Tax administration and tax control news

Transfer pricing (“TP”) and international taxation

• The Federal Tax Service of Russia is drafting an official position on the rules for the taxation of intra-group royalties.
• Such methodological guidance would set out the enforcement approaches developed by the Federal Tax Service of Russia in recent years regarding royalty transactions between related parties, including issues relating to the arm’s-length level of such payments. According to the Federal Tax Service of Russia, it is necessary to take into account not only the terms of the licence agreement, but also the functional analysis (the contribution, functions and risks of each party to the transaction, and the actual value of the trademark to the user, taking into account the specific characteristics of the Russian market).
• Discussions are currently underway with the academic community and leading Russian universities with a view to finalising the approach to be set out in the methodological guidance; the internal finalisation of the new approach is tentatively scheduled for October 2026; the official publication of the clarifications/methodological guidance is scheduled for December 2026.

• Although specialists within the TP Office of the Federal Tax Service of Russia are assigned to specific sectors, there is no sector-specific oversight, and troubled sectors are not singled out; instead, a general risk-based approach is applied.
• Historically TP control has focused on export transactions.
• The pre-audit analysis of controlled transactions for 2023 is now nearly complete (98% complete according to a spokesperson for the Federal Tax Service of Russia), and the analysis of controlled transactions for 2024 has begun.
• The most common mistake made by taxpayers in their notifications of controlled transactions is failing to specify the pricing method.
• At the same time, the Federal Tax Service of Russia notes that it is not possible to establish a guaranteed pricing method for one-off, non-standard export transactions involving over-the-counter commodities.
• Amid the current restrictions, new pricing agreements are rarely concluded (mainly in relation to commodity transactions, and less frequently in relation to royalties). Negotiations are also underway to establish a similar mechanism for concluding agreements with BRICS/EAEU countries.
• The sources of data on market levels and profit margins for the foreign party to a transaction remain a matter of uncertainty. As access to foreign databases (such as Orbis and similar platforms) is restricted, the Federal Tax Service of Russia does not insist that taxpayers abandon foreign sources, but encourages them to use Russian data and recommends “localising” foreign benchmarks (in particular, ensuring that companies are selected in accordance with the requirements of the Tax Code of the Russian Federation). According to the Federal Tax Service of Russia, the emergence of national price agencies or exchanges is seen as a likely, but for the time being, difficult-to-implement alternative.

• Reforms to strengthen the role of interregional tax inspectorates are continuing.
• For the time being, the interregional tax inspectorates have been tasked with addressing certain sector-specific risks concerning taxpayers across the country. In this connection, interregional tax inspectorates have been granted the authority to liaise with taxpayers who are not registered with them, where it is necessary to address sector-specific risks.
• Since 2022, the authorities have been practically constantly (on a weekly basis according to a spokesperson for the Federal Tax Service of Russia) monitoring the activities of Russian companies with a foreign presence.
• From 2025 to 2026, the agenda for interregional tax inspectorates will include the tasks of “whitewashing” the outstaffing market and assessing the effectiveness of tax concessions. Interregional tax inspectorates actively exchange information with other agencies (including the Federal Service for Labour and Employment and the Ministry of Economic Development). Expert councils are being set up in cooperation with representatives from other agencies to serve as a working tool for developing a uniform approach.
• In order to address sector-specific risks, the tax authorities are sending taxpayers extensive requests for the submission of documents/information (this trend is particularly evident among IT companies and those in the alcohol sector).

“Whitewashing” the staffing (outstaffing) market — key 2026 project

• On 1 June 2026, a pilot project for quasi-tax agency services was launched, involving representatives from the retail and e-commerce sectors, which, according to estimates by the Federal Tax Service of Russia, account for around 80% of the demand for staffing services.
• The essence of the project is such that the client commissioning staffing services, based on data provided by the recruitment agency, independently transfers part of the payment for the services to the Unified Tax Account to cover the contractor’s tax liabilities (approximately half of the amount attributable to personal income tax; the contractor is responsible for reporting the remainder independently). In fact, a major customer has started participating in fulfilling its counterparty’s tax obligations.
• The project is expected to generate a fiscal impact of RUB 50 billion (with respect to personal income tax and social security contributions).
• If the experiment proves to be a success, the tax authorities plan to extend this approach to other sectors.

Countering shell companies and “paper” VAT

• The Federal Tax Service of Russia, in cooperation with the Ministry of Internal Affairs and the Federal Security Service, is mass mailing notices/demands citing Articles 173.1–173.3 of the Criminal Code of the Russian Federation.
• The notifications specify that the tax authority has information of knowingly false VAT invoices used by the taxpayer’s counterparties to claim a VAT deduction. In these same notifications, the tax authority asks the taxpayer to submit amended VAT returns.
• Such notifications are sent in two steps: (1) notifications are sent to counterparties at the first tier of the chain if the transaction is deemed to be fictitious; and (2) once the authenticity of the transaction with the counterparty at the first tier has been confirmed, notifications are sent to the beneficiaries at the next tier.

Closed-end funds and real property

• The Federal Tax Service of Russia is focusing on schemes involving the use of closed-end funds in property transactions, whereby properties are purchased from the developer at cost or at a late stage of construction, then revalued and sold to end buyers at the market price, thereby enabling the redistribution of profits (in some cases, with the profits being transferred outside the Russian Federation).
• The representatives of the Federal Tax Service of Russia have explicitly stated that audits have already been carried out (“around 10”) and further audits are planned in relation to such transaction structuring models involving closed-end funds, and that they intend to develop a uniform approach to administration.