Page 56 - Central and Eastern European Transfer Pricing Review

56 | CEE Transfer Pricing Review

What types of transfer pricing When a transfer pricing study is If an adjustment is proposed by the
information must be disclosed? prepared, should its content follow tax authority, are dispute resolution
Income and expenses generated from Chapter V of the OECD Guidelines? options available to the taxpayer
related party transactions during the year Yes. Additional guidance regarding the outside of competent authority?
must be separately disclosed in the CIT content of the transfer pricing study is Adjustments assessed by the tax
return. expected during 2013. authorities must be applied and then
the taxpayer has an option to appeal to
What are the consequences Does the tax authority require an the second instance degree procedure
of failure to prepare or submit advisor/tax practitioner to have with the tax authorities, or fnally to the
disclosures? specifc designation in order Administrative Court.
Failure to separately disclose the value of to prepare or submit a transfer
related party transactions in accordance pricing study? If an adjustment is sustained, can
with the arms length principle carries No. penalties be assessed? If so, what
penalty exposure from 100 thousand rates are applied and under what
to 2 million Serbian dinar (RSD). Transfer pricing methods conditions?
Yes. Penalties may range from RSD100
Transfer pricing study Are transfer pricing methods thousand to RSD2 million for non-
outlined in Chapter II of the
disclosing of transfer prices at arms
overview OECD Guidelines acceptable? length in the tax balance. In addition,
Is preparation of a transfer pricing Yes. Please note that interest rates there is a potential penalty depending
study required i.e. can the can also be assessed using an interest on the additional tax liability assessed
taxpayer be penalized for mere rate prescribed as arms length by the by the tax authorities. This penalty
failure to prepare a study? Ministry of Finance. varies from 1 percent to 25 percent of
Yes, for all transactions. the assessed additional tax liability but
Is there a priority among the not less than RSD100 thousand.
Other than complying with a acceptable methods? To what extent are transfer pricing
requirement per the previous No. penalties enforced?
question, describe the benefts, if
any, of preparing and maintaining If there is no priority of methods, Rarely, although a signifcant shift is
a transfer pricing study? is there a best method rule? expected in this respect during 2013.
Preparing and maintaining a transfer Yes, new transfer pricing regulations What defenses are available with
pricing study shifts the burden of proof prescribe the use of the most respect to penalties?
from the taxpayer to the tax authorities appropriate method.
and provides shelter from adjustments Preparing documentation should mitigate
made based on incorrect comparables. Transfer pricing audit the risk of penalties. Other defense
In addition, timely preparation may and penalties strategies may include negotiation and
provide added protection from short reasonable cause but such strategies are
supplementary deadlines for submitting When the tax authority requests less likely to have the desired positive
and amending the documentation which a taxpayer s transfer pricing effects.
range from 30 to 90 days. documentation, how long does What trends are being observed
the taxpayer have to submit its
To satisfy the requirement and/or documentation? currently?
obtain the benefts, are there any The documentation should be available Outcomes from audits are revealing
requirements on when the transfer on request. However, an additional that the tax authorities prefer the CUP
pricing study must be prepared 30 to 90 day deadline can be provided method, but apply that method in a very
and submitted? simplifed way.
for submitting and amending the
Documentation should be documentation. There are also strong indications that the
contemporaneous. However, it can also tax authorities will place frm focus on
be submitted within 30 to 90 days of transfer pricing during tax audits starting
request. from 2013.

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