Russia: Proposed changes to advance pricing agreement (APA) procedures

Russia: Proposed changes to APAs

Draft law (known in English as: “On amending part one of the Russian Tax Code to improve tax control over prices, and on the procedure for entering into advanced pricing agreements”) includes measures concerning the procedure governing advanced pricing agreements (APAs).

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The deadline for the State Duma Committee for the Budget and Taxes to provide its comments, suggestions, and corrections to the draft law is 27 October 2020. After this, the draft law will be prepared for review in the Duma’s 2020 autumn session.

Among the APA developments proposed by the draft law are the following:

  • The taxpayer would have an opportunity to apply the transfer pricing method (as required by the laws of the other involved foreign jurisdiction).
  • A moratorium would be introduced for transfer pricing audits with regard to transactions subject to an APA, unless a decision has been made to conclude or deny the APA.
  • Time limits for negotiating an APA would be introduced.

At present, there are still items in the current version of the draft law to be resolved and discussed, including comments received from the business community. If the draft law is approved in the 2020 autumn session, the provisions would be effective 1 January 2021.


Russia’s APA network

There are currently more than 10 bilateral APAs pending at the review stage, and there are APA applications regarding transactions involving the export of goods, royalty payments (for trademarks as well as know-how), and transactions involving the rendering of services, among others. The completion of an application for a bilateral APA provides an opportunity for a taxpayer to discuss the current approach to pricing in controlled transactions and to coordinate a decision that is applicable both under Russian legislation as well as the legislation of the jurisdiction of the counterparty.

A bilateral APA with the tax authorities from Finland has been approved and is now at the signing stage. Other bilateral APAs have been concluded with Switzerland, Germany, and other countries.


For more information, contact the Global Leader of KPMG’s Global Transfer Pricing Services:

Komal Dhall | +1 212 872 3089 | kdhall@kpmg.com

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