The amendment to the Act on income tax effective as of January 1st, 2015 sets out that the transfer pricing rules should be applicable also to domestic related parties.
TP rules applicable also to domestic related parties
Starting from the new year the transfer pricing rules are applicable not only to foreign related parties but also to domestic related parties that are economic, personal or otherwise related (for example having a common statutory representative).
These parties are obligated to use methods based on price comparison and keep transfer pricing documentation. Moreover, the tax administrator is entitled to exercise relevant adjustment of tax base of not only foreign related parties but also of domestic related parties.
The amendment sets out that the prices agreed between related parties should not differ from prices that would be agreed in similar business relationships if the parties would not be economic, personal or otherwise related.
Content of the TP documentation
On August 20th 2014, the Ministry of Finance of the Slovak Republic released a regulation on the content of TP documentation to be used by taxpayers pursuant § 18 par. 1 ITA.
We believe that in case of amendment approval, the regulation will be applicable also to domestic related parties.
The regulation regulates three different forms of TP documentation – so-called shortened, basic and full version. Read more about the individual forms of transfer pricing documentation here