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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 made by their company 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 any controlled transactions made in the 2019 calendar year to the tax authorities by 20 May 2020. The notification must be submitted by each party to 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 5000, paid by the company, as a consequence for 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 on their list of companies in which transfer pricing audits should be conducted in future;
  • could harm the reputation of the director / responsible person and the company as a whole;
  • 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 exported from the company’s own automated accounting system);
  • Provision of a software solution for preparation of notifications – our 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.

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.

In the seven years in which there has been a requirement from the tax authorities to prepare controlled transaction notifications, KPMG has worked on more than 450 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.), consisting of over 1 million lines. KPMG has delivered each and every notification 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).

KPMG specialists are proficient at working with various automated accounting systems and preparing notifications using 1C. In addition to this, our professionals are experts at creating and implementing methodological approaches related to the preparation of individual notifications for specific companies.

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.