In world and Russian practice, special taxation rules are widely used for transactions in which groups of related parties are involved. The establishment of special prices for such cases is called transfer pricing.
A transfer price is called a price that is valid in the implementation of business transactions between different divisions of the same company or between entities that are part of a single group of companies. Accordingly, transfer pricing is a purposeful pricing activity between these businesses.
These prices make it possible to redistribute total profits in favor of those who are in countries with low taxes. The establishment of transfer prices is one of the most widespread methods of tax planning and minimization of taxes paid in favor of the state in the world practice.
For this reason, transfer prices have become an object of control by the government's fiscal services. For example, the Tax Code of the Russian Federation provides for a special section, which spells out the powers of the tax authorities to control pricing when making transactions between related parties. The approaches of the Russian tax authorities in this area are closely related to the principles that are widely used by foreign tax administrations.
The earliest attempts to regulate transfer pricing were made by the United States of America in the mid-1960s. The current Russian legislation in this area has been in effect since 2012. The law establishes that any transactions between related parties are controlled from the standpoint of the regulation of transfer prices. In some cases, the tax service has the right to compare the prices actually used by taxpayers with market prices. If significant and unjustified deviations from market prices are revealed, the fiscal authorities have the right to charge additional taxes.
At the same time, the objects of control are transactions with a turnover of more than 1 billion rubles per year; transactions where the participants are foreign related parties; where one of the parties applies special tax regimes (UTII, STS), as well as a number of other transactions stipulated by the legislator. For transactions of this kind, the taxpayer must submit a relevant notification to the tax service and prepare special reports on transfer pricing.
Companies that specialize in solving issues directly related to transfer pricing are successfully operating in Russian business practice. Specialists of such companies conduct training in pricing methods, carry out consulting projects for enterprises of various production orientations.
Optimization of taxation requires knowledge of the legislation in the field of transfer pricing, the ability to properly maintain the appropriate document flow, and also reasonably apply prices for those transactions that are subject to tax control.
One of the key points in the field of transfer pricing is the correct diagnosis of pricing risks, which is carried out taking into account the production and marketing activities of enterprises, the existing supply system, and the structuring of intra-group transactions. Competent determination of transfer prices also requires effective management and interaction between various departments of the enterprise as part of a set of measures to ensure strict compliance with tax requirements.
The Ministry of Finance of Russia and the tax authorities of the country are actively involved in explanatory work on issues that arise in connection with the introduction of the updated legislation on transfer prices. The application of the law in this area is often associated with difficulties arising from the ambiguity of the wording of certain provisions and the laboriousness of reporting.
In developing transfer pricing rules, the legislature took as a basis the principles of price comparison developed in a number of foreign countries. Experts do not exclude amendments to the domestic tax legislation regarding transactions with intangible assets. These changes and restrictions will be aimed at counteracting the erosion of the tax base and the possible withdrawal of corporate profits from taxation.
