OECD has welcomed the recent proposal of new draft transfer pricing legislation by the Russian Federation.

The proposed draft legislation would make the Russian Federation’s TP rules largely consistent with the internationally accepted OECD standards, thereby providing more legal certainty, a reduced risk of double taxation and a more investment friendly business environment for multinational enterprises.

The draft new transfer pricing law published on May 4, 2011 aims at improving the efficiency of tax administration and reducing the possibilities for tax avoidance, as well as conforming more closely to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. If adopted by the State Duma during 2011, the new transfer pricing law will come into effect in January 2012.

The Russian Federation is currently negotiating to become a member of the OECD. Compliance with the internationally agreed tax standards is a key element in its accession negotiations.