Interdependent entities and controlled transactions: positions and recommendations. Tax risks: is it possible to conclude transactions between "their" companies and individual entrepreneurs Transactions between related parties in a year
Controlled transactions are transactions between interdependent parties, as well as transactions between persons that are not interdependent, but equated to controlled transactions (Clause 1, Article 105.14 of the Tax Code of the Russian Federation).
Transactions equated to controlled
1.1. Transactions involving intermediaries (third parties not recognized as interdependent) who do not perform any additional functions in transactions other than organizing the resale of goods (works, services) between two interdependent persons.
Such intermediaries do not assume any risks and do not use any assets to organize resale, i.e. serve to organize a formal workflow. Sum limits on the amount of income from such transactions for a calendar year have not been established for the purpose of recognizing them as controlled by the Tax Code of the Russian Federation (see letter of the Ministry of Finance of Russia dated 07.17.2013 No. 03-01-18 / 27876)
1.2. Transactions in the field of foreign trade in goods of world exchange trade, if the subject of such transactions are:
- oil and oil products;
- black metals;
- non-ferrous metals;
- mineral fertilizers;
- precious metals and precious stones.
The codes of the goods listed in accordance with the CNEA can be found in Order of the Ministry of Industry and Trade of Russia dated 10.10.2012 N 1598 "On approval of the List of product codes in accordance with the Commodity Nomenclature of Foreign Economic Activity, transactions in respect of which are considered controlled in accordance with Article 105.14 of the Tax Code of the Russian Federation" (letter from the Ministry of Finance Russia dated 01/27/2015 N 03-01-18 / 2657).
Sum limits to the amount of income - the amount of income from such transactions made with one person for the corresponding calendar year exceeds 60 million rubles.
Transactions, one of the parties of which is a person registered in the offshore zone(including permanent missions of Russian organizations in offshore). List of states and territories that are offshore zones, approved by order of the Ministry of Finance of Russia dated 13.11.2007 N 108н (as amended on 02.10.2014) "On approval of the List of states and territories providing preferential tax treatment taxation and (or) not providing for the disclosure and provision of information during financial transactions (offshore zones). "
Such transactions are considered controlled if the amount of income from such transactions made with one person for the corresponding calendar year exceeds 60 million rubles.
Please note that the above transactions are controlled, even if they took place between persons that are not recognized as interdependent.
Controlled transactions between related parties
2.1. Transactions between related parties, if one of the parties to the transaction is not tax resident RF (for example, a transaction with a foreign parent organization). The sum criteria in the Tax Code of the Russian Federation for such transactions are not provided, they are recognized as controlled regardless of the size of the amount of income received from these transactions (see letter of the Ministry of Finance of the Russian Federation of 03.10.2012 N 03-01-18 / 7-135).
2.2 . Transactions between related parties, both parties of which are registered in the Russian Federation, if at least one of the following circumstances exists:
- the amount of income from transactions between related parties for the calendar year exceeds 1 billion rubles.
- one of the parties to the transaction is a taxpayer of mineral extraction tax, calculated at a tax rate established in percentage terms, and the subject of the transaction is the extracted mineral resources, which is recognized as a taxable mineral extraction tax for the specified party to the transaction, the extraction of which is taxed at the tax rate established in percentage terms. Such transactions are considered controlled if the amount of income from transactions between the specified persons for a calendar year exceeds 60 million rubles.
- at least one of the parties to the transaction is a taxpayer applying one of the following special tax regimes: UTII or UTII (if the transaction is concluded as part of such activities), while among other persons that are parties to the specified transaction, there is a person who does not apply these special tax modes. Such transactions are considered controlled if the amount of income from transactions between these persons for a calendar year exceeds 100 million rubles.
- at least one of the parties to the transaction is exempted from the obligations of the taxpayer of corporate income tax (for example, USN) or applies the 0% rate to the tax base for income tax as a participant in the Skolkovo project, while the other side of the transaction is not relieved of these duties and is not applies tax rate 0% for the indicated circumstances. Such transactions are considered controlled if the amount of income from transactions between these persons for a calendar year exceeds 60 million rubles.
- at least one of the parties to the transaction is a resident of a particular economic zone (SEZ) or a participant in a free economic zone (SEZ), in which the tax regime provides for special benefits for corporate income tax (compared with the general tax regime in the relevant subject of the Russian Federation), while the other party to the transaction is not a resident of such a SEZ or a participant in such SEZ.
