Transfer Pricing in Russia

Introduced by Federal Law 227-FZ of 18 July 2011 with effect from 1 January 2012, comprehensively tightened by Federal Law 539-FZ of 27 November 2023 (from 2024) and extended by Federal Law 425-FZ of 28 November 2025 (from 2026). Section V.1 is self-contained: it supplies its own methods, comparability rules, intervals and documentation content.

Where conditions between related parties differ from those between independent parties, the income that would otherwise have arisen is brought into the Russian tax base. An adjustment may not reduce tax payable or increase a loss; relief for the counterparty runs through the symmetrical-adjustment mechanism or MAP.

Article 105.1 also captures a common >25% shareholder, power to appoint the sole executive or half the board, board overlap above 50%, chains of >50% holdings, employment subordination and close family. Grounds added from 2024 cover a controlling person and its CFC, and CFCs under common control; Article 105.1(7) lets a court find interdependence on unlisted grounds.

Domestic related-party transactions are controlled only above RUB 1 billion and only where a circumstance listed in Article 105.14(2) applies — different corporate income tax rates, mineral extraction tax at an ad valorem rate, the unified agricultural tax, exemption from profit tax, Article 275.2 offshore hydrocarbon taxpayers, Skolkovo and 'Era' participants exempt from VAT, the investment tax deduction, or the additional-income hydrocarbon tax. There is no standalone special-economic-zone trigger: sub-paragraph 5 (SEZ and free-economic-zone residents) and sub-paragraph 7 (regional investment projects) were repealed by Federal Law 302-FZ of 3 August 2018 from 2019, so an SEZ resident is caught only indirectly through the different-rates limb. Article 105.14(4) carves out consolidated-group transactions, same-region dealings meeting strict conditions, interbank credits up to seven days, interest-free loans between Russian related parties and guarantees between Russian non-banks. The OECD profile's RUB 60 million figure reflects July 2021 law and is superseded.

Article 105.14(1) equates three categories to related-party dealings: resale chains through intermediaries performing no real functions; foreign trade in oil and petroleum products, ferrous and non-ferrous metals, mineral fertilisers, precious metals and gemstones; and counterparties registered or resident in offshore-listed or low-tax states. Relatedness is not required — only the RUB 120 million threshold.

Neither the Tax Code nor the Federal Tax Service's transfer pricing pages incorporate or cross-refer to the Guidelines. Russia's OECD profile (July 2021) treats them, alongside the UN Practical Manual, as admissible supplementary material. Russia is not an OECD member and its accession process was discontinued; verified largely by absence, no domestic instrument states their status.

Article 105.7 provides CUP, resale price, cost plus, comparable profitability (the TNMM equivalent) and profit split, and permits two or more to be combined. Where no method works for a one-off transaction outside the ordinary course of business, market value may be fixed by an independent appraiser under Article 105.7(9).

CUP has priority; the remaining methods engage only where CUP is impossible or would not support a reasoned conclusion. For resellers who resell without processing, Article 105.10(2) inverts the top two and the resale price method takes precedence. Benchmarking that opens with a TNMM search invites a method challenge before the comparables are even examined.

The tested party must contribute less to profit through its functions, bear lower commercial and economic risks, and own no intangibles materially affecting profitability; where no party satisfies all three, the closest is chosen. Permitted indicators are return on sales, on costs, on commercial and administrative expenses, on assets, and others reflecting the function–asset–risk–reward relationship.

Article 105.8 calls for at least four comparable transactions or four sets of comparable-company financial statements, with the interval bounds derived from n/4 and 0.75n; the fourth paragraph of Article 105.8(3) expressly permits an interval built on fewer where four are unavailable. Comparables must carry on comparable activities, hold non-negative net assets, avoid losses in more than one analysed year, and have no participation above 25% in or by other organisations — relaxable to 50% if fewer than four survive. The separate minimum-to-maximum rule for exchange and quoted prices is gone: Federal Law 539-FZ rewrote Article 105.9(5) so that the maximum, minimum and median for exchange quotations are computed under the same quartile order in Article 105.9(3), and repealed Article 105.9(6), for income recognised from 1 January 2024. The OECD profile's Q10 min-max answer is pre-2024 law.

Article 105.6 ranks sources: exchange quotations, customs and official price statistics, pricing-agency data and the taxpayer's own transactions rank ahead of published price information and company accounts. Only publicly available sources and the taxpayer's own data may be used (Art. 105.6(4)); secret comparables are not deployed. A pan-European search cannot simply be substituted for a Russian one.

For income recognised from 1 January 2024 the tax authority adjusts an out-of-range result to the median of the interval, for example under Article 105.12(9). A taxpayer adjusting voluntarily may still use the nearest boundary provided the result does not reduce tax or increase a loss (Art. 105.12(11)) — which makes pre-audit self-correction materially cheaper than waiting.

