Countries: Russia

Russia vs LLC OTIS LIFT, December 2021, Arbitration Court of Moscow, Case № А40-180523/20-140-3915

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The Russian company LLC OTIS LIFT carries out service and maintenance activities for lifts and escalators both under the registered trademarks and designations of Otis and lifts and escalators of other manufacturers. A License Agreement was in force between the Russian subsidiary and its US parent OTIS ELEVATOR COMPANY (NJ) (Licensor). In accordance with the […]

Russia vs PJSC Vimpelcom-Communications, May 2021, Arbitration Court of Moscow, Case No. A40-36350/21-140-1024

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PJSC Vimpelcom-Communications submitted to the tax authority a revised notice of controlled transactions for 2017, under which contract numbers for 68 transactions were adjusted, including an agreement with a foreign counterparty Veon Wholensale Services B.V. (Netherlands) for the provision of agency-services (the “Controlled Transactions”), and information was also provided on another transaction with another foreign […]

Russia vs ViciunaiRus LLC, April 2020, Supreme Court, Case No. A21-133/2018

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ViciunaiRus LLC was engaged in production and wholesale distribution of its products. During the inspection, the inspection concluded that the chain of contractual relations between the Company and its sole official distributor in the Russian Federation artificially had established intermediates that do not have assets and personnel. At the same time, the price of products […]

Russia vs PJSC Uralkali, November 2019, Supreme Court Review Panel, Case No. А40-29025/2017

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PJSC Uralkali, produced and sold fertilizers (“potassium chloride”) through a related Swiss trader. Uralkali had informed the authorities about the controlled transaction and submitted the required TP documentation. To substantiate the pricing of the transaction they had applied the transactional net margin method (TNMM) with the Swiss trader as the tested party. The Russian tax […]

Russia vs Garnet-SPb, June 2019, Court of Appeal, Case No. A56-113775/2017

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Garnet-SPb was the exclusive representative of a German manufacturing company in Russia. Following introduction of restrictions on the supply of certain categories of goods to Russia by the European Union in 2014, the Company had used the services of an intermediary trading company. The intermediary offered the Company to purchase products previously purchased directly from […]

Russia vs PJSC Uralkali, April 2019, Court of Appeal, Case No. А40-29025/2017

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PJSC Uralkali, produced and sold fertilizers (“potassium chloride”) through a related Swiss trader. Uralkali had informed the authorities about the controlled transaction and submitted the required TP documentation. To substantiate the pricing of the transaction they had applied the transactional net margin method (TNMM) with the Swiss trader as the tested party. The Russian tax […]

Russia vs LLC “Neftemash-Service”, June 2019, Supreme Court, Case No. A56-113775/2017

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Neftemash-Service LLC sold real estate (administrative and warehouse building, land plots, part of a workshop building) to two individuals that were also founders of the company and held the positions of general director and commercial director. The Company claimed the transactions were caused by an urgent need for capital, and that the reason for selling […]

Russia vs LLC Bogoroditskoye, February 2019, Court of Appeal, Case No. А62-8105/2017

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LLC Bogoroditskoye processed and preserved fish and seafood. During the period under review, these products were sold only to related parties. Following an transfer pricing audit, where the TNMM method was used, the tax authority concluded that the price of products paid by the related parties had been significantly lower than market prices, and that […]

Russia vs Ashin Steel Trading House, February 2019, Court of Appeal, Case No. A76-19287/2018

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A group company, PI, purportedly provided management services to the Ashin Steel Trading House. During the audit for FY 2013-2015 the tax authority came to the conclusions that Ashin Steel Trading House and the PI had “deliberately created a management relationship scheme so that service providers are listed on the staff of an entrepreneur who […]

Russia vs ViciunaiRus LLC, December 2018, Court of Appeal, Case No. A21-133/2018

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ViciunaiRus LLC was engaged in production and wholesale distribution of its products. During the inspection, the inspection concluded that the chain of contractual relations between the Company and its sole official distributor in the Russian Federation artificially had established intermediates that do not have assets and personnel. At the same time, the price of products […]

Russia vs LLC “Bulatovskiy Basalt”, November 2018, Court of Appeal, Case No. A05-5548/2018

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Bulatovskiy Basalt LLC extracted and sold basalt rubble. The rubble was sold to three related intermediaries, whom in turn, resold the rubble to the final buyers. The resale price was on average double the transfer price. The tax authorities considered that the sole purpose of incorporating intermediaries into the sales structure was to obtain an […]

Russia vs LLC “Scientific and Production Association”, October 2018, Supreme Court, Case No. А05-7708/2017

