Your company delivers internal cross-border services and goods. But is your internal pricing method 'at arm's length' principle? Do you meet the requirements of the Bulgarian tax administration for the applicable documentation?
Transfer pricing is an area that affects most multinational companies. Tax authorities around the world are increasingly focusing on pricing and transfer pricing policies implemented by multinational companies.
For example, the Bulgarian tax administration would like to know why you are realising high revenue in other countries and whether this is justified. Are they not a result of work performed in Bulgaria?
We see that the tax authorities in different countries will ask for an adequate justification for the pricing methods you apply because each country wants its "fair share" of your corporate taxes.
Transfer pricing guidelines
The Organization for Economic Cooperation and Development (OECD) and the European Union are preparing more and more extensive guidelines for transfer pricing. As a result, national transfer pricing rules become stricter - the Bulgarian tax administration requires extensive transfer pricing documentation during tax audits and tax inspections and may impose fines if the applicable legislative requirements are not met.
This increased emphasis on transfer pricing poses a greater need for internal organisation and accurate reporting. This is because the burden of proving the correctness of pricing is in you as entrepreneurs.
Transfer Pricing Strategy
It is essential to implement a good transfer pricing strategy and to have sufficient documentation on the subject to justify the distribution of profit in the group even if the effective tax burden at the group level is "high"!
We can help you with:
- Preparing transfer pricing documentation (local and master files);
- Review of existing transfer pricing documentation and policies;
- Profit allocation within the group.
Besides, we can assist you and advise you on minimising risks in choosing and developing your transfer pricing model and policies.