Global Tax Alert (News from Transfer Pricing) | 27 July 2017

Russian Government submits draft law on BEPS Action 13 and CRS implementation to State Duma

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Executive summary

On 20 July 2017, the Russian Government submitted the draft law, Concerning the Introduction of Amendments to the Tax Code of the Russian Federation (in Connection with the Implementation of the International Automatic Exchange of Financial Account Information and Documentation for Multinational Groups of Companies), to the Russian State Duma.

This Alert summarizes the key changes as compared to the previous version of the draft law published for discussion on 6 March 2017.1

Detailed discussion

The following is an overview of the proposed changes:

  • The volume of information required for global documentation has increased (instead of “major” intra-group transactions, a full list of contracts/transactions is required; not only unilateral advanced pricing agreements (APAs), as recommended by the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) Action 13 on Country-by-Country (CbC) Reporting, but all other APAs, i.e., bilateral and multilateral agreements are to be disclosed).
  • The period when global documentation may be requested from a taxpayer has changed (not earlier than 12 months and not later than 36 months after the end of a financial year).
  • A new rule stating that terms not directly defined in the Tax Code are to be interpreted as per the provisions of Russian accounting legislation. This is potentially significant where particular terms are treated differently under Russian and international financial accounting standards and a CbC report is based on the latter.
  • The draft law prescribes new sanctions (a fine of RUB100,000) for failure to provide transfer pricing (TP) documentation – both for a master file and a local file, including the local file (TP documentation) required under the current rules and the BEPS Action 13 local file under the draft law. The period of exemption from sanctions proposed by the draft law has also been adjusted; it is now from 2018 to 2020.

As far as the automatic exchange of financial information under the OECD Common Reporting Standard (CRS) protocol is concerned, there are no significant changes to the March version in the draft law.

As currently proposed, the Law will enter into force from 1 January 2018 and apply to financial periods of a multinational group commencing from that date. The draft law also keeps an option to submit CbC reports for earlier periods on a voluntary basis. For the Russian headquartered groups planning to file their CbC reports in Russia for 2016, there may potentially be a risk that a secondary filing obligation may be enforced in other countries where they have a presence if the local countries’ filing deadline falls before 1 January 2018, i.e., before the Russian law has formally entered into force. A detailed analysis of the rules in countries in which multinational groups operate would be needed in order to assess the level of this risk. It is also possible to consider appointing a surrogate parent entity outside Russia as a way to manage the risk.

Future Alerts will report on any further developments with respect to BEPS Action 13 legislation.


1. See EY Global Tax Alert, Russia revises draft law on BEPS Action 13 CbCR implementation, dated 10 March 2017.

For additional information with respect to this Alert, please contact the following:

Ernst & Young (CIS) B.V., Transfer Pricing and Operating Model Effectiveness, Moscow
  • Evgenia Veter
    +7 495 660 4880
  • Maxim Maximov
    +7 495 662 9317

EYG no. 04436-171Gbl