Special rules for transfer education in accordance with the "arm's length" principle may appear in the Tax Code of Moldova.
The corresponding draft law has been registered in the parliament and is already being considered by parliamentary commissions. The arm's length principle is an international standard that is used as a way to protect against artificial understatement or overstatement of taxes on transactions between related parties (including related companies). According to the draft, taxpayers will be required to provide the STS with information on transfer prices for transactions with affiliates, and the "arm's length" principle will be taken into account when determining the income or tax losses of affiliates. A taxpayer who enters into transactions with affiliates with a total value of 20 million lei or more during the financial period will be required to draw up a transfer price dossier. This document must be drawn up before the 25th day of the third month after the end of the reporting tax period and stored for 6 years from the date of compilation, it may be requested by the State Tax Service. For non-submission, incomplete or untimely submission of the transfer price dossier, a fine of 300,000 to 500,000 lei will be imposed. At the same time, the provision of false information on transfer prices for transactions with affiliated persons will be punished by a fine of 30 thousand to 50 thousand lei for each false information, but not more than 500 thousand lei. Herewith, the STS and tax officials will have the right to check the correctness of the transfer price in accordance with the arm's length principle and not allow or reclassify transactions with the recalculation of the corresponding obligations to the National Public Budget. The explanatory note to the draft notes that today in the tax legislation there are a number of rules that regulate market pricing for transactions between related parties. However, in practice they are not applied due to the lack of mechanisms for verifying compliance with the principles of full competition, which implies the concept of "transfer price". As expected, the initiated bill will eliminate the existing gaps in this area. // 10.10.2022 — InfoMarket
