The Russian Ministry of Finance has made public Letter No. 03-01-18/19214 clarifying the rights of tax authorities to readjust the taxable base in the case of selling goods and performing of works or services between related parties. Article 105.3 of the Tax Code implies that in case related parties conclude transactions under different terms than the transactions that independent persons may conclude according to section V.1 of the Tax Code, any income that would have been taken by the seller/supplier must be considered as taxable income.
Based on this provision, the Ministry of Finance considers the rights of tax authorities to organize the taxable base for corporate and individual income taxes if there is information that the taxpayer understated its tax obstacles. Again, on the basis of article 105.3 of the Tax Code, the tax authorities may reconsider the taxable base for the purposes of VAT and the mineral tax.
