Preparing Notifications on Controlled Transactions

Who must prepare notifications?

  

According to art. 105.16 of the Russian Tax Code, taxpayers have to notify the tax authorities of all controlled transactions performed by them within the calendar year.

Russian companies, as well as branches of foreign related companies operating in Russia that have taxable income, have to provide a notification on controlled transactions performed in the 2020 calendar year to the tax authorities by 20 May 2021. The notification must be submitted by each party of a controlled transaction that is registered as a Russian taxpayer.

If notification is provided after the deadline, or errors/mistakes are found by the tax authorities in the notification, the taxpayer could face the following negative consequences:

  • a penalty of RUB 5,000, paid by the company, as a consequence of the incorrect information found in the notification (article 129.4 of the Russian Tax Code);
  • a penalty of RUB 300-500, paid by either the company’s General Director or Chief Accountant, for non-compliance with tax legislation (article 15.6 of the Russian Administrative Code);
  • failure to provide the notification could act as an indicator to the tax authorities to include the company in their list of companies in which transfer pricing audits should be conducted in future;
  • penalties could harm the reputation of the director / responsible person and the company as a whole;
  • penalties could cause registration or visa-extension difficulties if the director / responsible person is a citizen of a foreign state.

Please refer to the attached PDF file for more detailed information.

KPMG services

  

  • Preparation of a “ready-to-send” notification in XML format compliant with the Russian Tax Code (based on data in MS Excel format exported from the company’s accounting system);
  • Provision of a software solution for preparation of notifications – KPMG Transfer Pricing Notification Converter;
  • Provision of methodological support to companies preparing notifications using 1С with the specialised module activated;
  • Finalisation of notifications prepared by clients in XML format from any type of automated accounting system;
  • Comparison of the notifications submitted by both parties to a transaction, and checking whether the information is represented identically in both notifications (for groups of companies);
  • Methodological support for companies that prepare the notification on their own. 

Please refer to the attached PDF file for more detailed information.

Our experience

   

KPMG specialists have extensive experience and knowledge of transfer pricing, accounting, tax accounting and international taxation. In our work on notification preparation projects, KPMG’s professionals provide our clients with expert consulting on all current, relevant issues, helping them avoid or solve contentious notification situations.

The KPMG approach is based on years of good practice and prosperous cooperation with our clients, achieving without exception only favourable client feedback in relation to the quality of our work during the notification preparation process.

Since 2013 KPMG has worked on more than 500 notification projects. Within these projects KPMG has prepared notifications for all 32 different transaction types (such as buy-sell, provision of services, granting of loans, etc.), including notifications consisting of over 1 million lines. Our clients have submitted each and every notification to the tax authorities within deadline.

Our team

  

Our professional team consists of more than 20 specialists from Moscow, Saint Petersburg, Nizhniy Novgorod and Novosibirsk, all experienced in the field of transfer pricing, accounting and tax accounting (both Russian Accounting Standards and IFRS).

Our KPMG specialists are proficient at working with various automated accounting systems and preparing notifications using 1C and SAP.

KPMG also has IT specialists providing technical support during the notification preparation process, capable of fine-tuning the XML-format files produced by the company’s accounting system.

Our KPMG team will help you prepare your controlled transaction notification in full compliance with the requirements of the Russian Tax Code and submit it to the tax authorities on time.