A new decree was issued by the Ministry for National Economy in October 2017, introducing a three-level, standardized approach relating to the transfer pricing documentation (including the master file, the local file, and the country specific report) from 2018.
The new regulations considerably extend the requirements for the content of the documentation, prescribing a much wider range of information to be disclosed relating to the organization structure of the whole company group, the controlled transactions and the benchmark analysis.
In the local file, the required information must be disclosed as a controlled transaction, however, the aggregation rules and the simplification option for low value added services can be applied. In this latter respect, the profit margin range has been modified from 3-10% to 3-7%.
The new rules are applicable to the transfer pricing documentation prepared for the tax year 2018, however the taxpayer may also choose to apply the provisions of the new regulations for the tax year 2017. The decree entered into force on 17 November 2017.
By Gabriella Galik, Partner, KCG Partners Law Firm