You can find out if the party to the transaction is a participant in the SEZ by using the state service of the Ministry of Economic Development to issue extracts from the register of residents of the SEZ at their request or the requests of interested parties. You can request and receive an extract, including in electronic form (via Single portal state and municipal services and e-mail respectively) (order of the Ministry economic development RF dated September 27, 2012 N 634).
Starting January 1, 2015, a SEZ will be created for a period of 25 years on the territory of the Republic of Crimea and the city of Sevastopol (Law of 29.11.2014 N 377-ФЗ "On the Development of the Crimean Federal District and the Free Economic Zone in the Territory of the Republic of Crimea and the City of Federal Significance of Sevastopol", Order Ministry of the Russian Federation for Crimean Affairs of February 9, 2015 N 27 "On approval of the form of certificate of inclusion legal entityindividual entrepreneur in single register participants in the free economic zone "). Transactions with participants in the SEZ or SEZ are considered controlled if the amount of income from transactions with these persons for a calendar year exceeds 60 million rubles.
- at least one of the parties to the transaction is a participant in the regional investment project (RIP)applying the corporate income tax rate to be credited to federal budget, in the amount of 0% and (or) a reduced tax rate on corporate profit tax to be credited to the budget of a constituent entity of the Russian Federation, in the manner and on the conditions provided for in Article 284.3 of the Tax Code.
Features of taxation of RIP participants can be found in chapter 3.3 of part 1 of the Tax Code. The procedure for maintaining the register of RIP participants was approved by order of the Federal Tax Service dated 23 June 2014 No. MMV-7-3 / [email protected] "On approval of the Procedure for maintaining the register of participants in regional investment projects and the composition of the information contained in the register." Transactions with RIP participants are recognized as controlled if the amount of income from transactions with these persons for a calendar year exceeds 60 million rubles.
- a transaction, one of the parties to which is a taxpayer, engaged in activities related to the production of hydrocarbons in a new offshore hydrocarbon field (paragraph 1 of article 275.2 of the Tax Code of the Russian Federation), and the other party to the transaction is not such a taxpayer, or does not take into account income (expenses) in determining tax base income tax in accordance with the rules of Art. 275.2 of the Tax Code of the Russian Federation. Such transactions are considered controlled if the amount of income from transactions with these persons for a calendar year exceeds 60 million rubles.
Exceptions to the Rules on Controlled Transactions
Even if the transactions satisfy the conditions listed above, according to paragraphs. 1-3 tbsp. 105.14 of the Tax Code of the Russian Federation, they are not recognized as controlled in the following cases:
- Parties to the transaction are participants in the same consolidated group taxpayers (AMG), with the exception of transactions the subject of which is minerals extracted, the object of taxation of mineral extraction tax at the rate established in percentage.
- Transactions in which the following conditions are simultaneously satisfied - the participants in the transaction are registered in one constituent entity of the Russian Federation, while they do not have separate divisions in other constituent entities of the Russian Federation or outside the Russian Federation, do not pay income tax to the budgets of other constituent entities of the Russian Federation, and have no losses (including losses past periods carried forward tax periods) taken when calculating corporate income tax.
In addition, there are no circumstances for the recognition of transactions by such persons as controlled in accordance with paragraphs. 2-7 p. 2 Article 105.14 of the Tax Code of the Russian Federation (i.e. not listed in paragraphs B - F of our article).
- Transactions between taxpayers referred to in paragraph 1 of Art. 275.2 of the Tax Code of the Russian Federation (see paragraph (G) of our article above), committed by them in carrying out activities related to the extraction of hydrocarbon raw materials from a new offshore hydrocarbon field, in relation to the same field;
- Interbank loans (deposits) for up to seven calendar days (inclusive).
- Transactions in the field of military-technical cooperation of the Russian Federation with foreign states, carried out in accordance with Federal law dated July 19, 1998 N 114-ФЗ "On military-technical cooperation of the Russian Federation with foreign states".
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april 2015
Olga V. Novikova
Head of Consulting Department, Pravest Audit
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Controlled transactions - These are transactions between related parties and equivalent to them.
For such transactions, tax authorities are entitled to verify that prices are consistent with market prices, as well as the completeness of the calculation and payment of a number of taxes.
