Get transfer pricing ready for year-end

Get transfer pricing ready for year-end

Transfer pricing considerations that taxpayers should keep in mind when completing year-end tasks.

Get transfer pricing ready for year-end

The deadline for income tax compliance is approaching and taxpayers have to consider reviewing their transfer pricing position. You may need to evaluate whether to adjust related-party payments or transactions, amend existing transfer pricing policy or agreements, or establish transfer pricing policies for new transactions or lines of business.

In light of income tax compliance, we have prepared a set of transfer pricing considerations that taxpayers should keep in mind to meet the requirements of the Law “On Income Tax”.

Identify all relevant transactions

  • Have all transactions with related parties been identified as per the requirements of the Albanian TP legislation?
  • Has any of the related parties transactions been adjusted for TP purposes in the counterparty country? If yes, have you evaluated whether a corresponding TP adjustment should be performed in Albania too?
  • Have you received/provided any services/goods/loans with no compensation?
  • Are related parties sharing, using or licensing intellectual property?

Confirm financial results are consistent with transfer pricing policies

  • Have you checked whether you have received/paid the right compensation for related parties transactions?
  • Have you confirmed whether profits realized are aligned with the entity’s or group's transfer pricing policy?
  • Have you confirmed that the conduction of the parties in the related transaction is in line with the agreements in place, and ensured that legal documentation is in place to substantiate any related-party transactions?
  • Do the accounting records clearly demonstrate the correct application of the transfer pricing policy?
  • Have you documented any cost allocation and performed a benefit test in relation to any costs allocated to your company?
  • Have you checked for unexpected losses or unusual gains after applying the transfer pricing policy?
  • Are you and the related counterparties being remunerated commensurately with the value generated?

It is also important to determine whether the relevant documentation (e.g., benchmarking analyses, external comparables, etc.) supports the arm's length price used. In addition, it may be prudent to revisit a transfer pricing policy and related supporting documentation to support arm's length pricing if the following have changed:

  • Functions performed
  • Assets employed
  • Market conditions
  • Risk profiles

KPMG expertise is available

To help identify any gaps that may exist and to assist in mitigating adverse transfer pricing findings in the event of an audit, consult a trusted transfer pricing professional, especially before:

  • Submitting the Corporate Income Tax return,
  • Making any transfer pricing adjustment,
  • Entering into a new related party transaction,
  • Implementing a new transfer pricing policy, or
  • Adjusting a current policy

Our transfer pricing experts are ready to answer your questions and provide you with the benefit of our worldwide network of transfer pricing practitioners.

For more information, contact KPMG.

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