The corporate tax rate in Russia is 20%. The tax consist of a 2 percent tax payable to the federal budget, and an 18% tax payable to the regional budget. For certain categories of taxpayers, regional legislative bodies are permitted to decrease the tax rate payable to regional budgets to 13.5%. Thus, the overall tax rate can be decreased from 20 to 15.5%.
OECD Transfer Pricing Guidelines are used as recommendations and as the basis for Russian transfer pricing legislation. Article 40 of the tax code (and Article 20 for PE's) provided a basis for the tax authorities in certain circumstances to challenge transfer pricing arrangements. The provisions also set out the basic rules for determining market prices against which the prices used by taxpayers were compared. The general rules for determining prices for tax purposes are supplemented by the Profits Tax chapter of Part II of the tax code, which containes some elements of transfer pricing to deal specifically with individual situations.
In 2011, new Russian transfer pricing rules were approved. The new law aims to make transfer pricing rules work in practice and bring them closer to the OECD Guidelines. The provisions will give the tax authorities more information about the transfer prices applied and the methods used in intragroup transactions by introducing transfer pricing reporting and documentation requirements.
Case law as such does not exist in Russia, but courts play a role in developing interpretations. However, court decisions often serve only as a general guide in disputes between the tax authorities and taxpayers.