Controlled Transaction Criteria
The Tax Code of the Russian Federation established, in particular, the following criteria for the control of transactions:
for transactions between related parties - residents of the Russian Federation in the presence of at least one circumstance:
the amount of income (the sum of transaction prices) for the year exceeds 1 billion rubles;
one of the parties to the transaction is a mineral extraction tax payer, while the amount of transactions for a calendar year exceeds 60 million rubles;
at least one of the parties to the transaction is a payer of the UTII or the Unified Social and Tax Administration, while the amount of transactions for a calendar year exceeds 100 million rubles;
at least one of the parties to the transaction is exempt from the duties of the payer of income tax or applies a tax rate of 0% to the tax base for profit, while the amount of transactions for a calendar year exceeds 60 million rubles .;
at least one of the parties to the transaction is a resident of a special economic zone or a participant in a free economic zone, in which the tax regime provides for special benefits for income tax, while the amount of transactions for a calendar year exceeds 60 million rubles .;
one of the parties to the transaction is an organization that holds licenses for the use of a subsoil block within the boundaries of which a new offshore hydrocarbon field is located, or the operator of a new offshore hydrocarbon field, with the transaction amount for a calendar year exceeding 60 million rubles .;
at least one of the parties to the transaction is a participant in a regional investment project applying the 0% tax rate to the federal budget or reduced rate on income tax to the budget of a constituent entity of the Russian Federation, and the amount of income from transactions exceeds 60 million rubles;
on foreign trade transactions with a resident offshore zone more than 60 million rubles;
on foreign trade transactions between related parties, regardless of the amount.
At the same time, the Tax Code of the Russian Federation contains transactions that are not recognized as controlled regardless of whether they satisfy the above conditions.
Such transactions, in particular, include transactions between organizations that simultaneously satisfy the following requirements:
- Fill out a notice of controlled transactions
A report may be a notification of controlled transactions, the need to hand over which is not always ... a report may be a notification of controlled transactions, the need to hand over which is not always ... ”and, in fact, the“ Notification of controlled transactions ”itself. Having opened the assistant, we immediately understand ... the convenience of filtering the positions involved in controlled transactions. We go into the nomenclature card, in ... tick this item. The item “Controlled transactions for inclusion in the notification” will form ...
- How to properly fill out a notice of a controlled transaction if a large range of various goods is sold under the contract
RF information on controlled transactions is indicated in notifications of controlled transactions (hereinafter - Notification ... Notifications indicate information on each controlled transaction (group of homogeneous transactions). ... obligations arising from a controlled transaction (group of homogeneous transactions), information .. information regarding the subject of execution of the controlled transaction (a group of homogeneous transactions) ... Taxpayers obliged to submit notifications of controlled transactions.The answer was prepared by: Expert of the service ...
- Controlled transaction with an interdependent foreign company: which documents to request from a counterparty
A reasoned justification of the price applied in a controlled transaction; We will clarify the procedure for selecting analog companies ... information for independent counterparties on controlled transactions in one of ...
- Results of disputes over the TP - how to protect your prices? Manual for traders
The actual profitability of the trader for each controlled transaction / group of homogeneous transactions (according to ..., on which the taxpayer carries out controlled transactions, in all cases were ... goods. The size of lots in controlled transactions corresponded to the size of lots taken into account ... the moment of price negotiation in audited controlled transactions (dates of an additional agreement / specification) ... of the tax authorities due to the fact that controlled transactions are export-oriented.
- Tax risks of issuing a loan to another company if the interest rate under the loan agreement is higher or lower than the refinancing rate
If loan agreements are not controlled transactions (including agreements with non-interdependent ... time if the loan agreement is a controlled transaction, the taxpayer is entitled to recognize the income ... of the Russian Federation. For tax purposes, transactions between interdependent organizations are recognized as controlled transactions ... a loan between interdependent organizations is controlled a transaction only if ... - Encyclopedia of decisions. Interest on controlled transactions for tax purposes; - Encyclopedia ...
- All shades of interdependence. Myths, reality and impact on tax security
For tax purposes. Interdependence in controlled transactions: is it worth it to be afraid ... of the connection with the presence of criteria for controlling the transaction. Recall that controlled transactions are transactions between related parties ... other transactions are HERE. Controlled transactions are verified tax authorities compliance ... as is the case with truly controlled transactions. As the Supreme Court of the Russian Federation has indicated ...