Article 105.16 requires disclosure of subject matter, participants, income and expenses split between regulated and unregulated prices, delivery terms, the method applied and the comparable sources used — plus, for listed commodities in related-party transactions, value-chain information down to the ultimate buyer. The current form and electronic format were approved by FTS Order ЕД-7-13/1088@ of 2 December 2024, effective 28 January 2025.

The core set covers counterparties and residence, commercial and financial terms, functional and risk analysis, foreign counterparties' income, expenses, headcount and assets, the comparability analysis, method choice and application, adjustments, sources, the computed interval and the profitability achieved. Group members must add management structure and decision-making locations, market strategy, restructurings, competitor analysis, intercompany agreements and audit reports.

Federal Law 539-FZ added a paragraph to Article 105.15(3) permitting the FTS to demand Article 105.15 documentation under Article 93(1), (2) and (5) or Article 93.1(2) — and Article 93.1(2) applies expressly outside the framework of tax audits. For income recognised from 1 January 2024 documentation on a specific transaction can therefore be called for with no pricing audit on foot; the OECD profile's Q22b answer reflects pre-2024 law. Documentation is prepared in Russian, with translations of foreign-language supporting material. In practice 2025 transactions became exposed to demands from 1 June 2026.

Article 105.15(8) requires documentation on controlled transactions in the listed commodity groups to be lodged simultaneously with the notification, purely domestic commodity transactions excepted. The FTS accepts it electronically (KND 1184076) under the recommended format in Order ЕД-7-13/505@ of 4 June 2025. The RUB 500,000 charge in Article 129.11(3) is the general penalty for not filing documentation on a specific controlled transaction or group of homogeneous transactions, not a commodity-only head — but the up-front May deadline makes commodity traders the likeliest to trip it.

Article 105.16-4 covers group ownership and control, profit drivers, supply chains for the five largest products or services, intra-group services, functional analysis, restructurings, the intangibles strategy and significant intangibles, financing arrangements and key financing entities, consolidated accounts, and pricing agreements concluded with tax authorities. Only one group member can be required to file it for a period.

Where the parent is foreign, the parent jurisdiction's threshold applies — typically the EUR 750 million equivalent. Article 105.16-6 requires per-jurisdiction aggregates: revenue, pre-tax profit, tax accrued and paid, stated capital, accumulated earnings, headcount and tangible assets. Filed in Russian with rouble amounts; a foreign-language filing is available only where the parent was not a Russian tax resident. Whether local filing is triggered turns on functioning exchange relationships, which need separate verification.

Article 105.16-2 requires electronic notification of participation in an international group, identifying every participant and the parent's jurisdiction and registration data. Article 105.16-7 is much narrower than a general duty on Russian group members: it applies only where more than 50% of the group's assets sit in Russia at the last reporting date before the year of the transactions and a participant has carried out controlled foreign-trade transactions in the Article 105.14(5) commodity groups. The filing then falls on that group's parent or authorised participant, being a Russian organisation or a foreign entity that has voluntarily become a Russian tax resident, and covers the consolidated accounts plus the financial statements of the participants that made, on-sold or facilitated those transactions (KND 1184067, Order ЕД-7-13/1115@ of 10 December 2024). Failure carries RUB 1,000,000 under Article 129.11(4).

Article 129.3 raised the cross-border penalty from 40%. Domestic controlled transactions under Article 105.14(2) remain at 40% with a RUB 30,000 floor. A transitional rule disapplies the penalty to income recognised between 1 January 2022 and 31 December 2023. The OECD profile's RUB 100,000 figures reflect July 2021 law.

The provision releases the taxpayer from the liability 'provided for by paragraph 1.2 of this article' — the 40% penalty on domestic controlled transactions under Article 105.14(2) — where Article 105.15 documentation substantiates market pricing or an APA covers the transaction. It does not cross-refer to paragraph 1, so no volume of documentation defends against the 100% / RUB 500,000 cross-border penalty. This is a hard statutory limitation, not an interpretive debate: the only escapes on cross-border transactions are self-adjustment under Article 105.3(6) and repatriation under Article 105.3(6.2).

Article 129.4: RUB 100,000 for a late or inaccurate controlled-transactions notification (up from RUB 5,000). Article 129.9: RUB 500,000 for the group participation notification. Article 129.10: RUB 1,000,000 for the country report or false information in it. Article 129.11: RUB 1,000,000 each for late national and global documentation, RUB 1,000,000 for consolidated accounts, and RUB 500,000 for failing to file documentation on a specific controlled transaction or group of homogeneous transactions — a general head that mentions neither commodities nor Article 105.14(5), so it is not confined to commodity traders.

