We would like to remind that before May 20, 2018, all companies that had controlled transactions in 2017 must submit notices of controlled transactions to the tax inspectorate. The transfer pricing rules apply to all transactions related to the provision of financing and credit agreements (with small exceptions), royalties and licensing agreements, supply contracts and service agreements between Russian companies and their foreign affiliated companies, even if the transaction price is zero. In other words, all cross boarder related party transactions.
We would like to draw your attention that the preparation of notifications does not relieve from the obligation to annually prepare documentation on controlled transactions with the justification of the market price level in controlled transactions. The documentation for the 2017 deals should be ready by June 1, 2018.
Failure to submit or late submission of a notice, as well as submission of a notification with inaccurate information, entail a fine of 5,000 rubles for a legal entity. In addition, if the tax base is underestimated because of the application of non-market prices, the organization faces a fine of 20% of the unpaid tax, but no less than 30,000 rubles, for transactions made in 2014-2016. Since 2017, the size of the fine has increased to 40%.
Experts of Emerging Markets Group are ready to offer you their assistance in the following actions: collection of data on controlled transactions for 2017, preparation of notification, and submission of notice to the tax inspection. Companies for whom EMG provides accounting services will be contacted individually regarding the preparation of the notification due on May 20.