- Digest of important tax law changes for november 2019
4-21/[email protected] Controlled transactions A new form of notification of controlled transactions by Order of the Federal Tax Service of Russia ... .07.2019 updated form of notification of controlled transactions. The form will enter into force 26 ... form take into account last year's amendments on controlled transactions. The amendments changed some of the signs, by ...
- Accounting and tax consequences of changes in transaction prices
Also consider changes in controlled transactions. The banking consequences of a price change ... involve interdependent transactions and controlled transactions, and pricing for these ... is subject to verification by the tax authorities. Controlled transactions include: transactions between interdependent ... rub. In addition to the above, for controlled transactions between interdependent persons registered in ... the procedure for the submission of a notice by the taxpayer of controlled transactions in electronic form). five ...
Follow the laws of a foreign state (territory). Controlled transactions A letter dated October 1, 2018 ... that such organization has conducted controlled transactions, in addition to notifying of controlled transactions made by the specified taxpayer ... year, also provides a notice of controlled transactions for the reorganized organization in relation to ...
- New in legislation in 2019
The Federal Law also introduced changes in controlled transactions. There is no longer a criterion for the amount of income ... profit is no longer a criterion for the controllability of a transaction, however, like the fact ... for transactions to be recognized as controlled: transactions provided for in paragraph 1 of Art. 105 ...
- Interest on the loan: how to determine the market rate?
Taxation. The relevant provisions apply to controlled transactions - that is, transactions that meet the criteria for ... taxation. The relevant provisions apply to controlled transactions - that is, transactions that meet the criteria ...
- Review of letters of the Ministry of Finance of the Russian Federation for September 2018
An international group of companies through liquidation. Controlled Transactions Letter dated September 4, 2018 ... for the purpose of declaring them controlled. Transactions between related parties provided for in subparagraph ...
organizations are registered in one constituent entity of the Russian Federation, do not have separate divisions in the territories of other constituent entities of the Russian Federation, as well as abroad;
Supervised Transactions: Accountant Details
The state represented by fiscal authorities in a special way approaches the control of transactions between interdependent persons. For this purpose, the concept of “controlled transactions” is provided for in the Tax Code of the Russian Federation. The list of criteria allowing to give transactions such a special status, we consider in this article.
What is a controlled transaction
The definition of this concept is contained in Art. 105.14 of the Tax Code of the Russian Federation. The following transactions are recognized:
- transactions of interdependent entities;
- transactions equivalent to them.
To answer the question under consideration, first of all, it is necessary to understand what subjects are recognized as interdependent.
Interdependent persons
The generally accepted criteria for interdependence for tax purposes are contained in the Tax Code. Here are some of them:
- participation of one jur. persons in another, if the share of participation exceeds 25 percent;
- interdependence due to job submission;
- family relationships.
The Tax Code of the Russian Federation directly indicates that this list of criteria is not exhaustive and can be supplemented by a court.
Recognition of business entities as such entails special tax control of interdependent persons in cases established by the Tax Code of the Russian Federation; tax recounts of prices are possible in accordance with the provisions of Sec. V.1 of the Tax Code of the Russian Federation and the corresponding additional charges to the budget.
Controlled transaction between related parties
Considering the criteria for controlled and uncontrolled transactions, we can conclude that they, in particular, are aimed at:
- preventing the tax base from being offshore;
- more equitable distribution of the tax base in the regions of our country.
As controlled by the Tax Code of the Russian Federation, in particular, it envisages transactions involving persons who do not meet the criteria of interdependence, if these persons:
- carry only the function of organizing resale between interdependent entities;
- do not risk in the sense attached to the concept of entrepreneurial activity.
In addition, control applies to transactions with companies resident in countries of a specially established list and some others.
Interdependent entities may become subject to special control by entering into a transaction if:
- revenues from transactions of interdependent entities amount to more than 1 billion rubles;
- one side (or several parties) of the transaction is a special regime, and the other side (parties) is not;
- one party calculates profit tax according to Sec. 25 of the Tax Code of the Russian Federation, and the other - no;
- the party to the transaction participates in the investment project, as a result of which it has income tax benefits.
For specific types of transactions from the number specified in Art. 105.14 of the Tax Code of the Russian Federation limits are set in the tens of millions of rubles. Only exceeding these limits, the parties risk becoming the subject of the control in question.
