Page 60 - Central and Eastern European Transfer Pricing Review

60 | CEE Transfer Pricing Review

Does the tax authority require an Furthermore, the EU Arbitration What trends are being observed
advisor/tax practitioner to have Convention lays down mechanisms on currently?
specifc designation in order how disputes between the authorities The tax authorities are more frequently
to prepare or submit a transfer of the involved countries should be focusing on transfer pricing audits of all
pricing study? resolved. types of businesses, and exit taxation
No. The respective proceedings are issues are starting to be discussed in
rather lengthy and administratively Slovakia.
Transfer pricing methods cumbersome procedures with results The tax authorities are more and more
being diffcult to anticipate.
Are transfer pricing methods familiar with transfer pricing issues
outlined in Chapter II of the If an adjustment is sustained, can and the inspections are more effcient
OECD Guidelines acceptable? penalties be assessed? If so, what and sophisticated (e.g. tax authorities
Yes. rates are applied and under what are preparing their own benchmark
studies). Tax inspections could be
conditions?
Is there a priority among the If a tax difference detrimental to the carried out by specialized teams with
acceptable methods? State budget is assessed as a result of trained and skilled people, who can
help the tax authorities in any region. It
Yes. First transactional methods non-compliance with the arms length is recommended to prepare extended
(CUP, resale, and cost plus), then principle, a penalty in the amount of transfer pricing documentation (not
other methods. three times the base interest rate of the just content specifed for simplifed
European Central Bank will be assessed; documentation) as tax authorities
If there is no priority of methods, however, not less than 10 percent from
is there a best method rule? the misstated tax would be levied. may additionally require supporting
information/documents upon a potential
Not applicable. inspection.
To what extent are transfer pricing
Transfer pricing audit penalties enforced? Special considerations
and penalties Always, if a misstatement of tax is Are secret comparables used by
identifed.
When the tax authority requests tax authorities?
a taxpayer s transfer pricing What defenses are available with Under certain circumstances the tax
documentation, how long does respect to penalties? authorities are allowed to determine
the taxpayer have to submit its No defenses if the documentation is not tax according to aids at their disposal or
documentation? provided to the tax authorities within procured without cooperation with the
According to Article 18 (6) of the statutory limits. Penalties can be reduced taxpayer. This may potentially involve
Slovak Income Tax Act, transfer pricing only in extraordinary circumstances comparables derived from the fles of
documentation must be made available stipulated by the tax law. other taxpayers which are not publicly
to the tax authorities within 60 days of In the case of penalties arising from available. However, based on other
request. additional tax assessments resulting law provisions, the tax authorities are
from a tax audit, ordinary and required to clearly demonstrate what
If an adjustment is proposed by the extraordinary legal remedies are available aids have been used to assess the
tax authority, are dispute resolution for the taxpayer, including appeal, specifc tax difference.
options available to the taxpayer review beyond appellate proceedings,
outside of competent authority? Is there a preference, or requirement,
and renewal of proceedings. An action by the tax authorities for local
Most tax treaties which Slovakia has with may be fled by the taxpayer with
other OECD countries contain MAPs the court against the decision on tax comparables in a benchmarking set?
if the adjustment assessed by the tax assessment (confrmed by the appellate No.
authorities results, or is likely to result, tax authorities) against which no ordinary
in double taxation. legal remedy is allowed.

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