Price information sources and databases
Among the difficulties currently faced in ensuring that the prices and conditions of intragroup financial transactions comply with the requirements of TP legislation are the restriction of access of Russian taxpayers to the databases of the Bloomberg and Refinitiv price reporting agencies
– the chief providers of price information for financial transactions in Russia and abroad, and the suspension of operations in Russia by international rating agencies
, which provided access to calculators used to determine the credit ratings of related counterparties.
It has become a matter of urgency for taxpayers to gain access to alternative information sources and databases which may be used to determine the market level of prices and fees in controlled financial transactions for transfer pricing purposes.
On 29 April 2022, the Board of Directors of the Bank of Russia adopted a Decision
 to the effect that, in determining the prices (value) of financial instruments, credit and non-credit financial organisations may, in addition to information published by the Bloomberg and Refinitiv agencies, use information provided by:
- NKO NRD AO
- Interfax AO (one of Interfax’s projects in partnership with NRD is the RU Data platform)
- Sbons.ru OOO, or
- If the required information is not available from the above sources, information provided by other organisations based on a reasoned decision of the relevant credit or non-credit financial organisation.
Although the Decision contains recommendations for financial organisations, the information sources may also be used by non-financial organisations that enter into intragroup financial transactions if they contain relevant information about comparable financial transactions.
In reply to an inquiry
from the National Financial Association self-regulatory organisation (NFA SRO), the Bank of Russia likewise confirmed that the above-mentioned Decision could be used as guidance for tax compliance purposes, and specifically in determining the reference prices (values) of non-traded securities (derivatives) in accordance with the provisions of regulatory acts for the purposes of Chapter 25 of the Tax Code.
In its Decision the Bank of Russia also asserts that other information may be used on the basis of a reasoned decision of the company concerned. In our view, such sources might include the following:
- NFA SRO
- Individual brokers (pricing data of market contributors)
Databases of local providers of financial information are currently being loaded with information on over-the-counter financial transactions concluded by Russian companies on the Russian market, meaning that the volume of information that can be used in determining the market level of prices is also increasing.
Furthermore, the suspension of Russian operations by international rating agencies and the ensuing restriction of access to those companies’ information products for Russian taxpayers has made it particularly crucial to identify alternative sources and methods for calculating the credit ratings of related entities which are members of MNE groups.
For instance, ACRA and Expert RA assign credit ratings to various categories of issuers and issued products (banks and other financial institutions, corporate sector organisations) and are developing special credit analysis solutions for the determination of credit ratings that can be used to assess the market price level for controlled financial transactions.
Taxpayers can also use updated TP methodologies to prove the arm’s length pricing of intragroup financial transactions occurring within Russia which are not classed as controlled for TP purposes if the tax authorities carry out audits to check for unjustified tax benefits in line with the provisions of Article 54.1 of the Tax Code
In addition, TP methodologies can be used by taxpayers in non-tax-related economic disputes
to demonstrate the arm’s length nature of interest rates and fees set in intragroup financial arrangements such as shareholder loans and subordinated loans in the context of various forms of public private partnership (PPP).