The implementation of controlled transactions does not in itself entail liability.
It is important to know the list of grounds that exclude the possibility of the considered control over transactions (clause 4 of article 105.14 of the Tax Code of the Russian Federation).
Here are some of them:
- if the parties to the transaction are part of a consolidated group;
- if the parties are simultaneously registered in one region, do not have branches and representative offices in other regions, do not pay corporate income tax in other regions, do not show losses, there are no circumstances provided for in paragraphs. 2 - 7 p. 2 Art. 105.14 of the Tax Code of the Russian Federation.
- parties to transactions are registered in our country, etc.
Having completed the transaction in question, control entities are required to send a notice of controlled transactions. A sample notification notice can be found on the Internet. You must use the form provided tax service. It can be downloaded from the official website of the department.
The Bureau Supreme Court On February 16, 2017, the Russian Federation approved a Review of the practice of courts reviewing cases related to the application of certain provisions of Section V.1 and Art. 269 \u200b\u200bof the Tax Code of the Russian Federation (hereinafter - the Overview). The court summarized the practice on issues arising from the mutual dependence of persons and the control of transactions. In this article, we will analyze the basic rules for applying the provisions of Section V.1 of the Tax Code of the Russian Federation, reflected in this Review.
Rule 1 (paragraph 1 of the Review)
The conformity of prices applied in controlled transactions is controlled by the Federal Tax Service of Russia and cannot be the subject of field and desk audits of subordinate tax authorities 1. This rule contains two important exceptions.
Exception 1 (paragraph 2 of the Review): methods for determining income using market prices (according to Chapter 14.3 of the Tax Code) can be applied in the usual tax auditif it is provided for by the chapters of part 2 of the Tax Code of the Russian Federation. This conclusion is illustrated by the reference rules of the Tax Code of the Russian Federation, providing for the possibility of determining the tax base for VAT and income tax, taking into account art. 105.3 of the Tax Code with:
–Realization of goods (works, services) on exchange of goods or on a gratuitous basis, when transferring ownership of the subject of pledge to the pledge holder in case of failure to fulfill the obligation secured by the pledge, when transferring goods (work results, rendering services) when paying in kind (paragraph 2 Article 154 of the Tax Code of the Russian Federation);
–With the gratuitous receipt of property (works, services), property rights (Clause 8, Article 250 of the Tax Code of the Russian Federation);
- receipt by the taxpayer of income in kind (paragraphs 4–6 of Article 274 of the Tax Code of the Russian Federation).
However, even in the framework of the chapters on income tax and VAT, the Survey does not contain a complete list of cases. Reference to Art. 105.3 of the Tax Code is also contained in determining the tax base for other taxes / fees. Therefore, the above list of the Armed Forces of the Russian Federation can be safely supplemented for the purposes of
–Payments of personal income tax 2 –– receipt by the taxpayer of income from organizations and individual entrepreneurs in kind in the form of goods (works, services) and other property, determination of value valuable papers, determination of the value of assets (paragraph 1 of article 211, paragraph 13.2 of article 214.1, article 220 of the Tax Code);
– MET calculations 3 — determination of the proceeds from the sale of the extracted mineral (clauses 2–3 of article 340 of the Tax Code of the Russian Federation);
–– application of the simplified tax system 4 –– receipt of income in kind (paragraph 4 of article 346.18 of the Tax Code);
–Application of the patent system of taxation –– receipt of income in kind (clause 5 of article 346.53);
–– determining the basis for calculating insurance premiums –– making payments and other benefits in kind in the form of goods (work, services), other property (Clause 7, Article 421 of the Tax Code of the Russian Federation).
Furthermore, general rule determination of the tax base for value added tax in the sale of goods, works, services provides for the calculation of their value based on prices determined in accordance with Art. 105.3 of the Tax Code of the Russian Federation (Clause 1, Article 154 of the Tax Code of the Russian Federation). The Ministry of Finance of the Russian Federation also drew attention to this in his Letter dated 02.15.2017 No. 03-07-11 / 8356.
The guarantee of the protection of the rights of the taxpayer from unreasonable tax control in the above cases is the provision of para. 3 p. 1 art. 105.3 of the Tax Code of the Russian Federation, according to which prices applied in transactions to which parties are not recognized as interdependent, as well as income received by persons who are parties to such transactions, are recognized as market prices for the purposes of the Tax Code.
