Regular updates of transfer price settings minimise the risk of deviating from the market standard
Last year, the Ministry of Finance issued Guideline GFD D – 34, “Communication on the Application of International Standards in the Taxation of Transactions between Associated Companies – Transfer Prices” as a response to the updated OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations from 2017. Guideline D – 34 provides practical recommendations for conducting comparative analyses, including recommendations on how frequently to update transfer price settings. According to Guideline D – 34, the Ministry of Finance recommends:
- Updating the strategies for searching for comparable companies used to determine the market spread of transfer prices at least once every three years;
- Testing annually whether there have been any major changes in the profitability of comparable companies as a result of market fluctuations (e.g. a sudden surge in the price of oil or other input materials);
- In the documentation of transfer prices, regularly verifying the validity of the methods applied.