PKF Finconta survey: Transfer pricing in Romania in 2018
PKF Finconta, an audit and tax consultancy firm ranked among the top 10 companies in Bucharest, launches today the 2018 edition of the survey “Transfer Pricing in Romania”. The aim of this survey is to identify the most important issues related to the topic of transfer prices as perceived by the directors and managers of the Romanian companies in 2018.
The study was conducted using the Computer Assisted Web Interviewing (CAWI) method, and questionnaire consisting of 18 questions was administered to respondents between February 15 and March 30, 2018. The report was put together by analyzing the 175 complete answers to the online questionnaire. Among the respondents, 49% were Economic and Financial Directors, 16% were General Directors and Members of the Boards of Administration and the rest constituted of other managerial roles.
“We decided to conduct this study to find out from PKF Finconta’s clients, but also from other companies in Romania, the issues that they prioritize on their transfer pricing agenda for 2018. We wanted to know this so much more because the current global transfer price environment (e.g. in the context of the OECD BEPS action plan) exerts an influence on how companies deal with transfer pricing issues”, says Florentina Şuşnea, Founder and Managing Partner of PKF Finconta.
The main results of the study
1. The topic of transfer prices is on the list of important points on the companies’ agenda in Romania. Only 9% say that this issue is of low importance, while only 7% do not consider it to be of any importance.
2 In the next two years, 37% of companies expect the value of transactions to grow, and another 37% say they will stagnate. On the other hand, 48% expect the number of transactions to remain the same, and 33% say the number will increase.
3. Almost 7 out of 10 companies in Romania (approximately 70%) see the issue of transfer prices becoming a tax problem over the next two years. Of these, 16% give this theme critical importance from this point of view.
4. Just 40% of respondents think they are heavily influenced by how this topic is addressed in the current global transfer pricing environment. Still, another 37% say they are not aware of and are not aware of the global changes in transfer pricing, while 23% think they only know them to a small extent.
5. In 2018, among the main factor augmenting taxpayers’ fears that issues related to transfer pricing would increase were the increased frequency of the inspections of tax authorities (72%), followed by 26% of companies which felt increase in the volume of intra-group transactions was the most important factor.
6. 47% of companies believed that the responsibility for transfer pricing is the responsibility of all parties involved in the transaction. Only 23% of companies say that this responsibility lies with the financial department at a group level, 18% see both financial departments (local and group) and only 5% feel this is the responsibility of the local finance department.
7. Regarding the implementation of the group transfer pricing policy, 35% of the companies say the transfer pricing policy is adjusted according to the rules in Romania. Secondly, 32% of companies say they do not currently have a transfer pricing policy. Only 5% of respondents have the local transfer pricing policies developed and implemented in accordance with Romania’s rules.
8. 30% of companies say they do not have any transfer pricing documentation for the Romanian entity. However, another 4 out of 10 companies say that the transfer pricing documentation is focused on specific transfer pricing requirements as prescribed by Romanian law.
9. 70% of companies are preparing transfer pricing documentation to reduce the risk of controversy. The following are the key motivations of having a transfer pricing documentation in place: supporting the fiscal audit (40%), the coherence of the group documentation (23%) and identifying the fiscal planning opportunities (20%).
10. 55% of the companies believe that the distribution of goods with the affiliated parties is the category of transactions most exposed to the tax authorities’ query in terms of transfer pricing. The following are the other categories of transactions which attract attention from the tax authorities: consultancy and management services (53%), group financing (40%) and other types of intra-group services (38%).
“This study provides an up-to-date picture of how companies in Romania are referring to the legislative aspects of transfer pricing. The results in this report are relevant to all managers who are looking to understand what are the approaches that various Romanian companies have with respect to transfer pricing. The most interesting aspect, from my point of view, is that the risk of controversy is the driving factor (70% of the companies) behind companies wanting to have a transfer pricing documentation in place, and only 23% are concerned about the coherence with the group documentation”, says Nilanjan Nag, from the Transfer Pricing leadership group at PKF Finconta.
Nilanjan Nag este Transfer Pricing Manager la PKF Finconta. Nilanjan și-a început cariera în anul 2007 și are o diplomă în Contabilitate și o diplomă de master în Management. Cu peste 10 ani de experiență în domeniul prețurilor de transfer, a colaborat cu două companii prestigioase, PwC și Deloitte, în India. Nilanjan are cunoștințe privind conformitatea prețurilor de transfer, planificarea angajamentelor și controlul prețurilor de transfer. De asemenea, a lucrat la angajamentele legate de documentația globală și are experiență în evaluarea proprietății intelectuale. Este autor al studiilor PKF Finconta privind prețurile de transfer în România și publică articole pe această temă. nilanjan.nag@pkffinconta.ro