Exception 2 (paragraph 3 of the Review): in the framework of tax audits by regional inspectorates, we will allow control over the conformity of the transaction price to market prices in order to identify cases of obtaining unjustified tax benefits. In this case, the discrepancy between the transaction price and market prices should be multiple, and the receipt of unjustified tax benefits should be confirmed by other evidence defaming the business purpose of the transaction 5.
For example, when conducting a taxpayer audit, the tax authority considered the price of sales transactions to be underestimated and determined the tax base based on the market value of the alienated property.
When considering the dispute, the court found that the tax authority did not prove the mutual dependence of the parties to the transaction, the parties to the contractual relationship confirmed the presence of commercial interest in concluding contracts.
Analyzing judicial acts, the Armed Forces of the Russian Federation noted that a multiple deviation of the transaction price from the market level can be taken into account as one of the signs of unjustified tax benefit only in conjunction with other circumstances that discredit the business purpose of the transaction (interdependence of the parties to the transaction, creation of an organization shortly before the transaction business transaction, use of special forms of settlements and terms of payments, etc.). The final judicial act was pronounced in favor of the taxpayer (Decision of the Armed Forces of the Russian Federation dated 01.12.2016 No. 308-KG16-10862 in case No. A32-2277 / 2015).
Here is another example. When conducting a taxpayer audit, the tax authority considered the price of sales transactions to be underestimated and determined the tax base based on the market value of the alienated property.
During the consideration of the case, it was found that the parties to the transaction are interdependent, the transaction price deviates many times from the market, the actual purpose of the transaction is to obtain unreasonable tax benefits.
When considering this dispute, the Armed Forces of the Russian Federation noted that the materiality and severity of the deviation of the price applied by the taxpayer from the market level in conjunction with other circumstances of the disputed transactions may have legal significance if signs of unreasonable tax benefit are established during a desk or field tax audit.
The final judicial act was made in favor of the tax authority (determination of the Supreme Court of the Russian Federation of July 22, 2016 No. 305-KG16-4920 in the case No. A40-63374 / 2015).
Thus, the formal non-compliance of the transaction with the features of the controlled one is not a guarantee of the taxpayer’s safety from additional taxes based on the market price of the transaction.
VEGAS LEX recommends: when concluding transactions deviating from market ones, it is necessary to understand what business purpose this agreement pursues. Try to fix your commercial interest in correspondence, protocols, memoranda and other documents, the decision on the provision of which during the audit or in court may be taken by the taxpayer situationally. When defending one’s interests in a tax dispute, due attention should be paid to the collection and analysis of the evidence base that the court will evaluate.
Rule 2 (paragraph 4 of the Review)
The court has the right to recognize persons as interdependent for tax purposes in cases not specified in paragraph 2 of Art. 105.1 of the Tax Code of the Russian Federation, if the counterparty of the taxpayer (interdependent persons of the counterparty) had the opportunity to influence the decisions made by the taxpayer in the field of his financial and economic activities. The burden of proof of these circumstances lies with the tax authority.
The purpose of applying this norm is to identify transactions, financial content which differs from the conditions that the parties would determine in their interaction as independent counterparties acting in their own economic interests.
The court included some signs of mutual dependence in the Review:
–– another person (including the counterparty to the transaction) has the ability to determine the decisions made by the taxpayer;
- the taxpayer acted in the general economic interests of the group to which he belongs (to the benefit of third parties);
–Freedom in decision-making was to affect the conditions and results of the execution of relevant transactions.
Often, the tax authority does not even try to prove that the mutual dependence of the parties directly affected the outcome of the transaction.
An exception: the influence exerted for economic reasons, for example, due to the advantageous position in the market of one of the parties to the transaction, should not be taken into account when deciding on the recognition of individuals as interdependent (clause 4 of article 105.1 of the Tax Code of the Russian Federation).
Rule 3 (paragraph 5 of the Review)
The interdependence of participants in a transaction may be the basis for adjusting their income (profit, revenue) according to the rules of section V.1 of the Tax Code of the Russian Federation if the whole set of conditions is observed in relation to this transaction, in the presence of which it is considered controlled.
