As supplementary to the Controlled Transaction Notice, the tax office authorized agent has the right to call up from the taxpayer a documentation package on controlled transactions. Such documentation formats are arbitrary, The Russian Tax Code only covers specific content requirements, including furnishing of the information on all the taxpayer’s activities related to the transaction under control, analysis of all the functions of all the parties to the transaction, justification of the method for commercial prices calculation, a description of the sources of information for the pricing calculation and such other information.
If the taxpayers happen to be participates of an international multicorporate enterprise and at the same time meets certain conditions, in addition to the above given information on controlled transactions, additional data on the international multicorporate enterprise has to be included in the provided documentation package.
A detailed procedure for the provision of the three-tier documentation for international multicorporate enterprises (global documentation, national-level documentation, country report) is ascertained in Chapter 14.4−1 of the Tax Code of the Russian Federation.There are certain conditions under which the taxpayer is considered having an extra responsibility when submitting the TP accounting, as a member of the international multicorporate enterprise:
- The current annual revenue from 50 billion rubles, if the parent company of the multicorporate enterprise is a tax resident of the Russian Federation;
- The current annual revenue in the amount established by a foreign state for filing a country report, if the parent company of the multicorporate enterprise is a tax resident of a foreign state.
In case if the organization failed to submit a report on the controlled transactions, it will face severe taxation consequences. At the same time, the penalty for failure of submitting a timely notice or inaccurate information provided in the notice is relatively small — 5,000 rubles. For participants in the multicorporate enterprises, responsibility for the failure to submit a country report (or submittance of an inaccurate one), national, global documentation amounts up to 100,000 rubles for each and every event. If the tax authority determines that due to the application of non-market prices, the taxpayer underpaid taxes to the budget, the penalty will be 40 percent of the unpaid amount.