MOSCOW, October 13 (RIA Novosti) - The Russian Finance Ministry speaks out against pre-coordination of transaction price between companies and taxation authorities, said deputy finance minister Sergei Shatalov during discussion of transfer pricing problems at the taxation conference in Moscow on Wednesday.
"I am sceptical about the possibility of pre-coordination of transaction price with the taxation authorities", said Mr. Shatalov in response to the proposal made during the discussion to coordinate the transaction price with the taxation authorities at the moment of its conclusion.
Mr. Shatalov pointed out "incredible bribery potential of such approach". He also believes that too many companies would be willing to coordinate their prices with the taxation authorities rendering them incapable of handling such flow of appications.
"The work of the taxation authorities will be completely paralized", said the Finance Ministry's representative.
Mr. Shatalov informed the audience that on the government's instructions the Finance Ministry was developing proposals, to be submitted by November 1, on amending the legislation in terms of control over transfer pricing.
According to him, the work is now in full swing. "We continue to argue ourselves hoarse to coordinate these proposals", said the deputy minister.
He noted that the legislation had not so far offered a definition of transfer pricing. According to Mr. Shatalov, this category includes all transactions subject to special control by the taxation authorities.
Along with transactions between interdependent bodies, such transactions include barter transactions, transactions on assignment of choses in action, foreign trade operations and transactions featuring price deviation of over 20%.
