25/02/19
Among others, it imposes a new obligation on taxpayers conducting related party transactions – they will be obliged to submit a statement confirming that prices applied meet the arm’s length principle. The statement will need to be signed by board members. Personal fines may be imposed for submitting false declarations.
The new regulations also grant the tax authorities new tools for auditing and challenging the related party transactions as well as change the obligations imposed on taxpayers conducting such transactions. The main purpose of the new regulations is to enhance the efficiency of tax audits and transparency of related party transactions.
On the other hand, the new law, may in some cases limit reporting requirements with respect to typical low-value-adding transactions and domestic transactions.
The new regulations introduce significant changes relevant for the taxpayers conducting related party transactions.
On one hand, the tax authorities are granted new tools (non-recognition and re-characterization). On the other hand, the requirements towards the transfer pricing documentation may be more or less stringent in comparison to previous financial years, depending on individual taxpayer’s situation.
The new law will surely increase the transparency of related party transactions and facilitate the selection of taxpayers for tax audits by the tax authorities since more details are to be disclosed to the tax authorities.