained that the formation of homogeneous groups of transactions for the purposes of the transfer documentation subject of the transaction is of secondary importance. The main factors affecting pricing are the kind carried on by the activities and related functions.
Given the above, according to the Ministry of Finance of the Russian Federation, a group of homogeneous transactions recognized set of transactions in which the same:
- performed party analyzed the transaction function;
- the method used in the determination of income for tax purposes (profit, revenue) in transactions which the parties are interdependent persons ;
- selected indicator of profitability for the activities carried on by the analyzed transaction;
- actual margins comparable organizations, defined on the basis of accounting (financial) statements, or transactions made by the taxpayer with independent parties.
In the case of transactions in group association on the above parameters taxpayer may determine the list of transactions included in such a group, guided by the principle of completeness and reliability of comparable parameters.
When submitting relevant information to a group of similar transactions in the preparation of notice need not be a reflection of information describing the specific items of the transaction (unit price of the subject transaction, quantity, location of the transaction, place of origin of the goods and other similar indicators, related to the specific subject of the transaction).
In turn, the taxpayer using a grouping shall be disclosed by the name of a group of similar transactions, the amount of revenues (expenses incurred) and the pricing method used .
Perhaps as a result of close cooperation of the taxpayers and the Ministry of Finance is currently formed, perhaps, an extensive layer acts of interpretation of legal norms, which allows sufficiently accurate to officiate documenting controlled transactions. Undoubtedly, the "pitfalls" of transfer pricing will emerge, the tax authorities will begin to audit compliance with Section VI of the Tax Code, but that we can only talk on the results of 2014.