Domestic transfer pricing regulations have gained new momentum this year. Legislative changes in 2022 will impose data reporting obligations on companies required to keep transfer pricing records. The most important of these is the obligation to provide data in the corporate tax return for the tax year 2022. As a result, companies with a normal tax year (1 January to 31 December of the current year) will have to include certain transfer pricing register data in their corporate tax return to be filed by 31 May 2023. It is not yet known what these data are, but it is known that the tax authority is entitled to impose a HUF 5 million fine for missing or incomplete records, warns Csaba Szabó, professional manager of ICT Europa Finance Zrt.
Detailed rules on the content have not yet been published, but are expected to cover the value of transactions with related companies, the method of determining the arm's length price. To date, there have been a number of instances where companies subject to the transfer pricing registration requirement have tried to avoid this obligation or have limited themselves to very minimal compliance when this area has come into focus.
As a result of the change in legislation, companies will no longer be able to take transfer pricing accounting lightly. This is because it is easy for the tax authorities to target companies that are liable but do not provide information in their corporate tax returns, or provide incomplete information.
For this reason, companies are advised to assess whether they are obliged to and can comply with the tightening transfer pricing regulations or whether they need to involve an external expert partner," says the professional director of ICT Europa Finance Zrt.
Who is obliged to provide data?
Enterprises with more than 50 employees on the last day of the tax year, or with a turnover or balance sheet total of more than EUR 10 million.
Which transactions are exempt from reporting?
That is, transactions that do not exceed a total annual transaction value of HUF 50 million. It is likely to rise to HUF 100 million in the future.
As a general rule, which groups of companies can be exempted from the obligation to keep transfer pricing records?
It is important to note that, in principle (but not in all cases!), the rules on itemised transfer pricing adjustments and documentation do not apply to transactions between companies that are part of a group. This does not mean that they do not have to comply with the provisions of the Civil Code, the Art. However, the exemption from the registration obligation could also be a saving grace for groups of companies where group corporate tax liability is justified anyway, but the benefits have not yet been examined," says Csaba Szabó, professional director of ICT Europa Finance Zrt.
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