From 2024 a primary upward adjustment on a transaction with a non-resident related party is equated to a dividend paid to that non-resident. The charge falls away if the non-resident repays the full amount to the Russian party's Russian bank account before a TP audit is appointed, with interest at 1/300 of the key rate per day. Combined exposure — profit tax, withholding and penalty — approaches 50% of the adjustment.

Article 105.17 reserves pricing audits to the FTS at federal level, with the Interregional Inspectorate for Pricing for Tax Purposes (created April 2012) doing the analytical work; territorial inspectorates cannot review controlled-transaction pricing except in narrow cases. Further extensions of up to six months are available for foreign information, expert reports and translations.

Organisations correct the base in the profit tax return for the year and pay the additional tax by the ordinary due date, avoiding late-payment interest. During the year VAT, mineral extraction tax and profit tax advances may be computed on actual prices. Sheet 08 codes the adjustment type, code 1 denoting a self-adjustment.

Article 138(2) exempts non-normative acts of the FTS itself from compulsory administrative appeal, so TP assessments go directly to the arbitrazh courts. Dulisma (case No. А40-123426/2016) was the first Section V.1 decision; Uralkali (case No. А40-29025/17) upheld rejection of the taxpayer's TNMM analysis on potash sales to a Swiss trader in favour of Argus Media quotations.

Article 105.19 opened APAs from 2024 to any taxpayer in listed-commodity controlled transactions with income or expenses of at least RUB 2 billion in a calendar year. Article 105.21 covers the application year plus the two preceding and two following years, extendable by two more; the rollback is not available for bilateral agreements. The OECD profile's 1–3 year, no-rollback description is superseded.

The FTS states RUB 1,000,000 from 1 January 2024, halved by Federal Law 539-FZ; at least one code aggregator still renders Article 333.33(1)(133) at RUB 2,000,000, so confirm the statutory text before filing. The taxpayer has 10 days to answer document requests and 30 days to resubmit a revised draft; bilateral cases may run to 27 months. Procedural guidance and model forms sit in FTS Letter ОА-4-13/85@.

Article 105.20(2) has allowed an application for an agreement involving the competent authority of a foreign state since the regime began, with the procedure set by Ministry of Finance Order No. 60н of 29 March 2018. Federal Law 6-FZ added the requirements now in play: the taxpayer must evidence that its counterparty has filed an equivalent application with the foreign competent authority, or notify the FTS within six months where the foreign filing follows, with extended review periods and a three-month window to resubmit for a unilateral agreement if no agreement is reached.

Chapter 20.3 (Articles 142.7–142.9) governs MAP, with procedure and time limits in Ministry of Finance Order No. 102n of 11 June 2020 — free-form application in Russian or English, generally within three years of first notification of the taxation complained of. TP cases are in scope on evidence of capital or de facto control links; penalties and fines are not. Outcomes are implemented under Article 105.18-1 and coded in Sheet 08.

The FTS must issue a notice of the possibility of a symmetrical adjustment within one month of execution, with interest at the refinancing rate for late issue; the taxpayer may chase it. The adjustment is reflected in the return for the period the notice was received. Foreign counterparties fall outside the mechanism entirely — their route is MAP.

Article 269(1.2) sets currency-specific intervals: 1% up to €STR+7 for euro, SHIBOR+7 for yuan, SONIA+7 for sterling, SARON or TONAR+5 for francs and yen, SOFR+7 otherwise. Interest inside the interval is recognised in full without a comparability analysis; outside it, full Section V.1 analysis and documentation apply. This is Russia's only genuine safe harbour — there is none for low value-adding services.

It also widened the related-party grounds to controlling persons and their CFCs, expanded documentation content and the powers to demand it, brought exchange quotations within the quartile computation, halved the APA duty to RUB 1,000,000 and opened APAs to RUB 2 billion commodity traders. Everything in Russia's July 2021 OECD profile predates it.

Ministry of Finance Letter No. 03-00-08/5827 of 28 January 2026 confirms that no official list will be published — taxpayers self-assess on the foreign legislation and must hold it with a Russian translation. Practitioners flag the UAE (9%), Ireland (12.5%), Cyprus, Serbia, Paraguay and Kyrgyzstan. The same law raised VAT to 22%.

It applies where consolidated revenue exceeds EUR 750 million in each of the two preceding years, the parent is a foreign tax resident at 31 December, and at least one group member sits in a jurisdiction operating extraterritorial top-up rules. The rate splits 5% federal / 10% regional and the effective rate is computed entity by entity for each Russian member, not on a jurisdictional blended basis — a real divergence from the model rules.

Section V.1 contains no baseline-distribution safe harbour and no FTS or Ministry of Finance instrument adopts or comments on Amount B. Distributors continue to be tested under the Article 105.7 hierarchy with the comparable profitability method and the Article 105.8 quartile interval. Verified by absence; given suspended OECD engagement, near-term adoption is unlikely.