Russia’s President Vladimir Putin has signed Federal Law No. 39-FZ introducing several significant changes to Russian transfer pricing regulation and VAT. The Law was officially published on April 8, 2013.  

Transfer pricing changes

The Law stipulates that the new Russian TP rules shall not apply to loans, credits, guarantees and agreements concluded before January 1, 2012 even if interest taxed or deducted under the Russian Tax code is due after that date (unless the conditions of such agreements have been amended after January 1, 2012).

More good news for taxpayers is that the Law postpones the deadline for filing a notification regarding 2012 controlled transactions, from May 20 to November 20, 2013.

The deadline for TP documentation to be ready for filing with the tax authorities is also shifted from June 1 to 1 December 1, 2013 to allow taxpayers more time to prepare the filing. According to the Law, tax audits of 2012 controlled transactions can be scheduled not later than June 30, 2014 (currently the date is December 31, 2013).

VAT changes

In addition, the Law contains long-awaited changes in the VAT regulation of premiums provided under supply agreements. This issue was earlier commented on by the High Arbitration Court of Russia, albeit without sufficient clarity.

These are the most notable aspects of these changes:

  • Under the Law, provision of premiums to incentivize sales shall not affect the price of the relevant goods earlier shipped, unless otherwise directly stipulated by the respective supply agreement or agreements.
  • The Law also allows Russian taxpayers to prepare one combined corrected VAT-invoice (effectively, a VAT invoice supporting credit notes), to cover multiple past supplies, and thus to document the price change of earlier shipped goods on a combined basis (for each past supply having its own original VAT invoice).

This VAT law change may be specifically relevant to manufacturers and distributors or suppliers of the first tier operating in Russia who supply goods to multiple second-tier distributors or re-sellers and implement various incentive rebate-based programs for goods distribution.

The part of the Law introducing the above amendments for VAT regulation of premiums comes into legal force starting from July 1, 2013.