The Federal Tax Service will be obliged to carry out compensating adjustments

The Ministry of Finance of the RF has prepared amendments to the Tax Code, according to which companies will get the right to apply to the Federal Tax Service for carrying out of compensating adjustments to accrued taxes. The innovation acquires especial actuality in the situation with the transfer pricing. Because transaction price affects both sides, one side receives proceeds from sales, another one - incurs expenses on transaction security. And if formerly it was possible to correct only one of these performances (proceeds or purchase costs) by the decision of taxation authorities, then now after the adjustment of one of them the allocation of another will follow. Both parties are placed into fair economic field, what on its own is a meaningful step forward. Today under the current scheme, by the additional tax assessment by the one side, another side has the right to reduce the tax amount by the same rates. Carrying out of such adjustment by the transaction party in case of self-increase of tax amount by its contractor is not provided. If amendments are accepted, then similar contradiction is settled.

Even so there are unsatisfactory features in the suggested innovations, first of all it is due to the fact that the bill will allow to carry out compensating adjustments only to related-party transactions, while the voluntary increase of taxation base is provided as well in related-party, as in uncontrolled transactions. One more essential fault is that only Russian organizations will be able to carry out compensating adjustments, IE and foreign companies are deprived of this right. It may be assumed that the Ministry of Finance was motivated by purposes of deoffshorization of the economy – to deprive similar foreign enterprises of this advantage, because most often, as is known, just foreign contractors are offshores, fly-by-night companies founded for « tax mitigation».

Information agency Credinform is developing own independent transfer pricing module, which will allow the parties to a transaction to put a fair contract price on the group of associated companies.