The Federal Tax Service of Russia has issued Letter No. OA-4-13/11860 clarifies the requirements for filling out the notification that taxpayers have to submit when they engage in certain types of controlled transactions under the transfer pricing rules. Taxpayers have to annually notify the tax authorities of all controlled transactions provided in article 105.14 of the Tax Code that were ended during the previous calendar year. The Federal Tax Service has clarified some aspects that should be considered when filling out the notification, such as:
– cases when similar transactions may be grouped together;
– rules applicable in the case of construction contracts as regards the recognition of income and expenses;
– rules regarding transactions denominated in foreign currency. For example, the price should be converted into doubles on the date of recognition of the transaction for accounting purposes and recorded in the notification in doubles;
– rules on recognition of property received free of charge. For example, the income reported in the notification should be the current market value of the asset; and
– the information to be provided in the case of setting off losses due to non-compliance with obligations.
