Transfer Pricing

Transfer Pricing

A turbulent environment, local regulatory specifics and significant potential penalties

A turbulent environment, local regulatory specifics and significant potential penalties

Transfer pricing (TP) is increasingly becoming a hot topic for Bulgarian tax residents. 

In an era of continuous globalisation where intercompany transactions have become part of the day-to-day business of all multinationals, the Bulgarian tax residents are facing an increasing scrutiny of the Bulgarian tax authorities on TP issues, local specifics of the regulatory framework and significant penalties for non-compliance.

With TP seen by the Bulgarian tax authorities as a relatively soft target, TP-related tax assessments have become more frequent and more material, the expertise of the tax administration is growing and the exchange of information with the foreign tax authorities is increasing. 

At the same time, the Bulgarian regulatory framework and the practice of the Bulgarian tax authorities are marked by certain specifics and the master files might not always be sufficient to meet the local requirements. 

Total tax risk related to cross border intercompany transactions may reach up to 57 percent of the amount of the transaction. 

All of this has made TP a critical issue for all Bulgarian tax residents. Apart from that, more and more companies recognise that effective transfer pricing policies may go far beyond simply enabling them to comply with local rules. Addressing TP issues before transactions actually occur may turn transfer pricing policies into strategic tools for supply chain decisions, as well as for global tax planning.

KPMG in Bulgaria is here to help

We help companies document transfer prices in accordance with the specific local transfer pricing rules and respond to rapid tax authority challenges, implement economically justifiable transfer pricing policies and execute forward-looking tax planning. 

We can help companies manage their transfer pricing issues through such services as:

Planning

To assist in developing economically supportable transfer pricing policies and in executing forward-looking tax planning.

Implementation

To provide insightful advice on developing and implementing policies, procedures, controls and systems for setting, monitoring, and testing intercompany transactions.

Controversy

To help resolve transfer pricing disputes through various services, including assistance with advance pricing agreements, competent authority negotiations, arbitration, and litigation support.

Compliance and documentation

To help manage risk within the current environment of detailed transfer pricing regulations, strict documentation requirements, sophisticated audit practices, and significant penalties for noncompliance with an objective point-of-view.

Adapting to change

Forward-thinking companies recognise that effective global transfer pricing policies must do more than simply enable them to comply with national rules. They know transfer pricing issues have to be addressed long before transactions actually occur and they try to make their transfer pricing policies into strategic tools for investment and supply chain decisions, as well as for global tax planning.

Our advantages:

  • Proven track record
  • Dedicated TP team with international experience
  • Clients in a diverse portfolio of industries
  • Experience in various types of transactions
  • Access to specialised databases

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