Page 41 - Central and Eastern European Transfer Pricing Review

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which would confrm that related-party When a transfer pricing study is If there is no priority of methods, is
transactions have been carried at arms prepared, should its content follow there a best method rule?
length only upon request. Chapter V of the OECD Guidelines? Not applicable.

Preparation of a transfer pricing study as The CIT legislation does not set out any
such is not required, as the CIT legislation further requirements or more detailed Transfer pricing audit
does not set out any requirements or guidance on the manner in which this and penalties
more detailed guidance on the manner information and evidence should be
in which the information and evidence prepared, nor provide greater details When the tax authority requests
should be prepared (i.e. the format), nor about the type of information which a taxpayer s transfer pricing
provides greater details about the type should be included. documentation, how long does
of information which should be included Considering the provisions within the taxpayer have to submit its
(i.e. the content). the Macedonian CIT legislation in documentation?
As a result, the taxpayer may not be regards to preparation of transfer The documentation should be available
on request, i.e. there is no specifc
penalized for mere failure to prepare a pricing documentation, as well as the deadline in respect of submission of
study. However, tax authorities might limited practice in regard to evidencing transfer pricing documentation; however
request provision of an explanation and/ transactions between related parties, the general deadline for submission
or additional information, and failure to taxpayers generally apply the guidance of requested information to the tax
provide such information could lead to available in the OECD Guidelines. authorities is 1 month.
penalties being assessed.
Does the tax authority require an
Other than complying with a advisor/tax practitioner to have If an adjustment is proposed by the
requirement per the previous specifc designation in order to tax authority, are dispute resolution
question, describe the benefts, if prepare or submit a transfer pricing options available to the taxpayer
any, of preparing and maintaining a study? outside of competent authority?
transfer pricing study? Not applicable. Adjustments assessed by the tax
Documentation is not required to be authorities must be applied and then the
submitted to the tax authorities unless Transfer pricing methods taxpayer has an option to appeal in the
requested in a tax audit. However, second instance (with the Ministry of
in practice it is recommended that Are transfer pricing methods Finance), or fnally to the Administrative
companies have readily available outlined in Chapter II of the OECD Court. The appeal does not prolong the
information and evidence which would Guidelines acceptable? payment of taxes and penalties.
confrm that related-party transactions The CIT Law prescribes that market If an adjustment is sustained, can
have actually been carried at arms prices are determined on the basis of penalties be assessed? If so, what
length, considering that the general comparable prices that could have been rates are applied and under what
tax procedure deadlines for submitting realized between unrelated parties on conditions?
requested information by the authorities the domestic market or a similar foreign
is 1 month. Furthermore, having readily market, i.e. the comparable uncontrolled There are no transfer pricing-specifc
available information and evidence shifts prices (CUP) method. penalties.
the burden of proof from the taxpayer to If such comparative prices cannot be Under the general penalty regime, in
the tax authorities. regards to the amount of understated tax
determined, the CIT Law prescribes that
To satisfy the requirement and/or the cost plus method be used. liability a late payment penalty interest
is assessed at the rate of 0.03 percent
obtain the benefts, are there any Is there a priority among the per each day starting from the day the
requirements on when the transfer acceptable methods? CIT is due for payment. Additionally,
pricing study must be prepared and the taxpayer can be assessed a penalty
submitted? Under the current CIT legislation for underreporting their tax base. The
Not applicable. if comparable prices cannot be maximum penalty is set at 10 times
determined, then the cost plus method
should be applied. the understated tax, whereby the tax
authorities have a discretionary right

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