Transfer Pricing in the Russian State Duma

On 16 February 2010 the Russian State Duma held parliamentary hearings on the topic “On legislative measures to improve pricing principles for tax purposes” where deputies discussed the draft law on transfer pricing.

In his speech at the parliamentary hearings, Sergey Pepeliaev, Managing Partner of Pepeliaev Group, pointed out that the draft law required material revisions in a number of aspects. He noted: “We need to rule out the risk that judges could exercise unlimited discretion in identifying related parties, determine the status of the Methodological Guidelines on how to establish the compliance of a transaction price with market prices and to stipulate the possibility to contest in court the refusal of the tax authorities to conclude pricing agreements, limit or cancel penalties for the re-calculation of prices according to expert assessments and other”.

The experience of lawyers working for Pepeliaev Group (which was recognised at The World Finance Awards 2010 held by The World Finance magazine as the “best Russian consulting firm in transfer pricing”) was in demand during the preparation of comments and proposals on the draft law. In accordance with a directive of the Russian Prime Minister, Vadim Zaripov, Head of the Analytical Department of Pepeliaev Group has been included in the working group of the Russian Ministry of Finance responsible for the preparation of the draft law. The written recommendations and proposals on the draft law compiled by Pepeliaev Group experts were transferred to the Russian State Duma tax committee.

The first reading of the draft law on transfer pricing is scheduled for 19 February 2010. Then three months have been set aside for revisions to the draft. It is anticipated that the law will be adopted in the second reading in June.

Lawyers from Pepeliaev Group specialising in transfer pricing plan to hold in the near future a number of seminars and training courses to prepare companies for the application of new rules for transfer pricing control.