Russia introduces draft law on country-by-country reporting requirements: implications for multinationals

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Global Tax Alert


A newly published federal draft law introduces Russia to a three-tiered approach to transfer pricing documentation and brings Russian regulations in this area in line with the OECD minimum standards under Action 13 of the Base Erosion and Profit Shifting (BEPS) Action Plan.

The draft law, published by the Ministry of Finance, is called the Documentation on Members of Multinational Corporate Enterprise Groups of Companies (MNEs).

Documentation requirements for Russian and foreign MNEs

The draft law provides that both Russian MNE groups and foreign MNE groups with a presence in Russia should produce the following documents in Russia:

  • A notification that the Russian entity is part of an MNE group and
  • A set of transfer pricing documentation - i.e., a country-by-country (CbC) report, a master file and a local file

MNE groups are obliged to comply with the new requirements with respect to the financial periods on or after January 1, 2017, i.e. the 2017 reporting period will be the first year that the MNE groups must file these documents in Russia. However, the draft law allows taxpayers to comply with the documentation requirements on a voluntary basis for the 2016 financial period.

The draft law provides an exemption for MNE groups that meet certain revenue thresholds. MNE groups below these thresholds will be exempt from the new documentation requirements (including the CbC report, master file and local file). Specifically, the exemption applies to MNE groups with an aggregate revenue (in the consolidated financial accounts for the preceding financial year) not exceeding:

  • RUB50 billion (approximately €800 million/US$879 million), for Russian MNE groups or
  • the revenue threshold set out in the laws of the foreign state where the parent company of an MNE group is a tax resident, for foreign MNE groups with a presence in Russia.

Country-by-country report

As a general rule, a CbC report shall be filed in Russia by the parent company of a Russian MNE group and a Russian member of a foreign MNE group. However, the Russian member of a foreign MNE group is entitled not to file such a report if its parent company is the tax resident of a foreign state which meets all of the following conditions:

  • the foreign state obliges its taxpayers to file a CbC report (containing data that are similar to those required in Russia)
  • the foreign state is a party to an international agreement on automatic exchange of information and is committed to exchange CbC reports with Russia within 12 months from the end of each financial year and
  • the foreign state is not listed by the Russian Ministry of Finance among the states that systematically breach their obligations to exchange CbC reports.

This filing requirement must be met within 12 months from the end of each financial year. That is, the draft law envisages that the first CbC reports must be filed before December 31, 2018, unless the MNE groups have chosen to file earlier on a voluntary basis.

Master file and local file

According to the draft law, MNE groups are not required to file their master file and local file with tax authorities. These files shall be provided only upon demand of the Russian tax authorities.

Once a demand has been issued, the Russian member must provide the master file within three months from the date of the demand, or within 15 months from the end of the most recent financial year, whichever is later.


Under the draft law, Russian members of foreign MNEs are obliged to prepare and file CbC reports with Russian tax authorities. This local filing requirement can be avoided in some circumstances where Russian tax authorities are able to access the CbC reports directly from the parent company state through an effective automatic exchange of information mechanism. It is not clear at this stage how many countries would meet the cumulative requirements set out in the draft law. Therefore, the local filing option should be considered the default position, at least until further reassurances are given by the relevant authorities.

Although the master file and local file do not have to be filed annually, it is still important to prepare them in advance because of the short time limits within which these files must be presented to the Russian tax authorities upon demand.

MNE groups that fall below a certain revenue threshold are exempt from the proposed documentation requirements. Under the draft law, this exemption applies also to master file and local file. It is important to note, however, that these MNEs are not discharged from the obligation to prepare and submit the notification on their controlled transactions and other documentation required by Article 105.15 of the Russian Tax Code.

Learn more about the implications of this draft federal law by contacting the authors.