Apparently, the Review outlines the essence of the dispute in case No. A53-30653 / 2014 with the participation of Flash Energy LLC. However, in the determination of the Supreme Court of the Russian Federation dated 04.04.2016 No. 308-KG15-16651, the court also drew attention to the fact that tax code excluded from the number of transactions between interdependent persons subject to control in the manner prescribed by Section V.1 of the Tax Code of the Russian Federation, transactions that do not meet the criterion of controlled transactions, as well as transactions for which the amount of income does not exceed the established art. 105.14 of the Tax Code of the Russian Federation sum criteria.
The classification of the transaction as controlled on the basis of paragraph 1 of Art. 105.14 of the Tax Code of the Russian Federation without taking into account the criteria reflected in paragraphs 2 and 3 of Art. 105.14 of the Tax Code, is not lawful.
For example, during the audit, the tax authority revealed the totality of the taxpayer’s transactions for the purchase of goods and materials from an interdependent person using a chain of intermediaries that fall under the criteria of sub. 1 p. 1 Article 105.14 of the Tax Code of the Russian Federation. In this connection, the company was held accountable under Art. 129.4 of the Tax Code for the failure to provide notice of a controlled transaction.
When considering the dispute, the court found that the amount of income from the transaction is below the established sum threshold provided for in paragraph 2 of Article 105.14 of the Tax Code of the Russian Federation, while the inspection did not provide evidence of compliance of any party with other conditions provided for by this paragraph of the article.
In addition, the court drew attention to the fact that the tax authority did not prove that the transaction does not fall under the criteria of agreements, which, by virtue of paragraph 4 of Art. 105.14 of the Tax Code of the Russian Federation are not recognized as controlled (for example, it did not reveal that the parties to the transaction have separate units on the territory of other constituent entities of the Russian Federation or pay taxes there). The dispute is resolved in favor of the taxpayer (Resolution of the Arbitration Court of 02.02.2016 in case No. A55-6922 / 2015).
Do not forget that from 01.01.2017 new sub-norms came into force. 6–7 p. 4 Article 105.14 of the Tax Code of the Russian Federation, according to which transactions on the submission of sureties / guarantees between Russian organizations are excluded from the number of controlled transactions (with the exception of banks (subparagraph 6, clause 4 of article 105.14 of the Tax Code of the Russian Federation), as well as transactions on extradition interest free loans between Russian interdependent persons. This greatly facilitates corporate financing and reduces the administrative burden on the business.
VEGAS LEX recommends: when defending their interests in the framework of a tax dispute, verify compliance of the transaction with all the criteria established by Art. 105.14 of the Tax Code of the Russian Federation. Take into account that even with the formal compliance of the terms of the transaction with the signs provided for in clauses 1-3 of Art. 105.14 of the Tax Code, the agreement will not be controlled in the cases listed in paragraph 4 of this article.
Rule 4 (paragraph 6 of the Review)
Provided for by paragraph 11 of Art. 105.7 of the Tax Code of the Russian Federation, the right of the court to take into account any circumstances that are relevant for determining whether the price applied by the taxpayer corresponds to the market level cannot serve as a basis for derogating from the statutory rules for calculating taxes on controlled transactions.
The court drew attention to the fact that the provisions of section V.1 contain not only the rules that should be followed by inspections, but also the rules for calculating taxes that taxpayers must follow when making controlled transactions. The rules applied by tax authorities and taxpayers should not differ by virtue of the principle of legal certainty of taxation (Clause 6, Article 3 of the Tax Code of the Russian Federation).
Prior to this, the position of the Constitutional Court of the Russian Federation, reflected in the determinations of December 4, 2003 No. 442-O and of September 18, 2014 No. 1822-O (when considering a similar norm of Clause 12 of Article 40 of the Tax Code of the Russian Federation), on the possibility of a court to take into account any circumstances when determining market prices are often interpreted broadly. For example, the courts considered it possible to accept as evidence the calculation of the market price, carried out in violation of the rules of paragraphs 4–11 of Art. 40 of the Tax Code of the Russian Federation (Resolution of the Arbitration Court of the SZO of 03/10/2016 in case No. A13-17750 / 2014).
Now in the Review it is directly indicated that when using paragraph 11 of Article 105.7 of the Tax Code of the Russian Federation, a court shall not facilitate a derogation from the rules:
–Determining the comparability of commercial and financial terms of transactions (Article 105.5 of the Tax Code of the Russian Federation);
–Selection of information to determine the comparability of transactions (Article 105.6 of the Tax Code);
–Selection priority method definitions of income (profit, revenue) (Clause 3, Article 105.7 of the Tax Code of the Russian Federation);
- the procedure for applying calculation methods (Articles 105.8–105.13 of the Tax Code of the Russian Federation).
