The Tax Code of the Russian Federation has been amended to tighten control over transfer prices from 2024. We describe the most significant changes for companies conducting transactions with non-residents.

Controlled transactions

  • As before, transactions with interdependent foreign persons are controlled if their annual income exceeds 120,000,000 RUB. Such transactions must be notified to the tax authorities on an annual basis and documentation must be prepared substantiating the conformity of prices with market levels.
  • Transactions with interdependent foreign entities conducted through independent intermediaries with limited functionality and risks are also controlled. Therefore, the inclusion of independent intermediaries from CIS countries, Asia, etc. in previous supply chains does not relieve a company of the need to notify the tax authorities of such transactions and prepare documentation justifying their prices.
  • Transactions with foreign interdependent persons are equated with transactions with persons from offshore countries. From 2024, the list of offshore countries includes the EU, the USA, Japan, the UK, Switzerland and others. Transactions with independent persons from these countries become controlled if their annual income exceeds 120,000,000 RUB. In this case, such transactions must be notified to the tax authorities and Documentation justifying the prices must be prepared.

Exception: transactions with offshore persons entered into before 1.3.22 and not controlled as of 1.3.22 will not be subject to control, provided that the procedure for determining prices and pricing approaches in these transactions have not changed after 1.3.22.

Notification of controlled transactions

  • A Notification of Controlled Transactions must still be submitted annually – by May 20 of the year following the year in which the transactions took place. The penalty for failure to submit the Notification has been increased from 5,000 RUB to 100,000 RUB. A company may also be fined if the Notification contains false information.
  • The Notification should include information on the method of pricing analysis, the sources of information used, the terms of commodity transactions and the value chain (for transactions on the list of the Ministry of Industry and Trade). The content of the Notification assumes that by the time it is submitted, the taxpayer has already conducted a transfer pricing analysis. This makes the preparation of Transfer Pricing Documentation not an optional action of a taxpayer, but mandatory.

Transfer pricing documentation

  • The tax authorities may now request Transfer Pricing Documentation outside the scope of an audit. For example, Documentation may be requested in the course of a pre-audit analysis by the tax authorities. The taxpayer must provide the Documentation within 30 days after the request. Failure to provide the Documentation may result in a fine of 500,000 RUB being imposed on the company. It should be noted that earlier legislation did not impose a fine for the absence of Documentation.
  • Companies carrying out foreign trade transactions involving goods on the list of the Ministry of Industry and Trade (oil, ferrous and non-ferrous metals, mineral fertilizers, precious metals and fireplace) will be obliged to submit Documentation to the tax authority at the same time as the Notice of Controlled Transactions.

Profit tax, dividends

  • In the course of control measures, the tax authority will calculate an adjustment to the tax base and the amount of additional tax payable on the basis of the median value of the market price or profitability interval. Previously, such a calculation was made on the basis of the minimum value of the interval. If a taxpayer adjusts tax liabilities independently, he can still use the minimum value of the market interval in calculations. Thus, the legislator encourages taxpayers to make independent adjustments without waiting for control measures on the part of the tax authorities – in the case of independent adjustments, the amount of tax payable will be less.
  • Income received by a foreign person due to the use of non-market prices in a transaction will be equated to dividends and taxed at source in the Russian Federation at the rate of 15% (secondary tax adjustment). Thus, the Russian budget will receive 35% of the amount of the tax base adjustment: 20% profit tax + 15% dividend tax.

If additional tax is paid as a result of an audit, the company will have to pay 55% of the amount of the adjustment to the tax base, taking into account the penalty.

Tax on dividends will not have to be paid if a foreign person returns such income before the tax payment deadline or before the opening of a tax audit. In the latter case, a Russian taxpayer will have to pay additional tax on income in the form of interest for the use of funds by a non-resident.

Penalties for non-payment of tax due to application of non-market prices

  • The penalty for failure to pay tax in connection with the application of non-market terms in a transaction with foreign interdependent persons has been substantially increased. Previously, the penalty amounted to 40% of the amount of underpaid tax, but not less than RUB 30,000. Starting from 2024, the penalty will be 100% of the amount of underpaid tax, but not less than RUB 500,000.
  • For domestic transactions, the penalty will remain at 40% of the amount of underpaid tax, but not less than RUB 30,000.
  • Protection from the penalty in the presence of Documentation substantiating the market price level will apply only to domestic transactions.

International groups of companies

  • Significantly increased penalties:
    • RUB 500,000 – a fine for failure to provide a Notice of Participation in the MNE or inaccurate information in it. The fine will be imposed for each fact of violation
    • RUB 1,000,000 – fine for failure to provide Global Documentation
    • RUB 1,000,000 – fine for failure to provide National Documentation
    • RUB 1,000,000 – fine for failure to submit Country Report
    • RUB 1,000,000 – fine for failure to provide Information from MNE Financial Statements, Financial Statements of an MNE participant.
    • Previously, the fines for these violations were within 100,000 RUB, and there were no fines for failure to provide information from financial statements.
  • Due to the termination of automatic exchange of Country-by-Country Reports with Russia by a number of countries, Russian members of IHCs whose Country-by-Country Reports are no longer received by the Russian tax authorities will have to submit these reports to the Federal Tax Service on their own. Since the penalty for unlawful failure to submit a report is quite high (1,000,000 RUB), we recommend that Russian companies that are members of the relevant ILCs prepare to submit Country Reports on their own.


  1. Companies should identify transactions that are controlled from 2024, taking into account changes in supply chains and expansion of the list of offshore entities. We recommend to define in advance the approaches to pricing in such transactions, prepare Documentation justifying the compliance of prices in such transactions with the market level.
  2. Where transfer prices deviate from the market level, we recommend making an independent tax adjustment without waiting for the tax authorities to take control measures. In this case, the amount of additional tax payable will be lower and the company will be able to avoid high penalties.
  3. We recommend discussing in advance with foreign counterparties the need to pay dividend tax on the amount of the tax adjustment made when the transfer price deviates from the market level.
  4. MNE participants should request Global documentation and information from the Group in advance for the preparation of the MNE Notice of Participation and Country Report.

We are ready to advise and assist on all matters relating to transfer pricing and taxation in controlled transactions.