MOSCOW, November 2 The Russian Ministry of Finance is preparing a bill to prevent currency violations by businesses through the use of non-market prices in transactions, the State Secretary said – Deputy Minister of Finance Alexey Sazanov.
“The issue of improving the mechanism for controlling prices in transactions between interdependent persons is currently being considered in order to reduce the possibility of tax evasion. The bill developed by the Ministry of Finance of Russia and the Federal Tax Service of Russia conceptually changes the approach to the administration of transfer pricing — the circle of interdependent persons is expanding, the depth of inspection is increasing, and fines are increasing (up to 40% of the tax base adjustment), the approach to determining the market price is being improved,” Sazanov said at a meeting with business at a B1 company event.
“One of the key objectives of the amendments is to minimize cases when foreign exchange earnings from foreign trade transactions are not returned to Russia due to abuses by taxpayers through the use of non-market prices in transactions,” he said.
According to him, it is planned to provide for the possibility of tax authorities adjusting prices in transactions between related parties to the median value of the market price interval (profitability interval), and not to the minimum.
He recalled that on December 31, 2023, the period of validity of “extended” intervals of maximum interest rates for tax purposes on debt obligations arising from controlled transactions ends.
“The Ministry of Finance is ready to discuss such an extension if it is necessary and justified, however, we believe that maintaining 0 as the lower limit of the interval is excessive,” he emphasized. Sazanov also noted that it is planned to introduce changes to the tax legislation that will allow the collection of tax at source on the amount of additional charges for transfer pricing (transfer pricing).
In addition, according to him, it is planned to introduce a withholding tax on services (15%) services provided by foreign related parties in order to minimize the use of intra-group services as a tool for distributing profits abroad.