Surveys conducted during the Transfer Pricing Forum held 12 April This year, on behalf of the Ministry of Finance, allowed to determine what taxpayers and tax advisers do not manage most when drawing up transfer pricing documentation. During the Forum, subjects of subsequent meetings of the Ministry with business representatives who are interested in this subject were also discussed.
Surveys conducted during the Forum show that:
- the most difficult issue in drawing up benchmarking analyses from a strategic point of view is to find an appropriate comparative sample of transactions/entities, while, in a technical sense, to select an appropriate method for the valuation of transactions and the profitability ratio,
- taxpayers and consultants are most difficult to analyse for financial transactions – in the valuation of such transactions for transfer prices they use external data – commercial databases or generally available and free data of NBP, ECB, statistics of banks.
The main topics identified by the participants as topics to be addressed by the Forum are:
- a detailed approach to the preparation of analyses for specific types of transactions (e.g. agency services, capital transactions, consortium contract, cash pooling and other financial transactions, refactures, transactions in which the price was fixed by tender);
- other technical issues relating to the preparation of comparative analyses (e.g. understanding the criterion of the availability of comparative data, the possibility of using internal data, the possibility of using bid data, problems with the selection of the relevant sample or the absence of unrelated comparable entities, the appropriateness of rejecting entities at a loss, the minimum sample size, the selection of a point from a range, the understanding of the concept of "updating benchmarking", the moment for which the benchmarking analysis should be drawn up and the years taken into account in the analysis);
- the possibility of an analysis of the whole entity without the preparation of analyses for each type of transaction;
- the possibility of using the valuer's valuation in the analysis of the marketability of transactions;
- developing safe harpours for low value-added services and their application;
- issues relating to comparative analyses for financial transactions (e.g. frequency of benchmark updates, possibility of using aggregated data made available by, for example, NBP, adjustments to comparability, appropriateness of carrying out analyses based on the rating of the financed party);
- the need to use national data for comparative analyses
- the content of the description of the conformity of transactions with market conditions;
- problems with understanding some of the elements of the transfer pricing documentation (description of the method of income calculation (losses), description of the economic strategy adopted, description of financial data allowing comparison of settlements related to a transaction/other event with data resulting from the financial statements) and other concepts in the scope of transfer pricing legislation, e.g. "transaction one the type, the value of the transaction.
As a preferred form of the next edition of the Forum, participants indicated meetings and work in smaller working groups to develop solutions and good practices for specific transfer pricing problems.
Source: Ministry of Finance