It is proposed to introduce the concept of transfer prices into the tax legislation of Moldova.
The draft fiscal policy for 2023 provides for the introduction of a separate section in the Tax Code, which regulates special transfer pricing rules in accordance with the arm's length principle. By design, this is an international standard that provides that if the terms of a commercial or financial relationship between affiliates differ from those between independents, then any income that, in the absence of those terms, would have been received by one of the parties, but because of these conditions has not been obtained, may be included in the income of that person and be taxed accordingly. This principle will apply in any controlled/consensual transactions made between affiliates (sale, assignment, leasing, license, credit, loan, advance, contribution or other transfer of any interest or right in the use of any property, the provision of any service to or from name of another taxpayer). 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 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. Herewith, 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. Thus, the State Tax Service and tax officials will have the right to verify the correctness of the transfer price determination in accordance with the “arm’s length” principle, using the methods of price comparison, resale price, profit sharing, etc. The Ministry of Finance believes that the application of the transfer price concept will increase efficiency tax administration through the introduction of analytical tools to determine or evaluate the market value of transactions between affiliated parties. At the same time, business representatives spoke about the inapplicability of this innovation without a clear regulation of the rights of the State Tax Service, and also pointed out the numerous ambiguities of these changes in the project and the additional burden on business. The draft fiscal policy must be approved by Parliament. // 21.11.2022 — InfoMarket
