1. Which taxed will the Federal Tax Service monitor when checking the pricing in 2019?
Starting from 2019, if the pricing rules are not observed within the framework of controlled transactions, the Federal Tax Service shall be entitled to adjust the tax base for the tax accrued on extra revenue from hydrocarbon production (prior to 2019, the list of such taxes comprises income tax, VAT, mineral extraction tax, and personal income tax).
Legal Basis and Details:
Federal Law No. 199-FZ, dated 19 July 2018.
2. Will the list of controlled transactions entered into by related residents change in 2019?
Starting from 2019, a transaction, for which the parties use various income tax rates, shall be deemed a controlled transaction. However, there are exemptions. For instance, the below transactions shall not be deemed controlled transactions:
- transactions with participants of the Skolkovo project, with the zero income tax rate;
- transactions with residents of the special economic zones or participants of the free trade zones entitled to income tax preference;
- transactions with participants of the regional investment projects entitled to income tax preference;
Transaction entered into with participants of innovative scientific and technological projects exempted from the VAT according to Art. 145.1 of the Tax Code shall be deemed controlled transactions.
The new criteria shall be taken into account when determining controlled transactions for 2019, irrespective of the date of signing an agreement.
Legal Basis and Details:
Federal Law No. 302-FZ, dated 03 August 2018, and Federal Law No. 373-FZ, dated 30 October 2018.
3. What amount of revenue from a transaction entered into with a related non-resident makes it a controlled transaction? Does it matter, whether the transaction is entered into directly or through an independent formal intermediary?
Starting from 2019, a new amount-based criterion will be introduced for the purpose of classification of transactions with a foreign related company (incl. through an independent formal intermediary) as controlled transactions. The transaction shall be deemed a controlled transaction if the revenue from it exceeds RUB 60 M. The new criteria shall be taken into account when determining controlled transactions for 2019, irrespective of the date of signing an agreement. Please note that this rule applies to transactions with non-residents. Later on, we will inform you of the changes in cooperation with residents.
Legal Basis and Details:
Federal Law No. 302-FZ, dated 03 August 2018, and Federal Law No. 373-FZ, dated 30 October 2018.
4. How much revenue shall a transaction entered into with a related resident bring in order to classify such transaction as a controlled transaction?
Starting from 2019, the revenue threshold used for classification of transactions with a related resident as controlled transactions will be increased. Previously, the threshold of such transactions amounted to RUB 60 or 100 M. Starting from 2019, it will amount to RUB 1 B. The transactions bringing a higher revenue shall be deemed controlled transactions. The new criteria shall be taken into account when determining controlled transactions for 2019, irrespective of the date of signing an agreement.
Please note that such rules do not apply to transactions entered into by residents involving an independent formal intermediary - see below.
Legal Basis and Details:
Federal Law No. 302-FZ, dated 03 August 2018, and Federal Law No. 373-FZ, dated 30 October 2018.
5. How to determine, whether or not a transaction entered into by related residents involving an independent formal intermediary shall be deemed a controlled transaction?
Starting from 2019, transactions entered into by Russian related persons involving an independent formal intermediary shall be deemed controlled transactions if the revenues received therefrom exceed RUB 60 M. Thus, the amount-based threshold of such transactions materially reduces (prior to 1 January 2019, it amounted to RUB 1 B, RUB 100 or 60 M). The new criteria shall be taken into account when determining controlled transactions for 2019, irrespective of the date of signing an agreement.
Legal Basis and Details:
Federal Law No. 302-FZ, dated 03 August 2018, and Federal Law No. 373-FZ, dated 30 October 2018.
