Preparing Controlled Transaction Notifications | KPMG | RU

Preparing Controlled Transaction Notifications

Preparing Controlled Transaction Notifications

We help our clients prepare the controlled transaction notification in full compliance with the requirements of the Russian Tax Code.

We help our clients prepare the controlled transaction notifications on time.

Who is obliged to prepare notifications?
 
According to art. 105.16 of the Russian Tax Code, taxpayers have to notify the tax authorities of all controlled transactions made by their company within the calendar year.

Russian companies, as well as branches of foreign related companies operating in Russia that have taxable income, have to provide notification of any controlled transactions made in the 2016 calendar year to the tax authorities by 20 May 2017.

If notification is provided after the deadline, or errors/mistakes are found by the tax authorities in the notification, the taxpayer could face the following negative consequences:
  • failure to provide notification could act as an indicator to the tax authorities to include the company on their list of companies in which transfer pricing audits should be conducted in future;
  • could harm the reputation of the director / responsible person and the company as a whole;
  • could cause registration or visa-extension difficulties if the director / responsible person is a citizen of a foreign state.

Please refer to the attached PDF file for more detailed information. 

 

FAQ

We also have prepared comments covering most frequently asked questions.

  • How do the Russian tax authorities check whether the notification on controlled transactions has been completed accurately?
  • Are there plans to make the notification easier to complete?
  • What problems and sanctions can companies face if they submit an incomplete or inaccurate notification? What do companies need to take into account?
  • Can a company adjust previously-submitted notifications and thereby avoid paying the fine?
  • How can a company that is part of a larger group simplify the procedure for submitting information on large numbers of transactions?
  • When should companies automate their notification preparations?

Detailed comments regarding the questions above please find in the attached PDF file.

 

Useful materials

Companies usually face difficulties when preparing notification. Due to this, we provide the notification form to be completed and instructions on how to prepare the controlled transaction notification, as well as a list of documents describing the key points to help taxpayers complete their notification:

  • Order No. MMV-7-13/524@ of the Federal Tax Service of Russia dated 27 July 2012 “On approving controlled transaction notification forms, the procedure for completing them, and also the electronic controlled transaction submission format and the procedure for submission by the taxpayer of the electronic controlled transaction notification”. This contains the notification form and instructions on how to complete it.

Other relevant requirements and clarifications for preparation and provision of notifications please see in the attached PDF file.

 

KPMG services

  • Preparation of a “ready-to-send” notification in XML-format compliant with the Russian Tax Code (based on data exported from ANY automated accounting system, including internal systems developed by clients themselves)
  • Provision of methodological and technical support to companies preparing notifications using the 1С system with the specialised module activated
  • Finalisation of client-generated notifications in XML format from any type of automated accounting system
  • Comparison of the notifications submitted by both parties to a transaction, and checking whether the information is represented identically in both notifications (for groups of companies)
  • Methodological support for companies that have prepared a notification on their own.

Please refer to the attached PDF file for more detailed information. 

 

Our experience

KPMG specialists have extensive experience and knowledge of transfer pricing, accounting, tax accounting and international taxation.

By working on notification preparation projects, KPMG’s professionals have provided our clients with expert consulting on all relevant and current issues, while helping them solve contentious notification situations.

The KPMG approach is based on three-years of good practice and prosperous cooperation with our clients, achieving without exception only favourable client feedback in relation to the quality of our work during the notification preparation process.

In the three years in which there has been a requirement from the tax authorities to prepare controlled transaction notifications, KPMG has worked on more than 200 notification projects. Some of these projects contained over 100 different transaction types, such as buy-sell, provision of services, granting of loans, etc. and consisted of over 1 million lines. KPMG has delivered each and every notification within deadline.

 

KPMG team

Our professional team consists of 20 specialists from Moscow and Nizhniy Novgorod, who have experience in the field of transfer pricing, accounting and tax accounting (both Russian Accounting Standards and IFRS).

KPMG specialists are experienced in working with various automated accounting systems and with preparing notifications using 1C. In addition to this, our professionals are expert at creating and implementing methodological approaches related to the preparation of individual notifications for each company.

KPMG also has IT specialists providing technical support during the notification preparation process, capable of fine-tuning the XML-format file produced by the company’s own automated accounting system.

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