The longest-awaited Russian tax law in recent years – the law on transfer pricing – was adopted on 8 July 2011 and will come into force on 1 January 2012.
By the time the law on transfer pricing comes into force, companies operating in Russia will be required to have adapted their transfer pricing policies and prepared all required documentation. This will require substantial effort over a relatively short period of time.
Multinational Enterprises (MNEs) will need to adapt rapidly to the new law and closely monitor it for any future changes in Russian commercial and economic environments:
— there will be an increasing focus on compliance, enforcement and legislative approaches, and dealing with these complex issues will provide a significant challenge;
— as Russian regulations are becoming more prescriptive, the number and complexity of tax investigations being conducted by the Russian tax authorities will rapidly escalate, and the quantum of tax adjustments will rise accordingly.
Within this framework, the design and implementation of internal pricing now represents much more than a compliance
issue. Clear, practical advice is vital for the establishment of a robust, tax effective structure.
Transfer pricing provides significant opportunities for MNEs to adapt their internal remuneration policies to maximise tax effectiveness and ensure close alignment with their business and commercial strategies in Russia.