Page 14 - Central and Eastern European Transfer Pricing Review

14 | CEE Transfer Pricing Review

Transfer pricing What are the consequences When a transfer pricing study is
disclosure overview of failure to prepare or submit prepared, should its content follow
disclosures? Chapter V of the OECD Guidelines?
Are disclosures related to transfer Failure to prepare and submit Yes. Please note that there are no offcial
pricing required to be prepared or disclosures may result in the RS tax guidelines or developed practice on this
submitted to the revenue authority authority challenging transactions subject. However, OECD Guidelines
on an annual basis (e.g. with the between related parties. are commonly used as an underlying
tax return)? template for the preparation of the
The RS CPT Law requires a taxpayer Transfer pricing study transfer pricing study.
to separately disclose in the annual tax overview Does the tax authority require an
return transfer prices for transactions advisor/tax practitioner to have
with related parties and market prices Is preparation of a transfer pricing specifc designation in order
for such transactions. The tax base is study required i.e. can the to prepare or submit a transfer
adjusted for the difference between taxpayer be penalized for mere pricing study?
transfer prices and the prices which failure to prepare a study?
would have occurred if the transactions No. No.
were at arms length. There is no
guidance on how the market price Other than complying with a Transfer pricing methods
should be determined (information on requirement per the previous
available methods follows), and there is question, describe the benefts, if Are transfer pricing methods
no developed practice to rely on. any, of preparing and maintaining outlined in Chapter II of the
a transfer pricing study? OECD Guidelines acceptable?
The RS CPT Law prescribes that a Although it is not a legal requirement Yes, with some exceptions. In
taxpayer must submit information on to prepare a transfer pricing study, in accordance with the RS CPT Law,
related parties and business relations practice, it is strongly recommended. If acceptable methods are CUP, resale
with the tax return. What types of the transfer pricing study is timely and price method, net proft, cost plus
transfer pricing information must be correctly prepared, it shifts the burden gross proft and proft split method.
disclosed?
of proof to the RS tax authority and can Is there a priority among the
The taxpayer must submit information provide penalty protection. acceptable methods?
on related parties and business relations,
such as legal status and business To satisfy the requirement and/or CUP is the preferred method.
activities of a taxpayer and characteristics obtain the benefts, are there any If there is no priority of methods,
of these activities; identifcation of requirements on when the transfer is there a best method rule?
transactions between related parties, pricing study must be prepared and
i.e. the volume and conditions under submitted? Not applicable.
which transactions have been conducted There are no requirements or offcial
in the last 5 years; list of activities guidelines, but if a taxpayer chooses Transfer pricing audit
and information on business partners to prepare a transfer pricing study, it and penalties
relevant for the transactions; description should be prepared by the time the
of transfer pricing method used. This annual corporate proft tax return is When the tax authority requests
information is provided along with the submitted (i.e. by 31 March of the a taxpayer s transfer pricing
annual tax return. current year, for the previous year). documentation, how long does
the taxpayer have to submit its
documentation?
There are no provisions that require
transfer pricing documentation (other
than information prescribed by the

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