The essence of transfer pricing is the pricing of goods, services, capital and so on in related party transactions within multinational enterprises to meet the conditions for an independent business relationship or to comply with the so-called “arm’s length principle”.
Anyone engaged in financial or business transactions with entities personally, economically or otherwise connected to them must maintain transfer pricing documentation. This obligation is binding both for transactions with legal entities and with individuals with no exception.
The new Guideline No MF/014283/2016-724, specifying the documentary obligations of public interest entities, central administrations and entities with direct or indirect government, municipal or higher territorial unit participation came into force in July 2016. However, the required content in the documentation has remained in principle unchanged for the entities.
Comparability analysis is considered to be key for choosing the most appropriate transfer pricing method and for fixing transfer prices for tax purposes. Comparability analysis is a critical elementof evidence, especially during a tax audit. However, businesses have in practice had huge problems in obtaining comparable data to defend the prices used in controlled transactions since responsibility for comparability rests with the taxable entity. Several sources of information are used to obtain external comparable data. The most commonly used is the Amadeus database. It is used also by Slovak tax authorities in tax audits. This database is available also at our company, so you can contact us if you are interested in transfer pricing documentation.
