The Russian Ministry of Finance (MoF) has issued Letter No.03-01-18/38106 on September 16, 2013 that explains whether transactions with individuals should be treated as controlled transactions for the purposes of transfer pricing regulations. According to section 2(4) of article 105.14 of the Tax Code, controlled transactions include transactions with related parties if all the parties have registration place or tax residence in Russia and if one of the parties is exempt from corporate income tax.
The Russian MoF has declared that transactions with individuals should not be classified as controlled transactions on the basis of section 2(4) of article 105.14 of the Tax Code. Besides, MoF stresses that under certain conditions, transactions may qualify as controlled transactions, i.e. if one of the parties to a domestic transaction concluded with a related party pays unified agricultural tax and the income obtained from such transaction exceeds RUB 100 million.
