The Russian Federal Tax Service on how to conclude advance pricing agreements for tax purposes.

27.01.2012

Legal Update No. 322
 

Goltsblat BLP advises that the Federal Tax Service has circulated Letter of No. OA-4-12/85@ dated 12 January 2012 on how to conclude advance pricing agreements for tax purposes.

For tax purposes, an advance pricing agreement (“APA”) is an agreement between a major taxpayer and the Russian Federal Tax Service on the procedure for determining prices and applying pricing methods in transactions subject to transfer pricing control for tax purposes. The Tax Code of the Russian Federation allows filing an application with the Russian Federal Tax Service for concluding an APA only by taxpayers that are Russian organisations. Permanent establishments of foreign companies are not allowed to apply for APAs.

The Russian Federal Tax Service advises that, in concluding APAs, it will be governed by the Tax Code of the Russian Federation, Russian Federation double tax treaties and other Russian laws, as well as generally accepted international principles for concluding such agreements, particularly those contained in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. It is specifically stated that, if a relevant Russian Federation double tax treaty exists, the APA needs to be concluded at the taxpayer's initiative between the taxpayer, the Russian Federal Tax Service and the competent state authority of the relevant foreign state (“bilateral agreement” as referred to in the OECD Guidelines).

In addition, the Russian Federal Tax Service points out that conclusion of an APA is voluntary for the parties and reserves the right not to do so in certain circumstances, for example, if during consideration of an application for concluding an APA there are reasons to believe that it will facilitate tax evasion.

The Russian Federal Tax Service describes in detail the procedure for concluding APAs and points to the possibility of preliminary discussion of its key provisions. The letter contains recommendations regarding additional information required for conclusion of an APA, application forms for initial and repeat submission of draft APAs, as well as a tentative list of documents that can be requested separately and the procedure for doing so.
 
For additional information, please contact:

to Andrey Shpak
Partner, Tax Practice
Goltsblat BLP
T: +7 (495) 287 44 44
E: info@gblplaw.com

to Anna Zelenskaya
Associate, Tax Practice
Goltsblat BLP
T: +7 (495) 287 44 44
E: info@gblplaw.com

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