Today, no one in the IT business would challenge the need to eliminate the Trojan horse risk. However, some 15 years ago, we would have turned a blind eye to this issue, telling our company management that in reality it was not a problem. We would also say that protection against a potential risk was just a waste of money. We can still disagree, but history has shown that Trojan horses have been and are a problem, and the related risk is always high. Nevertheless, only a few realise that the tax administration itself has set up a Trojan horse recently. Where and how?
The answer lies in the introduction of a “separate” appendix with the tax return (item 12, section I) in relation to transfer pricing. Where else could data be collected as soon and efficiently as possible, to be immediately used by the hunter for its benefit, in pursuit of tax collection?
A counterstrike (such as lobbying for an amendment to the law) is no longer possible and the Trojan horse is already with you. Therefore, we recommend – as the only form of defence – preventing the soldiers from seizing anything else in the enemy territory. This means making due preparations in advance. The fact that the tax administration has already carried out raids based on the appendix or “voluntary” questionnaire can be confirmed by several our clients.
We do not yet know the results of the raids (termed “on-site inspections” or “tax audits”). But time is also important, as is the knowledge that ignoring the risks and being penny-wise but pound-foolish when taking appropriate measures could backfire on you in the end.
Transfer pricing, and especially the correct system set-up, provides an opportunity for the management or shareholders to (re)gain a complete picture of all intra-group relations and links. It also offers an opportunity to establish relations optimally, and eliminate major risks arising from the liability of the company directors and officers for incorrect transfer pricing policy. Such information is also an invaluable tool for uncovering hidden potential and using it for precisely-targeted growth of the companies within the group.
Let’s learn from past mistakes and get ready for the Trojan horse.
We can offer our comprehensive transfer pricing services, including documentation to satisfy the increasingly demanding tax officers. We can also help with the more “interesting” part of such work – drafting a transfer pricing policy to ensure optimum financial and tax solutions in the group.
We are unable to prevent a Trojan horse being planted in your company. However, we know how to work with it to make the booty seized by the army as small as possible.
We are here to help you. Think about the escape route before it is too late, and remember that Trojan horses are not just found in computers.
Jaroslav Sůsa, Manager
Tel.: +420 226 219 000
Martin Pech, Senior Consultant
Tel.: +420 226 219 000