VEGAS LEX recommends: based on paragraph 11 of Art. 105.7 of the Tax Code of the Russian Federation, the taxpayer is entitled to provide evidence that the non-use of the market price was not a result of the mutual dependence of the parties to the controlled transaction, but had other economic reasons refer to accounting for sane economic benefits for tax purposes in other transactions, etc.
Rule 5 (paragraphs 7, 8 of the Review)
The market value assessment report may be accepted as evidence in disputes related to the adjustment of the tax base in accordance with Section V.1 of the Tax Code of the Russian Federation, only in cases specified in this section.
Namely:
- in the absence or insufficiency of sources of information listed in paragraph 1 of Art. 105.6 of the Tax Code of the Russian Federation (subparagraph 3, paragraph 2, article 105.6 of the Tax Code);
–When making one-time transactions, if the methods provided for in Chapter 14.3 of the Tax Code of the Russian Federation do not allow determining the conformity of the price to the market level (Clause 9 of Article 105.7 of the Tax Code of the Russian Federation);
–When making transactions when the assessment is mandatory (clause 10 of article 105.3 of the Tax Code of the Russian Federation).
The court also focused on the conditions for the adoption of the appraiser’s report in terms of its admissibility and reliability:
–– the report should allow to make a conclusion about the level of income that really could be received by the taxpayer;
- The conclusion must be prepared by a person who meets the requirements for the subjects of professional valuation activities;
–Expert should not deviate from the principles of identity and comparability of analogous objects.
For example, based on the results of a tax audit, taxes were accrued to the company based on market value rentdetermined by the inspector involved in the inspection, and not based on the prices applied by the taxpayer.
Having examined the valuation document, the court came to the conclusion that the concept of market value, determined in accordance with Federal Law of July 29, 1998 No. 135-ФЗ On Valuation Activities in the Russian Federation, is probabilistic. In the expert’s opinion, all the factors influencing the determination of the market value of the rent in relation to the above premises were not taken into account. In such circumstances, the expert opinion cannot be an unconditional confirmation of the established deviation of the rent.
As a result, the dispute is resolved in favor of the taxpayer (Resolution of the Arbitration Court of UO of 05.19.2015 in case No. A07-5319 / 2014).
The court also noted some principles for the appointment of forensic examination in the category of disputes under consideration:
–Examination should not be appointed to fill in the deficiencies of the tax audit;
–Examination can be appointed in order to resolve irreparable disagreements about the correct application of methods for determining income or to eliminate doubts about the reliability of conflicting evidence.
Rule 6 (paragraphs 9–11 of the Review)
Accountability under Art. 129.4 of the Tax Code for the unlawful failure to provide notice of controlled transactions or the reflection of inaccurate information in them should be subject to the following circumstances:
–The size of the fine does not depend on the number of transactions that must be indicated in the notification (that is, 5000 rubles, regardless of the number of transactions) 6;
- Failure to fill out certain details of the notice is not a reason to hold liable if this does not prevent the identification of a controlled transaction;
–Decision of the issue of tax liability under art. 129.4 of the Tax Code is within the competence tax officeto which such notification was or should be submitted by the taxpayer 7.
These clarifications on the application of Art. 129.4 of the Tax Code of the Russian Federation significantly simplify the interaction between tax authorities and taxpayers regarding the issue of notifications of controlled transactions.
In conclusion, I would like to note that 2017 is an important era in the regulation of transfer pricing. Beyond Review judicial practice Of the Supreme Court of the Russian Federation, which is of extreme importance in law enforcement, the norms of sub. 6–7 p. 4 Article 105.14 of the Tax Code of the Russian Federation, reducing the number of controlled transactions, and also considers the possibility of introducing cross-country reporting. In order to minimize tax risks, taxpayers should conduct an audit of completed transactions, and when implementing current transactions, do not forget to adapt them to dynamically changing realities.
1 Determination of the Armed Forces of the Russian Federation of February 26, 2016 No. 308-KG15-16651 in the case No. A63-11506 / 2014.
2 Personal income tax.
3 Mineral extraction tax.
4 Simplified tax system.