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 the price had been understated.
The arm’s length price was determined using a CUP method, based on data from Platts quote for Dubai grade oil, adjusted for quality and terms of delivery etc.
The court ruled in favor of the tax authorities, confirming that the application of the CUP method and the use of Platts data was justified.