The federal tax service of Russia has published guidance for lower tax authorities to follow in investigating the reasonableness of expenses claimed for intra-group services.
The tax authorities did not have a unified approach to verifying expenses claimed for intra-group services. On 6 August 2020, the guidance Letter No. SHU-4-13/12599 instructs lower tax authorities on how to verify expenses claimed in relation to intra-group services and specifically in terms of the economic justification and the sufficiency of supporting documentation with regard to the intra-group services.
In accordance with the guidance, the lower tax authorities required to verify the following issues:
- Services were actually rendered and there are no claims of expenses for identical services;
- There is a transparent pricing methodology;
- The services have economic or commercial value; and
- The expenses claimed by the taxpayer do not constitute compensation for expenses on shareholder activity.
