Preparation of the Transfer Pricing Sudy is one of the key and most complex processes related to tax legislation.
Doing business with companies under common control offers great opportunities of reducing the tax liabilities. Therefore, the tax authorities of the Republic of Serbia have introduced a series of regulations, among which is the obligation to prepare study on transfer prices.
Need a study on transfer prices? Contact us and we will be happy to help you.
WHAT THE TRANSFER PRICES REALLY ARE?
The transfer prices or “arm in arm prices” are the prices, at which transactions between companies under common control take place.
Since such companies can operate at prices that differ from market prices, the taxpayer is obliged to show market prices or “arm’s length prices” in the tax balance sheet.
WHO SHOULD PREPARE THE STUDY ON TRANSFER PRICES?
Tax payers that perform transactions with the companies under common control are required to prepare the Study on Transfer Pricing.
According to the Law on Corporate Income Tax, parties related to the taxpayer are those legal entities and persons who have the power of control or significant influence on making of business decisions of such legal entity.
The article 59 of the Law defines four levels of association of legal entities:
– Legal entities, where one legal entity exercises direct control and can influence the business decisions of another legal entity through the possession of min. 25% of shares, shares or votes in the management bodies of the controlled legal entity;
– Legal entities, where the same legal entities or persons participate in management, control and capital;
– Persons who are related to the owner or a person who owns min. 25% of shares, shares or votes in the management bodies of the legal entity;
– Persons registered in jurisdictions with a preferential tax system, the so-called “tax havens”.
WHY DO YOU NEED A SUDY ON TRANSFER PRICES?
The study on transfer prices is required in case the tax control tries to dispute realized expenses or calculate additional income based on services, tangible or intangible goods in business with associated parties. If you have already prepared such study, the expenses of proving possible business at prices that are not within the range of market fall on the tax authorities.
STUDY ON TRANSFER PRICES
In order to have proper documentation and avoid unnecessary penalties, increase in the tax base and payment of default interest, the study on transfer prices should be an integral part of your tax documentation, if you do business with the companies under common control.
SIMON’s expert team will be happy to meet your needs and help you achieve this goal. Please contact us and our experts will send you an offer as soon as possible.