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Part 1 of the Tax Code has been amended with a new section, V.1, on taxation of transactions between interdependent entities. Most of these changes will come into effect on January 1, 2012.

The main improvement introduced is an explanation of general terminology as well as a list of entities which may be considered "interdependent." The list includes:

1. Organizations which share direct or implicit participation in one another exceeding 25%;
2. A person and a company if the person holds a direct or implicit share of the company exceeding 25%;
3. Organizations with direct or implicit shares held by the same person, if these shares exceed 25% in each company;
4. A company and a person given a responsibility to name either company’s sole executive body or to name at least 50 percent of members to the board of directors;
5. Companies, if their sole executive body or at least 50 percent of the board of directors was appointed by the same person;
6. Companies whose boards of directors consist of at least in half of the same persons;
7. A company and a person invested with authority of company’s sole executive body;
8. Companies where the same person performs duties of the sole executive body;
9. Legal entities and/or persons if direct share participation of each preceding person in each successive company exceeds 50 percent;
10. Persons if one of them is subordinate to another due to official capacity;
11. A person and their relatives: spouse, parents, children, siblings, foster parents and foster children.

The law includes a new definition of market price as "the price of a deal between non-interdependent entities."

Generally, the tax base for transactions between interdependent persons must include profits which could be received if market price was applied to the transaction.

But corrections are allowed only in cases when the original use of a non-market price led to a lowering of the tax amount paid. If, in reality, the prices caused extra taxes paid, the tax base should be left unchanged.

The Tax Code was updated with a definition of monitored/controlled transactions. A transaction shall be regarded as monitored/controlled if at least one of the following conditions is present:

1. The sum of the profits received from transactions during the calendar year exceeds a given amount. In 2012 the amount equals 3 billion rubles, in 2013 – 2 billion, and starting with 2014 – 1 billion rubles.
2. One of the transaction parties pays Mineral Extraction tax based on the percentage rate, and the amount of profit for these transactions during the calendar year exceeds 60 bln rubles.
3. If at least one of the parties pays unified agricultural tax or single tax on imputed income, and at least one of the other parties does not use specific special tax regimes. The sum of the profits of these transactions per calendar year must exceed 100 bln rubles.
4. If at least one of the parties has been exempt from profit tax or applies a zero rate for this tax, and the other party (parties) is (are) not tax exempt and applies a different tax rate. The sum of the profits for these transactions per calendar year must exceed 60 bln rubles.
5. If at least one of the parties is a resident of a special economic zone with established tax privileges and other party (parties) are not residents of a special economic zone. The amount of profits for these transactions per calendar year must exceed 60 bln rubles. Please note: these transactions will be regarded as monitored/controlled starting only in 2014.

Also, monitored/controlled transactions include foreign trade transactions in oil, iron, base metals and precious metals, mineral fertilizers and precious gems if the amount of the profits per calendar year exceeds 60 bln rubles.

One more category of monitored/controlled transactions includes transactions with participants who are registered, reside or are invested with a status of tax resident of an off-shore zone. The amount of profits per calendar year must exceed 60 bln rubles.

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