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Transfer pricing is not any more a tale about fiscal technicalities where All’s Well that Ends Well once you have established a Measure for Measure (meaning an arm’s length price, in line with the market and the economic substance of the intra-group transaction).

Transfer pricing has become a political stage play destined for the general audience, appealing to their emotional state. A new scenario staged at a Glob(e)al level demonstrates that it is not quite Much Ado About Nothing and Love's Labor’s Lost regarding the love affairs of taxpayers with their aggressive fiscal planning. There’s going to be a TemPest… Hold on for a second! Doesn’t all this sound like Shakespeare? You bet!

You can find here Transfer Pricing in Shakespearean language.

A TPS production so everyone can understand that right now, in transfer pricing All the world’s a stage and it is time for … BEPS: Be Prepared to Switch!

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New changes in Romanian transfer pricing rules. The old Order 222 (the well-known Order issued by the President of the National Agency of Fiscal Administration which details the content of the transfer pricing file) is now history! From now onwards we will continuously read...Order 442.

Click here to find out our first impression about the changes!

We will come back to you with a detailed newsletter regarding this new piece of legislation, taking into account the latest recommendations coming from Brussels which clearly show that we should expect new additional developments to the legislation regarding intra-group transactions.

Once again it becomes clear that transfer pricing transcends the borders of a basic analysis of the market price, turning into a political issue.
Therefore, BEPS! BE Prepared to Switch!

We have prepared for you the English version of the Order 442/2016. Please note that this is an unofficial translation; dealing with the local authorities, the official (Romanian) version will prevail.  

In case of further questions, please don't hesitate to contact us. You can always count on our help!

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Dear partners,

In the beginning of the year, we have news that we believe will provide added safeguard against the fiscal issues and challenges you face. In order to cover the full range of fiscal and legal services required to solve fiscal disputes, Transfer Pricing Services (TPS) closed a strategic partnership with one of the strongest law firms in Romania, Nestor Nestor Diculescu Kingston Petersen (NNDKP).

From transfer pricing policy design and implementation to specialist assistance during fiscal inspections, from comparability analysis in the transfer pricing file to building a defence in domestic law courts and international arbitrage commissions, we are now in a position to offer a complete range of tax and legal services!

Year 2015 was a turning point for the intra-group rules on the international tax arena, as reflected in the final BEPS provisions, and the comeback of CCCTB and minimum effective tax level concepts on the European Commission’s discussions agenda. The changes have already begun to be reflected in the new Romanian regulations, both the Fiscal Code and the Procedures Code, as well as the application norms and ANAF orders.

As such, 2016 becomes the „ground zero” of the tax authorities’ new approach towards the investigation of the intra-group transactions. The approach will address, on one hand, the mounting public pressure which demands clear examples of fight against the BEPS phenomenon (Base Erosion and Profit Shifting), on the other hand, it will attempt to solve the mundane need of growing the budgetary revenues.

Times change, and so must taxpayers’ approach! Answer with ... BEPS! BE Prepared to Switch! We are better than ever prepared to offer comprehensive solutions for solving – as well as preventing – the issues you are facing! You can continue to rely on our support! Please refer, if needed, to the official press release and the media coverage concerning the TPS - NNDKP alliance.

You can find HERE the press release regarding the TPS-NNDKP alliance.

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” The Action Plan proposes to improve the transfer pricing framework in the EU, so that it better reflects current economic realities and modern business models. Transparency and better access to comparable prices are two areas where work can already start (...) The measures in the Action Plan are very much aligned with the OECD's Base Erosion and Profit Shifting (BEPS) reforms, which is strongly supported by us. but are shaped to meet the EU's own particular challenges and needs”.
I quoted from the fact sheet in EC’s press release of 17 June 2015 on the Action plan for a fair and more efficient corporate tax system in the EU. An innocuous fact sheet to match an equally innocuous title. But this only lasts until we meet the flagship action of the Brussels strategists’ plan – the CCCTB.
CCCTB stands for the Common Consolidated Corporate Tax Base applicable to the EU-based companies.
However, the actual translation would sound more along the lines of – while BEPS seeks to tackle the abuse of tax incentives, CCCTB is going to do away with the issue by way of...doing away with tax incentives altogether! It is a seismic wave with a foreseeable impact to affect not just the taxation of IC transaction, but the very economies of the Member States.
This is intended as a wake-up call to prepare for a post-17.06.15 Europe!

