On 3 May 2018, Russia published Decree No. 60 on the Official Gazette, which approves the procedures for the conclusion of advance pricing agreements (APAs).  The Russian Finance Ministry delegated the competent authority powers with respect to bilateral and multilateral APAs to the Federal Tax Service (FTS) for the purposes of conducting respective mutual agreement procedures (MAPs) with competent tax authorities of tax treaty partner countries. The main aspects of the procedures are summarized as follows:

Formal application: The application procedure contains the recommended form and a list of documents required for the APA process to formally start. A formal APA application should be submitted in both jurisdictions in order for the FTS to commence communication with the competent authority of another state.

Consideration of the taxpayer’s application: In considering the application, the FTS may conduct additional discussions with the taxpayer and request additional information. If the application process progresses, mutual consultations will be held with the relevant foreign competent authority. The time limits provided in Article 105.22 of the Tax Code apply, which include that the review by the FTS should be completed within 6 months, but may be extended to 9 months. Consequently, the FTS may either: (i) initiate negotiations between the competent authorities; (ii) suggest amending the APA; or (iii) reject it.

Negotiations between competent authorities: Negotiations will be held with the relevant foreign competent authority to reach mutual agreement and conclude an APA. During the process, the tax authority may request additional information from the taxpayer regarding issues that arise during the negotiations. Taxpayers may be informed of the negotiations (at their request), however, any mutual agreement and correspondence of the competent authorities are not provided to the taxpayer. If no mutual agreement is reached, the APA application is rejected.

Implementation of the Mutual Agreement of the Competent Authorities: A copy of the mutual agreement itself is not made available to the taxpayer but is used as a basis for signing an APA with the taxpayer. If a mutual agreement is reached between the FTS and the foreign competent authority, the FTS will put forward to a taxpayer the conclusion of an APA on the terms agreed in the Mutual Agreement or to amend the draft APA in order to comply with the Mutual Agreement. If the taxpayer agrees, an APA will be concluded.

In conclusion, if the mutual agreement is reached between the competent authorities, the FTS will take one of the following decisions:

• A decision on the need to finalize the draft pricing agreement with respect to foreign trade transactions (subject to the provisions of the mutual agreement of the competent authorities); or
• A decision to conclude a pricing agreement with respect to foreign trade transactions.

If the decision is a necessity for the conclusion, the taxpayer must submit a revised draft of the APA within 30 days of receipt of the decision. If the revised draft complies with the mutual agreement of the competent authorities, a decision on the conclusion of the APA will be taken. If a revised draft is not submitted, the application will be rejected and the foreign competent authority informed.

Once the FTS has made a decision to conclude an APA, the taxpayer must respond within 30 days to notify its acceptance or rejection. If the taxpayer does not respond within 30 days, a disagreement is assumed. If accepted, the APA is complete.