She explained this policy needs to be a central point of the business and risk management strategy of any Romanian member of a group of firms. It should be reasonable from a commercial perspective and take into consideration comparable transactions of other companies, in order to make a strong case during a fiscal inspection.
“It is not advisable for a company to handle the transfer pricing file to fiscal authorities, if they haven’t made a formal request,” Oanea told BR. “The Romania-based firm and the consultant and the affiliated firm abroad (parent company) need to work impeccably and sometimes on short deadlines to obtain and interpret an amount of information that isn’t easy to collect or process,” said Oanea.
What are transfer prices?
Nadia Oanea: “The transfer prices represent the prices at which group members buy and sell goods and services. These operations run a high fiscal risk, which can also lead to double taxation.”
The tax manager advised companies that are going through a fiscal inspection to seek assistance from a fiscal consultant – eventually the one who documented the transfer prices – to avoid the communication of erroneous information.
Companies should strive to avoid any conflict with the fiscal representatives during a control, advised Oanea.
If they end up with a litigation case on their hands, the tax payers should have on their side a team that includes specialists in fiscal litigation and fiscality, as well as members of the tax and accounting department of the company.
“The objective is to reduce as much as possible the adjustment made by the fiscal inspectors, in order to keep most of the money within the firm,” said Oanea.
ANAF intensifies transfer pricing inspections
Since setting up special unit for transfer pricing in 2011, the fiscal administration agency ANAF has intensified the verification of transfer prices of affiliated tax payers that register structural losses through profit transferring.
Romania-based firms that are part of a group of companies need a consistent transfer pricing policy in line with the market price principle so as to avoid any price adjustments from the fiscal body ANAF, according to Nadia Oanea, tax manager – head of tax department at Baker Tilly accountancy.
She explained this policy needs to be a central point of the business and risk management strategy of any Romanian member of a group of firms. It should be reasonable from a commercial perspective and take into consideration comparable transactions of other companies, in order to make a strong case during a fiscal inspection.
“It is not advisable for a company to handle the transfer pricing file to fiscal authorities, if they haven’t made a formal request,” Oanea told BR. “The Romania-based firm and the consultant and the affiliated firm abroad (parent company) need to work impeccably and sometimes on short deadlines to obtain and interpret an amount of information that isn’t easy to collect or process,” said Oanea.
What are transfer prices?
Nadia Oanea: “The transfer prices represent the prices at which group members buy and sell goods and services. These operations run a high fiscal risk, which can also lead to double taxation.”
The tax manager advised companies that are going through a fiscal inspection to seek assistance from a fiscal consultant – eventually the one who documented the transfer prices – to avoid the communication of erroneous information.
Companies should strive to avoid any conflict with the fiscal representatives during a control, advised Oanea.
If they end up with a litigation case on their hands, the tax payers should have on their side a team that includes specialists in fiscal litigation and fiscality, as well as members of the tax and accounting department of the company.
“The objective is to reduce as much as possible the adjustment made by the fiscal inspectors, in order to keep most of the money within the firm,” said Oanea.
ANAF intensifies transfer pricing inspections
Since setting up special unit for transfer pricing in 2011, the fiscal administration agency ANAF has intensified the verification of transfer prices of affiliated tax payers that register structural losses through profit transferring.
The effort of the Romanian authorities comes against the backdrop of business internationalization. This has created favorable conditions for multinationals to condone fraudulent practices, and the pricing manipulation between the subsidiaries of the same company being frequently used to reduce the taxation in the production or destination states, according to Oanea.
The fiscal agency has drawn up a list with tax payers that run a high fiscal risk. Furthermore, ANAF has analyzed companies that carried out transactions of the supply of international telecom services, with affiliated persons outside the EU.
Oanea added ANAF is building a registry on fiscal risks in order to target their inspections better. The agency is also working on a data base to include the special fiscal cases it identified.
“All these surely represent the levers through which the inspection authorities will ensure the inclusion in their verification plans of companies whose transfer pricing policies aims to move the profits from Romania in other fiscal jurisdictions,” stated Oanea.
The Baker Tilly tax manager concluded that members of multinational groups have to be ready with an adequate documentation and the right fiscal consultant to make their case during a fiscal inspection in this field.
Nadia Oanea is key speaker of the Transfer Prices workshop, part of the Tax & Law Event, organized on March 28 by weekly magazine Business Review. The event hosts a panel of experts that will outline the main fiscal and legal changes that impact the local business environment.
