TogliattiAzot: Russian Courts Endorse Simplistic Approach to Transfer Pricing Valuation

The recent judicial decisions in the transfer pricing case of TogliattiAzot, a large Russian producer of chemicals, have become highly controversial. On anything but strong legal grounds, the courts denied the taxpayer the right to use the transactional net margin method. Instead, the courts agreed with the position of the tax authority, which argued that the comparable uncontrolled price method should be used. This case demonstrates that Russian courts so far have been unable to delve into complex transfer pricing problems, opting instead to agree with the point of the tax administration.