Russia updated the requirements in respect of Country-by-Country reporting, Master File and Local File

Key changers for transfer pricing reporting

Proposed draft legislation introducing a new format for transfer pricing reporting by multinational corporate groups has been updated.


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On 6 March 2017, the Russian Ministry of Finance published an amended draft law adding new provisions to the Russian Tax Code regarding the international automatic exchange of financial account information, and providing new standards for transfer pricing documentation for multinational corporations (we described the first version of the draft law in our alert dated 16 September 2016). The published draft law is available at the federal portal for bills and regulations (in Russian only). Below we summarise the key changes and the most recent status of the latest BEPS developments in Russia.

Key changes in the draft law

Country-by-Country Reporting

Applies to multinational group companies (“MNE”) with annual consolidated group revenue equal to or exceeding RUB 50 billion in the previous year. Regulations extend to subsidiary entities. If the parent entity is foreign, the local threshold should be used to determine if a Country-by-Country report (“CbC report”) is required.

There is no direct explanation as to how the consolidated group revenue threshold should be calculated if the parent entity is in a foreign jurisdiction which does not require the submission of a CbC report.

If the ultimate parent entity (“UPE”) of an MNE or an authorised member of an MNE compiles consolidated financial statements in a currency other than the currency of the Russian Federation, it should be converted into roubles, applying the official annual average exchange rate of the respective foreign currency to the Russian rouble in the financial year immediately preceding the financial year for which the CbC report must be filed (the previous version of the law required use of the official exchange rate as at the end of the financial year).

Entities are required to notify the Russian tax authorities within 8 months (not three months as stated in the previous version of the draft law) from the end of the last fiscal year of the parent entity. For example, if the year ends on 31 December 2017, this becomes the first reporting period. The first deadline for notifications would thus be on 30 August 2018.

Provisions regarding penalties remain the same. Failure to provide the notification or the provision of incorrect information will result in a penalty of up to RUB 50,000 (penalty not applicable for 2017–2019). Failure to submit a CbC report when required or submission of incorrect information will lead to penalties of up to RUB 100,000 (penalty not applicable for 2017–2019). However, if the taxpayer identifies inaccuracies in the filed CbC report and submits a revised version before it is discovered by the tax authorities, this will exempt the taxpayer from sanctions.

The option of submitting a singular notification on behalf of several Russian-based entities who are members of the same MNE is now available. Thus, either the UPE, the MNE’s surrogate parent entity, or even another MNE’s constituent entity in Russia (if entitled by the UPE) can submit notification containing a full list of the Russian-based constituent entities.

The data sources for the CbC report have also been rectified: now consolidated financial statements prepared in accordance with IFRS or any other globally accepted accounting standards, as well as other local standards, can be used. The draft law emphasises the importance of consistency in the chosen approach to use of information sources.

The deadline for CbC report submission remains the same: it must be filed no later than 12 months after the last day of the financial year of the MNE.

Master file

The requirements for the Master file’s contents are described in more detail and are better aligned with the OECD recommendations published as part of BEPS Action 13.

Another change that would bring additional concerns to the Russian-based subsidiaries who are members of the MNE is that the new draft now entitles the Russian tax authorities to directly request the Master file from Russian taxpayers that are members of an MNE, rather than requesting it from the UPE.

In the meantime, failure to submit a Master file when required, or for submitting incorrect information, does not lead to a penalty (the previous draft law prescribed a penalty of RUB 100,000).

Local file

The obligation to prepare a Local file arises for Russian taxpayers who:

• are members of MNEs with consolidated revenue exceeding RUB 50 billion (or an equivalent threshold applied by foreign law to the non-Russian resident UPE), and

• conduct transactions with related party (-ies) from the same MNE that is (are) not Russian resident.

The new draft provisions regarding the Local file now refer to Articles 105.15 and 105.17 of the Russian Tax Code. This means that the Local file should contain the same structure and content as the national transfer pricing documentation on controlled transactions that taxpayers must prepare under current transfer pricing rules for taxation purposes. The difference arises in the part concerning the additional information that must be included to complete the document with content in line with OECD recommendations published as part of BEPS Action 13.

The new draft law does not expressly state that national transfer pricing documentation is fully replaced by the Local file. Neither is it specified whether the Local file should be prepared for one particular transaction (as it should be for national transfer pricing documentation) or for all transactions.

A Russian taxpayer, part of an MNE, must provide the Local file upon request from the tax authorities within the same timeframes as stipulated for the local transfer pricing documentation on controlled transactions, i.e. not earlier than 1 June of the year following the calendar year in which the controlled transactions took place, and within 30 working days from the tax authorities’ request.

Failure to submit the Local file when required or for submitting incorrect information does not lead to a penalty (the previous draft law prescribed a penalty of RUB 100,000).


Country information (CbC report, Master file, Local file) should be presented in Russian, and all figures reported in Russian roubles. There is nothing to prevent taxpayers additionally presenting Country information in a foreign language.

There is an exception granted only to MNE’s which have a UPE that was not a Russian tax resident in the reporting year. In this case, the CbC report may be provided in a foreign language.

New definitions implemented

The definitions of certain terms have also been updated:

̶  MNE’s ultimate parent entity;

̶  MNE’s authorised entity;

̶  consolidated revenue.

The definitions of these terms have been brought into line with the OECD Guidelines published as part of BEPS Action 13.

The draft law is now being considered from the point of view its regulatory influence.

Given development of this draft legislation, we would recommend that companies that are members of the MNEs falling under the requirements outlined above assess the scope of potential obligations and necessary disclosures in Russia. Local subsidiaries of foreign-owned MNEs should communicate the latest developments regarding BEPS implementation in Russia to their head offices or subholdings. These steps will help the MNEs prepare processes, make arrangements, and identify risks by the date on which the new requirements take effect.

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