It is expected that starting from 1 January 2019 significant changes to article 30-1 of Tax Code of the Republic of Belarus (hereinafter – Tax Code) describing the control over the transfer pricing (hereinafter – TP), will come into force. The existing 20-percentage deviation from market prices will no longer be allowable. Among other provisions, the announced drafted document of the Tax Code contains changes and amendments regarding TP in the following:
- list of controlled transactions
- thresholds for controlled transactions
- sequence of methods to be applied for determining market prices
- sequence of information sources to be applied.
The expected Tax Code revision as well as new concepts and definitions proposed by the drafted document will provide legal basis for applying the best international practice and using knowledge and skills accumulated by other countries in carrying out market researches and preparing TP documentation when justifying prices in Belarus, which are doubtful and not always justified under the effective local tax legislation.
Carrying out early analysis to identify controlled transactions and related tax risks allow the company to be prepared for tax authority’s inquiry and prevent adverse tax consequences.
According to the recent year’s tax audits, the 20-percentage deviation from market prices provided by the law has been a crucial provision allowing companies to be free enough in determining TP in intra-group controlled transactions. Those few market researches of prices prepared by companies in Belarus, as a rule, revealed deviations that were within the 20-percentage permissible value. After the 20-percentage deviation cancellation, the transfer prices fixing will acquire additional complexity for international groups of companies and will require the qualitative TP documentation preparation and justifications.
KPMG has significant experience in providing TP services and will assist сompanies in assessing tax risks, reducing them, developing a defensive position and preparing an economic justification and TP documentation when justifying prices in Belarus.
Our TP services include:
- Analysis and identification of controlled transactions in accordance with the legislation of Belarus.
- Development and implementation of a TP policy (regulation) for fixing prices in intra-group transactions to be in the range of the market prices.
- Assistance in preparation of economic justification for prices in controlled transactions for submission to the tax authorities.
- Assistance in preparation of TP documentation for submission to the tax authorities.
- Advisory support during the interaction with the tax authorities at all stages of tax audits.
- Other advisory services in the field of TP.
- Analysis of the impact of the Group's operational structures against potential risks and implications of TP in Belarus.
- Other related services.
- In October 2017, KPMG in Belarus joined KPMG in Russia and CIS and gained access to the best experience and skills of TP specialists in Russia, Ukraine, Kazakhstan and other countries of KPMG network.
- KPMG tax team in Belarus is represented by the qualified professionals with experience in various industries and all business areas.
- KPMG in Russia and CIS has 4 600 staff in 9 countries. KPMG team includes over 150 professionals in TP.
- KPMG is the leader in Russia in the field of TP for 2016-2018 according to the reputable business publication - International Tax Review.
- KPMG is actively involved in the lawmaking process and regularly interacts with the Ministry of Finance, the Federal Tax Service of Russia, as well as tax authorities in other CIS countries, and provides training to tax authorities on common international approaches to TP issues.
- We provide TP services to customers from various industries and have industry experience in all business areas.