Putin Signs Law to Tighten Control Over Foreign Trade Transactions

MOSCOW (Sputnik) - Russian President Vladimir Putin on Monday signed a law that, among other things, tightens control over transfer pricing in foreign trade transactions.

The law expands the list of affiliated entities whose transactions are subject to control for the application of market prices. The controlling entity and its controlled foreign companies (CFCs), as well as entities controlling the same CFCs, will be considered as affiliated. Organizations controlled by individuals who are close relatives will also be considered affiliated.

At the same time, transactions that come under government control as a result of the suspension of Russia's tax agreements with certain countries are excluded from the list.

The information to be disclosed about such transactions will include the resale chain if some of its links are based outside Russia, to "understand whether market prices were used in transactions between affiliated parties," Russian Deputy Finance Minister Alexey Sazanov said. This applies to the export of oil and oil products as well as ferrous and non-ferrous metals, mineral fertilizers, precious metals and jewels, he added.

Corporate groups that make foreign trade transactions and whose assets are mainly located in Russia will have to present to regulators their consolidated financial statements as well as statements of companies that participate in such transactions within their group.

The changes will go into effect on January 1, 2024.