Implementation of methodology of price risk management on transactions into the Russian business practice

The transfer pricing mechanism is actively used by taxpayers for tax liabilities cutting of the following capital gains tax: value-added tax, income tax, severance tax, sales income tax. Since 2012 a new mechanism of price control on transactions has been introduced in the Russian Federation. This mechanism is essentially dose to the practice of the Organization for Economic Cooperation and Development countries. According to this method, the changes affected people who are acknowledged mutually dependent and to be subject to inspection. It is also influenced by the criteria of verified transactions acknowledgment, and methods of control. Taxpayers are charged to make selfcontained notifications to tax authority on availability of controlled transactions, and formation the package of the documents proves validity of price using. All that requires mandatory incorporating the mechanism of tax risks administration and implementing the methodology of transfer pricing into the system of organization revenue on the basis of its compliance with the Russian Federation Tax Code requirements. The remarkable thing is that in the modern scientific and foreign literature great consideration is given to the questions of organization risk management. The models of organization risk administration are suggested including tax risks, assessment techniques of probability of risk event occurrence. However, there are basically no particular techniques which are adapted to the peculiarities of the Russian tax legislation. The authors propose the methodology of risk administration on transactions price control, including the following standard stages of organization risk administration: risks identification, evaluation of causes and conditions of its origins, design of complex measures and forms of regulation which are directed to monitoring and prevention of risk situations. The process of risk administration is aimed at exposure of organization transactions the prices on which are subject to tax control, determination and confirmation of allowed and actual level of deviation from market prices on the basis of methods established by the Tax Code (method of comparable market prices, cost-is-no-object approach, resale price method, like-for-like revenue method or distribution of profits approach), recalculation of tax liabilities amount and reporting to the rating authorities. In this respect tax risks of the organization could arise due to inaccuracies in the Russian Federation Tax Code at the moment of transaction acknowledge to be controlled, when comparable transactions sampling for using in an information database is formed, by research of market level of profitability for the purposes of taxation, updating order of accounting (financial) reporting. Preventative price risk management needs a system of monitoring transactions with contracting parties and affiliated persons to be implemented as well as functional regulations of lead the process tax risks to be implemented into organization. The proposed methodology is universal and has to be implemented by Russian business soonest, which will allow to reduce conflict situations between taxpayers and taxation authorities.

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