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DOI: 10.7256/2454-065X.2013.6.8942

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DOI: 10.7256/2454-065X.2022.1.36207

Abstract: The article examines the main obligations of taxpayers in various CIS countries and their differences in comparison with the approach adopted by the OECD countries, in particular, the widespread obligation to file notifications of controlled transactions, the specifics of the requirements for filing three-level reporting, etc. The object of the study is the provisions of the legislation of the analyzed countries in the field of transfer pricing, by-laws and regulations issued by individual public authorities, and the subject of the study is the main regularities of regulation, as well as differences in the requirements for the preparation and submission of reports on transfer pricing. The main conclusions of the study are the high degree of specificity of taxpayers' obligations in the field of transfer pricing in the CIS countries, as well as the general unity of approach among the analyzed countries. As part of the work, it was also found that, taking into account the trends towards convergence of legal norms among the CIS countries, there is a high probability of further increase in the administrative burden on taxpayers, in particular, the adoption of TP rules by those countries that have not yet adopted them, and the introduction of three-level reporting in those countries in which such a requirement is not yet available. The novelty of the research lies in the formation of an up-to-date comparative characteristic of legislative norms, as well as the identification of possible trends in the development of legislation based on the history of the development of TP rules in the CIS countries.

Keywords: obligations of taxpayers, taxation in the CIS, international taxation, transactions of related parties, tax planning, controlled transactions, the outstretched arm principle, transfer pricing, taxation of TNCs, three-level documentation

DOI: 10.7256/2454-065X.2016.7.19733

Abstract: The subject of the present research article is the process of differentiating cases of interdependence depending on their degree of impact on transation terms and economic performance of related parties. According to the author, the arm's length principle needs to be limited in cases when companies' intergration does not have the purpose to avoid taxes. In this regard, the author offers to differentiate cases of relationship depending on the degree of impact of one party on decisions made by the other party, and to define the grounds for taxation of a group of related parties (enterprises) as the single taxpayer. In his research Kamenkov has mainly used: 1) Aristotelian method that has allowed to define differences between relationship cases and to describe the features of the single consolidated taxpayer; and 2) comparative law method that has allowed to compare foreign and Russian approaches to the matter under research. The author of the article offers his own approach according to which related parties can be divided into the three groups depending on their degree of impact: 1) one of the parties can directly influence decisions of the other party (the 'red' light); 2) one of the partices can influence decisions of the other party unless the contrary is proved (the 'yellow' light); 3) one of the parties cannot influence decisions of the other party unless the contrary is proved (the 'green' light). Depending on the degree of impact of one party on the other party's will, the burden of the proof of related influence on business transactions and economic results of the consolidated taxpayer can be distributed. The author of the article also offers his approaches to fixing the single consolidated taxpayer for a group of companies participating in the same operating procedures. 

Keywords: income tax, traffic light principle, arms length principle, economic base, transfer pricing, single taxpayer, tax consequences, related parties, consolidated group of taxpayers, associate company

DOI: 10.7256/2454-065X.2016.7.67959

Abstract: The subject of the present research article is the process of differentiating cases of interdependence depending on their degree of impact on transation terms and economic performance of related parties. According to the author, the arm's length principle needs to be limited in cases when companies' intergration does not have the purpose to avoid taxes. In this regard, the author offers to differentiate cases of relationship depending on the degree of impact of one party on decisions made by the other party, and to define the grounds for taxation of a group of related parties (enterprises) as the single taxpayer. In his research Kamenkov has mainly used: 1) Aristotelian method that has allowed to define differences between relationship cases and to describe the features of the single consolidated taxpayer; and 2) comparative law method that has allowed to compare foreign and Russian approaches to the matter under research. The author of the article offers his own approach according to which related parties can be divided into the three groups depending on their degree of impact: 1) one of the parties can directly influence decisions of the other party (the 'red' light); 2) one of the partices can influence decisions of the other party unless the contrary is proved (the 'yellow' light); 3) one of the parties cannot influence decisions of the other party unless the contrary is proved (the 'green' light). Depending on the degree of impact of one party on the other party's will, the burden of the proof of related influence on business transactions and economic results of the consolidated taxpayer can be distributed. The author of the article also offers his approaches to fixing the single consolidated taxpayer for a group of companies participating in the same operating procedures. 

Keywords: income tax, traffic light principle, arms length principle, economic base, transfer pricing, single taxpayer, tax consequences, related parties, consolidated group of taxpayers, associate company

DOI: 10.7256/2454-065X.2016.7.19639

Abstract: The author considers Russian transfer pricing rules entered into force from the 1st January 2012 from the perspective of their accordance to the balance of private and public interests principle. The author analyses the overall compliance of the forced tax base adjustment by the tax authorities to this principle as well as specific aspects of the issue (the transaction definition for the transfer pricing tax control purposes, the tax authorities’ power in the related parties’ transactions audit). The author applies theoretic approaches to the “balance of private and public interests” term to the current transfer pricing tax control rules in Russia, analyses court and administrative practice. The main conclusion of the article is that the tax base adjustment under the transfer pricing tax control rules does not violate balance of private and public interests principle by itself. It does not provide creation of the tax base in the transaction between related parties, but “requalification” of the accounted, “hided” at the another entity profit to the tax base of the entity which shall account it. The principles of the parity, substance over form, fair tax base maintenance and double taxation avoidance, economic substantiation and fair taxation are the base for the considered rules. However, some rules of the Russian Tax Code require changes. Hence, Art.105.7 p.11 of the Russian Tax Code regulation significantly decreases the certainty and predictability level between tax authorities and taxpayers and therefore cannot be considered as commensurately limiting taxpayers’ rights. The “deal” term used in the Section V.1 of the Russian Tax Code is narrower and less precise than the efficient transfer pricing tax control requires. It violates balance of private and public interests principle as does not allow to control relationships, which shall be controlled (labor relationships, novation, etc.), and at the same time formally controls relationships, which cannot be controlled. The Section V.1 of the Russian Tax Code requirements does not limit transfer pricing tax control by the local tax authorities within the tax audits, thus it puts taxpayers to the unequal status depending on the transactions they enter. Key words: transfer pricing, the arm’s length principle, balance of private and public interests principle, the related parties’ transactions audit, the Russian Federal Tax Office, OECD Guidelines, the tax audit, the territorial tax authority, transaction, tax base adjustment, related parties.

