The Ministry of Finance of the Russian Federation (the “Finance Ministry”) and the Federal Tax Service of the Russian Federation (the “FTS”) intend to set out the conditions under which transfer pricing agreements can be entered into, and a consolidated group of taxpayers (a “Group”) set up quickly.

The FTS has clarified the procedure for entering into transfer pricing agreements. Specifically, the FTS has defined what an agreement on transfer pricing is and has indicated which types of such agreements companies may conclude with the FTS.

The FTS has also clarified several issues concerning the functioning of a Group. This specifically concerns the requirements for the subject matter of an agreement on creating a Group (to which the Group’s participants must conform), as well as the procedure for reviewing the submitted documents.

Moreover, the Finance Ministry has clarified (i) the procedure for a Group to make advance payments on profit tax; (ii) how a Group may apply decreased tax rates under the laws of the constituent territories of the Russian Federation; and (iii) a Group’s accounting policies.

[Letter No. OA-4-13/85@ of the Federal Tax Service of the Russian Federation, dated 12 January 2012; Letter No. ED-4-3/22492@ of the Federal Tax Service of the Russian Federation “On the Terms and Conditions of an Agreement on Creating a Consolidated Group of Taxpayers”, dated 29 November 2011; Letter No. AS-4-3/22569@ of the Federal Tax Service of the Russian Federation “On Registering the Amendments to an Agreement on Creating a Consolidated Group of Taxpayers”, dated 29 December 2011; Letter No. ED-4-3/162@ of the Federal Tax Service of the Russian Federation “On Separate Issues of Adhering to the Terms and Conditions Stipulated in Article 25.2 of the Tax Code of the Russian Federation when Creating a Consolidated Group of Taxpayers”, dated 13 January 2012; Letter No. 03-03-10/126 of the Ministry of Finance of the Russian Federation, dated 28 December 2011]