In the last decade, the position of the Russian tax administration on the deductibility of intra-group services charges was rather unclear. Firstly, the payments – even if charged at arm’s length – were often treated as base eroding payments that are considered unjustified. This applies especially to the application of the indirect allocation method. Secondly, any cross-border payments for management and administrative services required extensive documentation (so called „act of acceptance“). Eva Frehner and Georgy Galumov describe the evolution of this transfer pricing concept in Russia and assess the future practice change in light of the new guidance that is highly appreciated by multinational enterprises in the aftermath of COVID-19.