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Since 2012, the Company had rented out premises in its administrative building. Among the tenants were both independent parties, and a related party. For the related party, the rent were 10-20 times lower than for the independents parties. The related party tenant subleased, more than 97% of the space it had rented. Furthermore, the cost […]

Russia vs Togliattiazot, September 2018, Russian Arbitration Court, Case No. No. А55-1621 / 2018

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A Russian company, Togliattiazot, supplied ammonia to the external market through a Swiss trading hub, Nitrochem Distribution AG. The tax authority found that the selling price of the ammonia to Nitrochem Distribution AG had not been determined by Togliattiazot in accordance with the arm’s length principle but had been to low. Hence, a transfer pricing […]

Russia vs Burdinsky A.V., March 2018, Supreme Court, Case No. No. А04-9989/2016

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Burdinsky A.V. sold building products to both related and unrelated parties. Following an audit of FY 2012-2014, the tax authorities concluded that Burdinsky had understated the price of goods in transactions with related parties in order to save on taxes and obtain unjustified tax benefits. Price discrepancies were in the range of 11% to 52%. […]

Russia vs Gazprom Chemical Fiber, September 2017, Appeal Court, Case No. А12-39246/2016

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Gazprom Chemical Fiber had previously sold goods directly to the final buyers, but now an intermediate trading hub had been established – the Trading House – through which sales and purchases were now passed. Following an audit, the tax authorities concluded that the cost of purchasing goods, as well as sales revenues following the establishment […]

Russia vs Uralkaliy PAO, July 2017, Moscow Arbitration Court, Case No. A40-29025/17-75-227

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A Russian company, Uralkaliy PAO, sold potassium chloride to a related trading company in Switzerland , Uralkali Trading SA. Following an audit, the Russian tax authority concluded that Uralkaliy PAO had set the prices at an artificially low level. A decision was therefore issued, ordering the taxpayer to pay an additional tax of 980 million roubles and […]

Russia vs Lesprom Forestry Company, May 2017, Appeal Court, Case No. A29-7607/2016

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Lesprom Forestry Company had sold sand and construction services to a related party, Road Company LLC. The tax authority concluded that the Company had created a tax avoidance scheme aimed at artificially underestimating the income on transactions with Road Company LLC. The price for sand and construction work was revised and tax liabilities on income […]

Russia vs Dulisma Oil, January 2017, Russian Court Case No. A40-123426 / 16-140-1066

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This case relates to sales of crude oil from the Russian company, Dulisma Oil,  to an unrelated trading company, Concept Oil Ltd, registered in Hong Kong. The Russian tax authorities found that the price at which oil was sold deviated from quotations published by the Platts price reporting agency. They found that the prices for particular deliveries […]

Russia vs ZAO NK Dulisma, January 2017, Court of Appeal, Case No. А40-123426/2016

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In 2012, ZAO NK Dulisma, a Russian oil and gas company, sold crude oil via an unrelated Hong Kong-based trader. In Russia, transactions with unrelated parties may be deemed controlled transactions for Transfer Pricing purposes, provided certain conditions are met. The Russian Tax Authorities audited the transactions with the Hong Kong trader and found that […]

Russia vs Continental Tires RUS LLC , Aug. 2014, Russian Court of Appeal, Case No А40- 251161/2015

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Continental Tires RUS LLC had been issued a substantial loan from Continental AG (Germany). Following an audit the tax authority established that the main purpose of the loans was the systematic withdrawal of funds abroad. According to the tax authorities the loan transactions were concluded for the purpose of artificially raising cash in the form […]

Russia vs Mazda Motors, October 2015, Supreme Court, Case No. А40-4381/13

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A Russian subsidiary of the Mazda Motors Group had been claiming losses. Following an audit the tax authorities concluded that losses for FY 2009, was due to overstatement of the purchase prices of Mazda cars. An assessment was issued where the pricing was determined using the Resale Price Method, resulting in additional income of 1,362,172,034 […]

Russia vs Hyundai Motors, October 2015, Arbitration Court of Moscow, Case No. А40-50654/13

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A Russian subsidiary of the car manufacturer group HYUNDAI had been claiming losses in fiscal years 2008 and 2009. In the opinion of the tax authority, losses incurred by the Russian distributor were mainly due to non-arm’s length transfer pricing within the group of companies. Decision of the Russian Arbitration Court According to the court, […]

Russia vs Mazda Motors, March 2015, Arbitration Court of Moscow, Case No. А40-4381/13

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A Russian subsidiary of the Mazda Motors Group had been claiming losses. In the opinion of the tax authority, the losses incurred by the Russian distributor were mainly due to non-arm’s length transfer pricing within the group of companies. An assessment was issued where the pricing had been determined using the Resale Price Method. Decision […]