As we informed you in the previous issue of the newsletter, the MFSR submitted a new guideline on the content of transfer pricing documentation for a comment procedure at the end of 2018.
The new guideline was published in the Financial Newsletter in late 2018 as Guideline of the Ministry of Finance of the Slovak Republic No. MF/019153/2018-724 on determination of the content of transfer pricing documentation, replacing the original guideline. According to the new guideline, taxpayers are obliged to take action when preparing documentation for a tax period starting after 31 December 2017. Taxpayers can also submit transfer pricing documentation to a tax administrator in accordance with the old guideline, however, only if such a tax administrator calls upon them to do so by 30 June 2019 at the latest.
The new guideline has implemented new requirements for transfer pricing documentation, which have been published in the revised OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017. Changes for taxpayers have particularly been made due to the increased focus on transfer pricing, so that tax administrations have sufficient information for a risk analysis, and so that the documentation provides useful information in the case of tax inspections directed at transfer pricing.
The biggest change concerns the preparation of shortened (simplified) documentation, which will only be submitted to a tax administ
rator as a standardised form. This standardised form is available on the website of the MFSR. Taxpayers shall only submit the form to a tax administrator if called upon to do so. Changes have also been made to the complete documentation, which should now include much more information about entire groups of companies, their financing, profitability factors, supply chains, intangible assets and other facts. In other words, greater emphasis shall be placed on the provision of comprehensive information. Another new feature in the case of financial transactions is that, for the purposes of materiality and transaction values, matters will proceed based on the highest value of the principal or underlying asset. Important transactions in this case are transactions that meet the materiality characteristics of the Accounting Act.
The new guideline has not introduced any major changes to the basic documentation. However, the purpose of basic and complete transfer pricing documentation should continue to be documentation of the process of valuing a taxpayer’s mutual business relationships, including the prices of controlled transactions and other factors that affect pricing.
Taxpayers who do not meet any of the criteria for preparing shortened (simplified), basic or complete documentation shall fulfil their obligations by completing a tax return with data on dependent companies.