Recently, the Russian Ministry of Finance has adopted a guidance letter (No. 03-12-12 / 1/39688 of 05.31.2019) clarifying the recognition of persons as related for transfer pricing purposes.
The Guidance Letter No. 03-12-12/1/39688 says that under Tax Code article 105.1, section 1, parties are deemed to be interdependent for tax purposes if the characteristics of the relations between them can influence the conditions or results of transactions made by these persons or the economic results of these persons or the activities of the persons represented by them.
For the purposes of Article 105.1 of the Tax Code of the individual participation share in the organization, the aggregate participation share of this individual and his children in the specified organization is recognized.
At the same time, organizations or individuals that are parties to a transaction are entitled to independently recognize themselves for tax purposes as interdependent parties.
In addition, the court may also recognize persons to be interdependent for other reasons not provided for by paragraph 2 of Article 105.1 of the Tax Code, if the relations between these persons have the features indicated in paragraph 1 of this article.
According to article 105.1, section 2, the Ministry of Finance said that for the purposes of the Code, the persons listed in paragraph 2 of this article shall be recognized as related persons.
