FINANCE MINISTER EXPLAINS HOW TO RESOLVE TP REPORTING THRESHOLDS IN TAX GROUPS

In determining the thresholds which trigger transfer pricing documentation requirements, you need to refer to the entire tax group as a single taxpayer and not to the individual members thereof.

On 14 August 2018, when answering minor parliamentary question no. 7775, the Finance Minister said that, under Article 9a(3e) of the Corporate Income Tax Act (CITA), transfer pricing documentation must be prepared for transactions (or other events) between companies constituting a tax group and their affiliates which are not members of the same tax group.

The Minister made it clear that this law is designed to only outline the range of transactions (other events) to be reported in TP documentation, and not to change the way the TP reporting thresholds are to be determined in tax groups.

In addition, Article 9a(1) CITA reads that it is taxpayers (including tax groups) that are subject to TP documentation duties. Once a tax group is formed, its member companies are no longer taxpayers for CITA purposes. Thus, the reporting thresholds must refer to the tax group as a taxpayer, and not to any of its individual members.

The same issue was also discussed by the Finance Minister in his answer of 7 February 2018 (ref. DCT.054.1.2018) to a major parliamentary question.

If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant or our office.

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