Gasprom Will Not Be Exempt From Transfer Pricing

The bill aiming to exempt Gazprom’s operations from the transfer pricing regulation has been withdrawn.

The transfer pricing regulation restricts the sale of goods or services by affiliated companies at non-market prices and, by doing so, the redistribution of profit to a company that pays lower taxes. The new law on arm’s length transactions comes into force in two months. It was adopted after several years of strenuous discussions, quiet but tenacious resistance and obstruction.

The law not only dramatically increases the odds of revision, for tax purposes, of prices set between affiliated companies but seek to focus the taxmen’s time and efforts on large scale transactions and transactions with foreign companies.

Earlier, Russian business daily Vedomosti reported that Gazprom’s CEO Alexei Miller sent a letter to Vladimir Putin asking to exempt the company from the transfer pricing law. Mr Miller wanted special provisions that would deem any transaction of the gas major or its subsidiaries struck at the market price.

The day after the publication the Russian Deputy Finance Minister Sergei Shatalov stood up to the proposition. ‘Gazprom should not be entitled to a waiver; it should comply with the transfer pricing law. We are not ready for any exceptions,’ he said.