Page 12 - Central and Eastern European Transfer Pricing Review

12 | CEE Transfer Pricing Review

Other than complying with a Is there a priority among the If an adjustment is sustained, can
requirement per the previous acceptable methods? penalties be assessed? If so, what
question, describe the benefts, if CUP is the preferred method. rates are applied and under what
any, of preparing and maintaining conditions?
a transfer pricing study? If there is no priority of methods, Additional taxable income assessed is
Although it is not a legal requirement to is there a best method rule? subject to the standard corporate proft
prepare a transfer pricing study, KPMG in Not applicable. tax rate of 10 percent increased by the
BiH strongly recommends the preparation penalty interest of 0.04 percent per day
of one. If timely and correctly prepared, Transfer pricing audit of default in payment.
it shifts the burden of proof to the FBiH
tax authority and can provide penalty and penalties To what extent are transfer pricing
protection.To satisfy the requirement When the tax authority requests penalties enforced?
and/or obtain the benefts, are there any a taxpayer s transfer pricing Given that transfer pricing is a
requirements on when the transfer pricing documentation, how long does relatively new topic in the FBIH,
study must be prepared and submitted? the taxpayer have to submit its currently it is not common for the
Currently, there are no requirements documentation? FBiH tax authority to scrutinize
transactions with related parties.
or offcial guidelines, but if a taxpayer There are no provisions required to
chooses to prepare a transfer pricing prepare transfer pricing documentation What defenses are available with
study, it should be prepared by the time (other than information prescribed respect to penalties?
the annual corporate proft tax return is previously by the CPT Law) or a Timely prepared transfer pricing
submitted (i.e. by 31 March of the current deadline for the submission of documentation.
year for the previous year). such documentation. Although the
preparation of a transfer pricing study What trends are being observed
When a transfer pricing study is is not required by the legislation, best currently?
prepared, should its content follow practice would prescribe that the
Chapter V of the OECD Guidelines? documentation be available immediately The topic of transfer pricing is relatively
Yes. Please note that there are no offcial upon request. new in the FBiH. In practice KPMG in
guidelines or developed practice on this BiH have not seen many examples of
subject. However, OECD Guidelines If an adjustment is proposed by the the competent tax authority performing
are commonly used as an underlying tax authority, are dispute resolution transfer pricing audits. However, based
template for the preparation of the options available to the taxpayer on experience in the region it is expected
transfer pricing study. outside of competent authority? that the FBiH tax authority will increase
An adjustment is proposed following a performing audits of related party
Does the tax authority require an tax audit or the basis of a tax assessment transactions.
advisor/tax practitioner to have issued by the FBiH tax authority. The
specifc designation in order taxpayer can appeal against the tax Special considerations
to prepare or submit a transfer assessment to an independent second
pricing study? degree body within the FBiH Ministry of Are secret comparables used by
tax authorities?
No. Finance. In the case of a negative ruling
by the independent second degree body There are no specifc rules in the transfer
Transfer pricing methods the taxpayer can appeal to the Cantonal pricing provisions.
Court. However, the taxpayer can appeal
Are transfer pricing methods to the Cantonal Court only after receiving Is there a preference, or requirement,
by the tax authorities for local
outlined in Chapter II of the a negative ruling by the independent comparables in a benchmarking set?
OECD Guidelines acceptable? second degree body and after paying
No. In accordance with the FBiH CPT the corporate profts tax assessed, any No.
Law, the only transfer pricing methods penalty interest and any fxed penalties.
acceptable are the CUP and cost plus
method.

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