lunes, 11 de julio de 2016

Cape Verde introduces transfer pricing rules

The Cape Verde government published in December 2015 legislation establishing a new transfer pricing regime that entered into force on January 1, 2016. The new rules focus on regulating the local application of the transfer pricing rules and principles included in the Corporate Income Tax Code in the context of the fiscal reform implemented by Law no 82/VIII/2015.
A recently published ministerial order – No. 75/2015 – defines the principal guidelines of the transfer pricing regime, empowers the tax authorities to make the necessary adjustments should they conclude that transactions between related parties were not in accordance with the arm’s length principle, and defines new reporting and documentation requirements, as detailed below.

Scope of the new regime
The new regime contains detailed guidance on the transfer pricing rules applicable to any commercial transactions (involving goods, rights, or services) or financial transactions that begin or occur on or after January 1, 2015.
According to the new legislation, entities are regarded as related for transfer pricing purposes taking into account a threshold of 20 percent of direct or indirect ownership in the capital or voting rights of both entities.
In addition, the regime stipulates that a special relationship must be deemed to exist when legal arrangements allow one company to influence the management decisions of another company, or when a taxpayer enters into transactions with an entity that benefits from a more favorable tax regime.

Reporting and documentation requirements
Contemporaneous transfer pricing documentation must be filed upon request by the tax authorities, and the new rules establish that its preparation is mandatory for:

  • Companies classified as “Large Taxpayers” under specific legislation;
  • Companies considered taxed under a privileged tax regime, as established in the General Tax Code;
  • Permanent establishments of nonresident companies; and
  • Other entities explicitly designated by the tax authorities.

In addition, all taxpayers must report in their annual fiscal and accounting declaration any controlled transactions entered into, identify the related parties involved, and state whether transfer pricing documentation was prepared in accordance with the law. The declaration must be filed by the seventh month following the year-end (that is, by July 30 for companies with fiscal years that match the calendar year).
The ministerial order specifically refers to the OECD’s transfer pricing guidelines as a source of “high importance.”

Source: Deloitte

No hay comentarios:

Publicar un comentario