Page 3 - Central and Eastern European Transfer Pricing Review

Introduction

Challenging and changing times, challenging and changing transfer pricing
regulations(!)

In present turbulent times, the economy continues to which is leading, in more and more countries, to much more
demonstrate that the only predictable factor is change: sophisticated concepts such as the introduction of advance
a change of business models, in the roles played in pricing agreements or competent authority matters.
the market, of business attitudes, but also a changing Obviously various CEE countries sit in different places on
environment with regards to regulation. The process is the transfer pricing learning curve. However, they have one
dynamic. What was new just a moment ago needs to be thing in common: their local application of transfer pricing
updated almost immediately. This is all also true for transfer concepts is extremely swift. Development of a country
pricing.
where these issues had not been thoroughly investigated
Central and Eastern Europe (CEE) was in the past a region or not even regulated in local law, into a country where
which traditionally needed to play catch up to stay on par transfer pricing is one of the most thoroughly investigated
with modern market economies. Existing concepts from areas during tax audits now takes only months, not years.
many western countries typically had to be adopted in the It is no longer a slow process where the authorities need to
CEE environment, which is the case with transfer pricing. observe the market and its reactions, but the opposite: soon
In some CEE countries transfer pricing regulations had even after introduction of any new regulation or new obligation,
been introduced at the beginning of the 1990s, however in the authorities begin applying them in practice.
practice actual implementation did not take place.
It is therefore important to stay updated with the latest
The situation gradually changed, especially with the process developments in the area of transfer pricing when dealing
of introducing the documentation requirements to related- with emerging CEE markets in international trade.
party transactions which have been around since the This publication aims at presenting basic knowledge on
beginning of the new millennium. Step-by-step, country- transfer pricing rules in CEE countries. The individual
by-country, transfer pricing is becoming an increasingly country fles outline local transfer pricing information,
important issue in CEE.
including documentation requirements, deadlines, transfer
In general, CEE countries follow the same trail blazed by pricing methods, penalties, special considerations, advance
developments in the international business community pricing arrangements, and competent authority matters.
and according to the standards set by the Organization for I trust you will fnd this information valuable for your own
Economic Co-operation and Development, in particular, its purposes and encourage you to contact your local KPMG
continuously updated OECD Transfer Pricing Guidelines representative within CEE with any questions you might
for Multinational Enterprises and Tax Administration, have regarding this material.
which demonstrates how transfer pricing regulations are
developing in particular markets.
At present, almost all CEE countries have transfer pricing Jacek Bajger
regulations in place. They begin with the defnition of Partner
related parties, description of the arms length concepts, Transfer Pricing Services
followed by documentation requirements, the sum of KPMG in Central and Eastern Europe

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