Russia: Interest rates on controlled debt obligations, transfer pricing analysis not always required

Russia: Interest rates on controlled debt obligations

Federal Law No. 374-FZ (passed on 23 November 2020) amends Article 269 of the tax law of the Russian Federation and specifically with regard to the rates of interest on debt obligations for tax purposes.

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The new measures have transfer pricing implications. Specifically, revised Article 269 provides a broader range of upper and lower limits for interest rates on controlled debt obligations for the period from 1 January 2020 to 31 December 2021. This effectively expands the list of controlled debt obligations that do not require a transfer pricing analysis.

The following table shows the new ranges for the limits of qualifying interest rates on debt obligations for the period from 1 January 2020 to 31 December 2021 for certain frequently used currencies:

 Currency of the debt obligation1

Range of limits in the revised version of Article 269  (for the period from 1 January 2020 to 31 December 2021)

Range of limits in the previous version of Article 269

RUB (for controlled transactions between Russian counterparties)

0% to 180% of the key interest rate of the Central Bank of the Russian Federation (CB RF)

75% to 125% of the key interest rate of the CB RF

RUB (for other transactions)

75% to 180% of the key interest rate of the CB RF

75% to 125% of the key interest rate of the CB RF

EUR (€)

Minimum value: 0%

Maximum value: EUR EURIBOR + 7 percentage points (p.p.)

Minimum value: EUR EURIBOR + 4 p.p.

Maximum value: EUR EURIBOR + 7 p.p.

USD ($)

Minimum value: 0%

Maximum value: USD LIBOR + 7 p.p.

Minimum value: USD LIBOR + 4 p.p. Maximum value: USD LIBOR + 7 p.p.


For loan interest paid during the period 2020-2021 and within the range of limits, Article 269 does not require a transfer pricing analysis. However, if the loan interest is beyond the range of the limits, a transfer pricing analysis will need to be conducted, and if warranted, an additional amount of tax may need to be paid or the taxpayer may need to prove the arm’s length nature of the interest accrued for tax purposes.

On entering into debt transactions (even with a 0% rate), other tax rules may need to be considered and the potential tax implications considered—not just from a transfer pricing aspect but also with regard to other tax implications.


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

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

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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