Safety measures in the event of tax inspection
Our experience and experience of other tax consultancy companies indicate the growing interest of tax authorities in the phenomenon of transfer pricing. Since tax authorities suspect that prices used in transactions among affiliated entities differ from market prices and are used, among others, in order to lower revenues, and thereby also tax obligations, inspections in the scope of transfer pricing are becoming more and more common.
It should be pointed out that:
- During a tax inspection inspectors may request tax documentation of transfer pricing any time.
- In accordance with the regulations, the tax payer has only 7 calendar days to submit documentation from the day such a request was made. As tax authorities commence inspection procedures usually on Thursdays, the real time for preparation of the documentation, in the event it does not exist, is much shortened.
- 7 calendar days is often not enough to prepare a document which may be sometimes complicated.
- In the event that the taxpayer does not have or fails to submit the documentation in the statutory period of 7 days, he is subject to severe, not only tax, but also penal–fiscal and penal sanctions. See Sanctions >>
It is therefore important to prepare current documentation systematically and to be prepared in the event of transfer pricing–related inspection.
Procedure for preparation of transfer pricing documentation
Verification of relations
Within the scope of verification activities we verify the entity’s data related to the public domain of the Internet, economic information systems and other resources which were gathered in co-operation with the client. On this basis, we formulate conclusions concerning the existing relations with other entities and after consulting the client we prepare a final list of such relations.
Verification of limits
We analyse transactions among the selected entities, on the basis of relevant data, in order to check whether the statutory transaction limits, which cause tax obligation to arise, were exceeded. These limits are specified in the acts on CIT and PIT.
Transaction limits >>
Preparation of the report
On the basis of the information collected in the previous stages we prepare a report on the documentation obligation, which comprises the following:
Table of affiliated entities with the description of relationships
Table of transactions with amounts and indication whether the limits were exceeded, including justification
Conclusions resulting from the examination specifying transactions for which tax documentation should be prepared
Recommendation of the type of documentation for particular transactions, accounting for the risk and level of security
Placing an order
On the basis of the information in the report, based the examination carried out, we prepare an offer for the preparation of tax documentation of transfer pricing and other measures securing the risk of transfer pricing. For each individual case we consider the risk of particular transactions and present an optimal solution.
On the basis of our experience we have prepared several versions of documentation which fulfil the documentation obligation. Each Client may choose a version satisfying their needs both from the factual and financial perspective.
Versions of documentation >>
Preparation of documentation
Depending on the chosen version we prepare a document which takes into account all necessary components >> The expertise, experience and diligence of our experts guarantees the accuracy and punctuality of the prepared documentation. When we prepare the documentation we always inform our clients about safety and protection measures and indicate the best solutions.
Keeping tax documentation protects your company against the 50% penalty income tax rate and other severe sanctions. Tax documentation prepared and updated systematically allows to monitor business operations and provides a real picture of your business.
Don’t be afraid of transfer pricing inspection! Contact us and we will help you to meet the documentation requirements. We guarantee that the prepared documentation and procedures implemented related to application of transfer pricing will be accurate and correct.
Tel.: +48 71 79 25 991