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The strongest worldwide politicians perform change ringing on the bells atop the multinational companies.They strive toward a new order of the international taxation, focused on new rules regarding transfer pricing.
Just read the (bells) lips and listen to the new clapper noise – Transfer Pricing is a Political Issue!

”For whom the bell tolls in transfer pricing”
a new friendly introduction into the unfriendly tax environment!

From the producers of ”Who said...”
Transfer Pricing Services

Warning: "The following program contains strong flashing data and statements. Please make sure you are in the ... market range"

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The Romanian Tax Administration (ANAF, in original) has just sent to the local press a few data regarding the activity in the area of transfer pricing during 2014.

Here are the main information:
• In 2014, the tax inspectors conducted 130 tax inspections "which included an analysis of the affiliation relations of the taxpayer and the transfer prices applied as part of the transactions undertaken with the identified related parties";
• "Last year were conducted a third of the total number of transfer pricing inspections performed until present, and the biggest transfer pricing adjustment performed by the tax inspectors was 18% higher than the one performed in 2013. The adjustment was performed to a large taxpayer not named by ANAF";
• ANAF mentions that the team allocated for managing the area of transfer pricing consists of 54 tax inspectors at a local level and 12 tax inspectors at the central level. Until present, 72 tax inspectors were trained as part of an experience exchange program with experts from UK, and 196 tax inspectors operating in the territory participated in 2014 in intensive training seminars in the area of transfer pricing. According to an official note from 2014, all tax inspectors within the tax inspection apparatus of NAFA have attributions in auditing transfer prices, by way of requesting the transfer pricing documentation file.

 This should be read in the context in which public opinion begins to put pressure on the tax authorities to show "spectacular" results through auditing large taxpayers, not only the small ones.

Actually, comparing with the previously ANAF data (please find below), 2014 is the year with the most audits on transfer pricing by far.

• During the 2010 – 2013 period, there were 402 audits requiring the transfer pricing documentation file.

• Compared to the 2010 – 2012 period, the audits from 2013 represent roughly 15% of the tax audits in which the supervisory body ordered the elaboration of the transfer pricing documentation file.
• In 2013, the maximal transfer pricing adjustment was performed with about 72% higher than the adjustment made in the previous year, 2012.
• The amount of the additional amounts (income tax, penalties and late payment penalties) is around RON 48 million, in 2010 – 2013.
• Regarding the reference period, the fiscal loss of the audited taxpayers (including the transfer pricing documentation file) has been reduced by about RON 450 million.
• All tax inspectors of the ANAF tax inspection apparatus are responsible for examining the transfer pricing documentation file by requesting it.

By their specific of not being an exact science, transfer prices are thus a major tax risk for groups of companies.
In the next issue of our newsletter, TPS Express, we will return with fresh information to help you maintain your Transfer Pricing Safety.

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We would like to draw your attention to a press article offering official data on the Romanian Tax Administration (ANAF, in Romanian) activity regarding transfer pricing.

Below, you can see the highlights:
• During the 2010 – 2013 period, there were 402 audits requiring the transfer pricing documentation file.
• Compared to the 2010 – 2012 period, the audits from 2013 represent roughly 15% of the tax audits in which the supervisory body ordered the elaboration of the transfer pricing documentation file.
• In 2013, the maximal transfer pricing adjustment was performed with about 72% higher than the adjustment made in the previous year, 2012.
• The amount of the additional amounts (income tax, penalties and late payment penalties) is around RON 48 million, in 2010 – 2013.
• Regarding the reference period, the fiscal loss of the audited taxpayers (including the transfer pricing documentation file) has been reduced by about RON 450 million.
• All tax inspectors of the ANAF tax inspection apparatus are responsible for examining the transfer pricing documentation file by requesting it.

Even though the balance statement does not seem spectacular for the public, it reflects an alignment of the ANAF with the worldwide trend of perceiving the transfer pricing as a top tax priority.
In our March TPS Express newsletter we will return with new information for your Transfer Pricing Safety.