LETTER OF THE FEDERAL TAX SERVICE OF THE RUSSIAN FEDERATION

of November 2, 2012 No. ED-4-3/18615

About application of separate provisions of article 105.3 of the Tax Code of the Russian Federation

The Federal Tax Service directs for data and use in work the letter of the Ministry of Finance of the Russian Federation of 18.10.2012 N 03-01-18/8-145 concerning application of separate provisions of article 105.3 of the Tax Code of the Russian Federation.

The Departments of FNS of Russia for subjects of the Russian Federation are entrusted to bring this letter to subordinate tax authorities.

Appendix

LETTER OF THE MINISTRY OF FINANCE OF THE RUSSIAN FEDERATION

of October 18, 2012 No. 03-01-18/8-145

About application of provisions of article 105.3 of the Tax Code of the Russian Federation

The department of tax and customs and tariff policy considered the appeal of the Federal Tax Service concerning application of provisions of article 105.3 of the Tax Code of the Russian Federation (further - the Code) and reports.

Article 105.3 of the Code establishes general provisions about the taxation in transactions between affiliated persons. Provisions of this Article shall be considered in case of determination of the corresponding tax base on separate taxes. Besides, in some cases (goods exchange transactions, realization on a grant basis) the tax base is determined according to the procedure, similar to procedure for determination of market prices, stipulated in Clause 105.3 Codes. At the same time, if Chapters of part two of the Code regulating questions of calculation and payment of separate taxes determine other rules of determination of the price of goods (work, service) for the purposes of the taxation, then rules of part two of the Code are applied.

Regulations of Item 1 of article 105.3 of the Code provide application in transactions between affiliated persons of the commonly accepted principle of "outstretched arm" in world practice in case of determination of the prices in transactions for the purposes of the taxation. At the same time the prices are recognized market transactions which parties are the faces which are not recognized interdependent.

Thus, affiliated persons, establishing the prices in transactions among themselves, for the purposes of the taxation shall be guided by the principle of "outstretched arm".

Tax control in connection with transactions between affiliated persons is exercised by federal executive body, the representative for control and supervision in the field of taxes and fees (further - TsA FNS of Russia).

In our opinion, proceeding from set of regulations of the Code of the transaction between affiliated persons it is possible to divide into two groups: controlled, recognized by those in case of observance of provisions of article 105.14 of the Code, and other transactions between affiliated persons.

Concerning controlled transactions the obligation according to the notification of tax authorities on making of such transactions and submission of the corresponding documentation when carrying out TsA FNS of Russia of check of completeness of calculation and tax payment in connection with transactions between affiliated persons is assigned to taxpayers. In turn, according to Item 1 of article 105.17 of the Code check of completeness of calculation and tax payment in connection with transactions between affiliated persons is carried out by TsA FNS of Russia. At the same time control of compliance of the prices applied in controlled transactions to market prices cannot be subject of exit and cameral checks.

Concerning other transactions between affiliated persons which are not falling under criteria of controlled transactions, submission of the notification and preparation of documentation according to article 105.15 of the Code are not provided. At the same time, in our opinion, control of compliance of the prices in such transactions can be exercised in the following procedure.

If during the examination the territorial tax authority elicits the transaction fact which under the terms falls under controlled, but in the notification provided to tax authority the taxpayer reflects false information or which under the terms of agreements does not fall under controlled, but at the same time, by provisional estimate, the transaction belongs to controlled, by territorial tax authority the information letter in TsA FNS of Russia in which the facts testimonial of understating of the amounts of the corresponding taxes are stated can be prepared. The specified information can form the basis for repeated exit tax audit according to the procedure of control of activities of the tax authority performing with the subsequent check of completeness of calculation and tax payment in connection with transactions between affiliated persons.

In making cases between affiliated persons of the transactions which are not answering to signs controlled in whom calculation of tax base is performed based on provisions of individual clauses of part two of the Code proceeding from the prices determined according to article 105.3 of the Code (including in case of sales of goods (works, services) in goods exchange (barter) transactions, sales of goods (works, services) on a grant basis, transfer of property regarding pledge to the pawnbroker in case of non-execution of the obligation provided with pledge, transfer of goods (results of the performed works, rendering services) in case of compensation in natural form), control of compliance of the prices applied in such transactions to market prices can be subject of exit and cameral checks. At the same time for the purpose of determination of the actual transaction price in which understating of tax amount, subject to payment in the budget system of the Russian Federation is supposed we find it possible to apply the methods established by Chapter 14.3 of the Code.

Concerning transactions in which taxpayers artificially create conditions in order that the transaction did not answer signs controlled we consider necessary to establish the actual interdependence of persons, including according to Item 7 of article 105.1 of the Code, or to recognize the transaction controlled based on provisions of Item 10 of article 105.14 of the Code.

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