International Tax Newsletter - Spring/Summer 2012 - Russia
NEW TRANSFER PRICING REGULATIONS
New rules for the taxation of related party transactions came into force in 2012.
The following five transfer pricing methods have been introduced:
- method of comparable market prices
- method of the subsequent sale price
- cost method
- method of compared profitability
- method of profit distribution.
Two or more of these methods may be used at the same time.
Cross-border transactions involving goods traded on commodity markets and transactions where one of the parties is registered, lives or is a tax resident of the state or the territory included into the List of States and Territories adopted by the Ministry of Finance of the Russian Federation shall be treated as transactions between related persons.
This list includes Cyprus, Hong Kong, Liechtenstein, and the Channel Islands (Guernsey, Jersey, Sark, Alderney).
On an annual basis, a taxpayer shall notify local tax authorities about effected controlled transactions.
INCOME TAX CHANGES
All income received by a foreign company from the sale of shares in Russian companies where more than 50% of the assets consist of immovable property located in the territory of the Russian Federation and from financial instruments derived from such shares shall not be treated as income from sources within the Russian Federation and shall not be subject to taxation, provided such shares are recognised as shares traded on an organized stock market.
INTERNATIONAL TAX TREATIES
The income tax treaty between Chile and the Russian Federation dated 19 November 2004 was ratified on 28 February 2012.
The Protocol dated 7 October 2010, amending the income-tax treaty between the Russian Federation and Cyprus, dated 5 December 1988 was signed on 28 February 2012.
More information on these developments can be provided by Nadejda Orlova, PKF Russia, through the EisnerAmper contacts listed at the end of this Newsletter.
International Tax Newsletter - Spring/Summer 2012 Issue