Keywords: transfer pricing, the arm's length principle, balance of interests, Russian Federal Tax Office, OECD Guidelines, tax audit, local tax authority, transaction, tax base adjustment, related parties

DOI: 10.7256/2454-065X.2016.8.67961

Abstract: In her article Zadorozhnaya analyzes guidelines for tax control of transfer pricing in Russia as amended effective of January 1, 2012, from the point of view of their conformity with the principle of the balance of public an dprivate interests. The author analyzes both general conformity of involuntary adjustment of taxable base by tax authorities when rules of tax control over transfer pricing are applied and particular aspects of the subject matter (definition of transaction for the purposes of tax control over transfer pricing as well as competences of tax authorities when checking the calculation and payment of taxes resulting from transactions between related parties). The author has applied theoretical legal approaches to the definition of the 'balance of private and public interests' in relation to effective rules regarding tax control of transfer pricing in Russia. The author has also analyzed judicial and administrative practice on the matter. The main conclusion of the present research is that adjustment of a taxpayerâ' taxable base based on the rules of tax control of transfer pricing does not distort the balance of public and private interests because it does not mean that the taxable base is not created in the place where it has never been before (i.e. during transactions between related parties) but the recorded profit 'hidden' by the other party is 'requalified' as part of the taxable base that has been formed as a result of transaction performed by the party which should have recorded it. These rules are based on the principles of taxation equality, 'substance over form', preservation of an appropriate taxable base and prevention of double taxation, economic justification and fair taxation. At the same time, the author states that there are some guidelines in the Tax Code of the Russian Federation (herein after TC of the RF) that need to be reviewed. Thus, provisions of Clause 11 of Article 105.7 of the TC of the RF significantly decrease the level of certainty and predictability in relations between taxpayers and tax authorities and this is why cannot be considered to be adequately restricting taxpayers' rights. Moreover, the term 'transaction' used in Section V.1 of the TC of the RF is narrow and less accurate than it is needed for the purposes of efficient tax control over transfer pricing which distorts the balance of public and private interests and does not allow to control the relations that should be controled (such as labor relations, debt conversion, etc.) while sets control over the relations which cannot be controled. According to the author, if not limited by the requirements of Section V.1 of the TC of the RF, control of transfer pricing by territorial tax authorities during tax audits creates unequal conditions for taxpayers depending on the type of transaction performed.

Keywords: transfer pricing, the arm’s length principle, balance of interests, Federal Tax Service of Russia, OECD Guidelines, tax audit, territorial tax authority, transaction, adjustment of taxable base, related parties

DOI: 10.7256/2454-065X.2016.7.19985

Abstract: At the moment, due to the entering into force of the Russian transfer pricing rules from 1st January 2012, the practice on their application is developing and questions on their interpretations arise. As the Russian transfer pricing rules are based on the recommendations of OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, the issue on their applicability in Russia appear. In this article the author analyses court and administrative practice on the issue and forms a self consistent approach to this problem. The Author concludes that OECD Guidelines may be applied as proceeding, elaborating, developing and filling the gaps in the Russian regulation in case of similarity of logic and goals of the transfer pricing control in OECD Guidelines and the Russian Federation Tax Code.

Keywords: transfer pricing, arm’s length principle, tax control, cost sharing, OECD Guidelines, tested party, portfolio approach, related parties, group of companies, Russian Federal Tax Office

DOI: 10.7256/2454-065X.2016.8.67963

Abstract: The subject of the present research is the estimation of the criteria defining characteristics of the tax residency of companies. The object of the research is the principles for determining tax residency of companies. The author of the article also underlines that tax residency is one of the fundamental concepts in the construction of the tax system and the common methodological platform for building and formalization of relations of subjects of foreign economic activity with different tax jurisdictions. Thus, the legal regulation is aimed at establishing residency subject composition and status of entities. The guidelines for determining tax residence companies involve (1) the place of incorporation, (2) the center of management and control, (3) the place of management; and (4) the place of effective management. The article describes the features of the principles determining tax residency. The place of incorporation is included as the last criterion for determining tax residency in case of failure of the preceding tests. Using econometric and statistical methods, in his research Grundel analyzes theoretical developments of the current legislation set forth by tax administrations of foreign countries, particularly the establishment of the basic principles of determining the residency of companies. In terms of the manipulation for multinational companies it is difficult to move all the factors influencing the determination of residency jurisdiction in the country with the low tax burden. The author concludes that it is necessary to use the conflict rules for determining the country of residency for physical entities as in the case with legal entities. The provisions set forth by the OECD Model Tax Convention for legal entities should be transferred to the obligation to determine the residency of physical entities. 

Keywords: place of management, place of incorporation, Model Tax Convention, functional analysis, center of vital interests, residency criteria, principles of residency, international taxation, place of effective management, transfer pricing