Page 44 - Central and Eastern European Transfer Pricing Review

44 | CEE Transfer Pricing Review

Montenegro

KPMG's Views on Transfer Pricing in Montenegro

Transfer pricing rules have been present for more than a decade in Montenegrin
Corporate Income Tax (CIT) Law, but specifc and detailed regulations on the
application of these rules have never been published by the Ministry of Finance.
However, due diligence should be taken with respect to the transfer pricing rules
stipulated in the CIT Law (even though they are not applied in practice) since the
tax authorities may change their current practice retroactively.

Basic information What is the statute of limitations Transfer pricing study
on assessment of transfer pricing
Tax authority name adjustments? overview
Tax Administration of Montenegro. Generally 5 years from the end of the Is preparation of a transfer pricing
year in which a tax liability should have study required i.e. can the
Citation for transfer pricing rules taxpayer be penalized for mere
been determined. The absolute period of
Articles 19, 20 and 38 of the Corporate limitation is 10 years. There is no special failure to prepare a study?
Income Tax (CIT) Law. statute of limitations on assessment of No. However, supporting documentation
transfer pricing adjustments. for disclosed transfer prices is
Effective date of transfer pricing recommended (specifc form is not
rules prescribed).
1 January 2002. Transfer pricing
disclosure overview Other than complying with a
What is the relationship threshold requirement per the previous
for transfer pricing rules to apply Are disclosures related to transfer question, describe the benefts, if
between parties? pricing required to be prepared or any, of preparing and maintaining
submitted to the revenue authority
A company is defned as being related on an annual basis (e.g. with the tax a transfer pricing study?
to another company or an individual if return)? Since there are no specifc requirements
this other company or the individual regarding the documentation, preparing
has a direct effect on the conditions or Yes. a transfer pricing study provides a beneft
economic results of the transactions What types of transfer pricing of shifting the burden of proof to the tax
between these entities. authorities.
information must be disclosed?
Special conditions are: participation Income and expenses generated from To satisfy the requirement and/or
in the capital or in the voting power of related party transactions during the year obtain the benefts, are there any
at least 25 percent, the existence of a must be separately disclosed in the CIT requirements on when the transfer
subordinated relationship between two return. pricing study must be prepared and
entities, or if one entity is under control submitted?
(direct or indirect) of another entity the What are the consequences
two subsidiaries of the same entity of failure to prepare or submit No specifc requirements.
or entities are under direct or indirect disclosures?
control of a third entity. No consequences are defned in the
CIT Law for failure to prepare or submit
disclosures.

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