on the closest day thereto within a three-month period (in the absence of trades on the transaction day). For securities and derivatives not quoted on a stock exchange, the market price is within range determined by a 20% deviation band above and below the reference price, and the profit/loss of a taxpayer is calculated based on the reference price and the allowed deviation. The procedure for calculating the reference price for non-tradable securities is to be established by the Federal Service for Financial Markets, subject to approval by the Ministry of Finance. The transfer pricing rules are currently being reviewed by the Russian Parliament. Recent proposals to amend the transfer pricing rules provide for the following significant changes:
the scope of controlled transactions may be limited to transactions between related parties if the total income and expenses from/on such transactions exceed one billion rubles in a calendar year, or with respect to natural resources, crossborder sale of oil and oil products, and cross-border transactions with parties beneficial owners located in jurisdiction included in a “black list” of offshore jurisdictions;
new methods for determining market prices;
transfer pricing documentation requirements; and
the introduction of advanced pricing agreements.
There is no exact information on when these rules will be adopted. However, as a change to the Tax Code new transfer pricing rules can not come into effect before 2011.
7.5
Taxation of Foreign Companies
Russian legislation taxes profits derived from a “permanent establishment” in Russia, as well as certain other types of income 74
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