• Type: KPMG information
  • Date: 7/7/2014

Fiscal Barometer - June 2014 


Teodora Alecu

Director, Transfer Pricing

Companies whose business is part of a group should no longer wait, and need to make it a priority to prepare their transfer pricing documentation file for their intra-group transactions. This is not something essentially new, but the pressure of deadlines set out in recent draft legislation has added a degree of urgency.

The draft has been presented to the business community, and it appears very likely that it will soon enter into force in its current form.


In the past, we have emphasized that transfer pricing is a topic on the agenda of organizations such as the OECD and that the Romanian tax authorities usually follow their recommendations. However, it now seems that the management of group companies will have transfer pricing on their agenda, too.  Even though legislation exempts low value transactions from the requirement to be documented, attention should still be paid to these, as tax inspectors are nevertheless entitled to ask for supporting documents and explanations of those transactions during audits.


The draft legislation states that updated transfer pricing documentation for the previous tax year must be prepared no later than 60 days after the deadline for submission of the annual corporate tax return. The principle is that no corporate tax return should be drafted without the finance manager having taken a look at transfer prices. To encourage compliance, the new draft legislation sets fines. Failure to meet the 60 day deadline will render the taxpayer liable to a fine of around 3,000 EUR, while failure to meet the second deadline of 30 days, which is given by the tax authorities if the file is not ready, makes the taxpayer liable to another fine. However, the taxpayer may also suffer much tougher penalties resulting from transfer pricing adjustments, which are more likely to be made if the deadlines pass and the transfer pricing file has still not been prepared.


The philosophy is the same. Taxpayers should look at their transfer pricing, preferably in advance of setting up intercompany transactions, and monitor the prices closely to make sure that they remain at market levels. This will enable an accurate base to be determined for corporate tax purposes. The tax authorities will look closely at how the corporate taxable base has been calculated. Consequently, a company’s finance management needs to understand better how the prices have been set, so that they will be in the position to explain to the tax authorities that the corporate taxable base has not been underestimated as a result of the transfer prices applied to intragroup transactions.

Tax News - Tax News 

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