Page 26 - Central and Eastern European Transfer Pricing Review

26 | CEE Transfer Pricing Review

Estonia

KPMG's Views on Transfer Pricing in Estonia

The Estonian Tax and Customs Boards focus on transfer pricing issues has
continuously increased during recent years. As a new trend, a considerable
number of informal requests have been sent to taxpayers operating in different
industries for transfer pricing documentation.

Basic information an assessment of tax is 6 years. In if one party of the transaction is a
Estonia, tax returns are submitted on person domiciled in a low tax rate
Tax authority name a monthly basis. territory
Eesti Maksu- ja Tolliamet (Estonian Tax
and Customs Board). a company:
Transfer pricing which employs 250 persons or
Citation for transfer pricing rules disclosure overview more including the personnel of
General rules are established by the Are disclosures related to transfer its associated companies
Income Tax Act. OECD compliant pricing required to be prepared or which has annual turnover
methods and pricing principles are submitted to the revenue authority (associated persons turnover
established with the Decree by the on an annual basis (e.g. with the included) of 50 million Euros (EUR)
Minister of Finance. tax return)? or more for the previous taxation

Effective date of transfer pricing No. period
rules What types of transfer pricing whose consolidated balance sheet
Current general rules are effective from information must be disclosed? total was EUR43 million or more
1 January 2000. Amended rules together a non-resident through its permanent
with documentation requirements are Not applicable. establishment registered in Estonia:
effective from 1 January 2007. New What are the consequences
regulations concerning related parties of failure to prepare or submit under the same conditions as a
in the Income Tax Act are effective from disclosures? resident company.
1 January 2011.
Not applicable. Other than complying with a
What is the relationship threshold requirement per the previous
for transfer pricing rules to apply Transfer pricing study question, describe the benefts, if
between parties? overview any, of preparing and maintaining
Ownership of at least 10 percent, based a transfer pricing study?
on voting power, share capital, having Is preparation of a transfer pricing Penalty protection, shifting the burden
common economic interest, or if one study required i.e. can the of proof.
party has a dominant infuence over taxpayer be penalized for mere
the other (subjective judgment, no failure to prepare a study? To satisfy the requirement and/or
ownership requirement). For companies which qualify under the obtain the benefts, are there any
documentation requirement, yes, for all requirements on when the transfer
What is the statute of limitations transactions. pricing study must be prepared and
on assessment of transfer pricing submitted?
adjustments? The documentation requirement The transfer pricing study must be
applies to:
Three years from the fling date of the submitted within 60 days of request.
tax return. In the event of intentional credit and fnancial institutions and
failure to pay or withholding an amount insurance companies
of tax, the limitation period for making

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