Transfer Pricing Health Check | KPMG | SK

Transfer Pricing Health Check

Transfer Pricing Health Check

It is the right time to act

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Transfer Pricing Health Check

It is the right time to act

Transactions between related parties must be performed at arm’s length prices and at market conditions. The determination of prices and conditions for transactions between related parties is governed by transfer pricing.

The number of tax audits focused on transfer pricing matters constantly increases. Based on our experience, many companies may face serious problems in this area since in many cases transfer pricing has not been regarded as a priority. This results into a relatively high “success” of the tax authorities in the performed tax audits:

  • In 2014 the volume of findings from 12 488 tax audits reached EUR 645 mil., in average EUR 52 000 per tax audit 
  • Due to deficiencies in transfer pricing, in 2014 the tax authorities imposed additional tax in the amount of EUR 21.5 mil., with an average assessment of EUR 1 mil. per taxpayer

Services rendered by KPMG in the area of transfer pricing may help you in taking decisions on prices and transaction terms for transactions with related parties. At the same time, we can assist in their description in the required transfer pricing documentation. Without the maintenance of a proper transfer pricing documentation a penalty up to EUR 3000 may be levied by the tax authorities, also repeatedly.

We would therefore like to introduce to you our main services in the area of transfer pricing:

  1. Express review of the price-setting system from the transfer pricing perspective
  2. Assistance in drafting the required transfer pricing documentation
  3. Assistance in tax audits focused on transfer pricing

1. Express review of the price-setting system from the transfer pricing perspective

  • Discussion about the chosen approach to transfer pricing during a personal meeting
  • Identification of possible differences in price determination in the case of transactions with related parties in comparison to price determination between independent parties
  • Identification of transfer pricing methods for individual transactions and the assessment if the methods used are suitable depending on the types of transactions

In our personal meeting we will draw your attention to the possible errors in the transfer pricing area as well as to the associated risks. Our fee will amount to EUR 700 plus EUR 390 per each transaction under review.

2. Assistance in drafting the required transfer pricing documentation

  • Determination of the obligation to maintain the transfer pricing documentation, depending on the required scope
  • Identification of controlled transactions which must be documented
  • Preparation of the functional and risk analysis
  • If necessary or in the case of your interest, identification of comparable data (e.g. prices) based on information on independent parties, so called comparability analysis (Benchmarking analysis)
  • Drafting the transfer pricing documentation for controlled transactions between related parties

Our output will be the transfer pricing documentation in the required scope in line with the valid tax legislation. Our fee will depend on the complexity of the transfer pricing documentation and the number of types of transactions which will have to be documented.

3. Assistance in tax audits focused on transfer pricing

  • Representation in tax audits
  • Assistance in the preparation of supporting documentation and responses for tax inspectors
  • Drafting comments to the tax audit protocol
  • Representation during the tax assessment procedure

We always try to protect our client's interests in line with the valid tax legislation. Upon agreement, we can also represent you during a lawsuit against the financial authorities. The fee for our assistance during tax audits will be determined based on the number of hours spent on this engagement.

© 2017 KPMG Slovensko Advisory k.s., a Slovak Republic limited partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

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