Page 15 - Central and Eastern European Transfer Pricing Review

Bosnia and Herzegovina | 15

CPT Law as detailed previously) or scrutinize transactions with related Are management fees deductible?
a deadline for the submission of parties. In practice we have seen Yes, assuming documentary support
such documentation. Although the limited cases of the RS TA inspecting exists and economic beneft can be
preparation of a transfer pricing study transactions with related parties. proven.
is not prescribed by the legislation,
best practice would be that the What defenses are available with Are management fees subject to
documentation should be available respect to penalties? withholding?
immediately upon request as best Timely prepared transfer pricing Yes, regardless of where the service is
practice. documentation. provided.

If an adjustment is proposed by the What trends are being observed Are year-end transfer pricing
tax authority, are dispute resolution currently? adjustments permitted?
options available to the taxpayer The topic of transfer pricing is relatively
outside of competent authority? new in the RS. In practice KPMG in BiH Yes. In accordance with the CPT Law
of RS, adjustments for transfer prices
An adjustment is proposed following a have not seen many examples of the RS should be made in the CPT return at the
tax audit on the basis of a tax assessment tax authority performing transfer pricing end of the tax year.
issued by the RS tax authority. The audits. However, based on experience in
taxpayer can appeal against the tax the region it is expected that the RS tax Other unique attributes?
assessment to an independent second authority will increase performing audits No.
degree body within the RS Ministry of of related party transactions.
Finance. In case of a negative ruling by
the independent second degree body Special considerations Other recent
the taxpayer can appeal to the County developments
Court. However, the taxpayer can appeal Are secret comparables used by Not applicable.
to the County Court only after receiving tax authorities?
a negative ruling by the independent There are no specifc rules in the transfer
second degree body and after paying pricing provisions. Tax treaty/double tax
the corporate profts tax assessed, any resolution
penalty interest and any fxed penalties. Is there a preference, or
requirement, by the tax authorities What is the extent of the double tax
If an adjustment is sustained, can for local comparables in a treaty network?
penalties be assessed? If so, what benchmarking set? Minimal.
rates are applied and under what No.
conditions? Treaties are negotiated on the level of
BiH, but are applicable to both entities.
Additional taxable income assessed is Do tax authorities have A number of tax treaties signed by the
subject to the standard corporate proft requirements or preferences former Socialist Federal Republic of
tax rate of 10 percent increased by the regarding databases for Yugoslavia apply. New treaties are being
penalty interest of 0.06 percent per comparables? signed by BiH.
every day of default in payment. No.
If extensive, is the competent
To what extent are transfer pricing What level of interaction do tax authority effective in obtaining
penalties enforced? authorities have with customs double tax relief?
Given that transfer pricing is a relatively authorities? No experience.
new topic in the RS, currently it is not Low to moderate.
common for the RS tax authority to

© 2013 KPMG Central and Eastern Europe Ltd., a limited liability company and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.