Step 2. TPR

6 steps to TP without (active) repentance

Because of its volume and detailed questions, the TPR form can be complicated to complete in practice. At the same time, a well-filled TPR streamlines the preparation of the local file and even identifies previously unnoticed areas of risk. Therefore, the best way to start effective transfer pricing reporting, is by completing the TPR. Please note that for the purposes of 2020 reporting , it will be necessary to prepare for using the new version of the form published by the Ministry of Finance.  

We would emphasise that the TPR is a source of significant information about the company’s situation. The data from this form is to be used for identifying controlled entities. This is one of the reasons why it is important to dedicate an appropriate amount of time and attention to correctly complete this form.

In completing the form, it can be particularly challenging to aggregate transactions appropriately so that there is no need to produce a TPR for a single transaction, which is time-consuming and costly for entities entering into numerous intercompany transactions.

Another potential difficulty is in describing financial transactions involving different terms related to the financial result of the transaction, such as transaction value, debt value, and principal amount. These terms denote different categories, depending on the type of financial transaction. For example, transaction value in the case of a loan or credit is the principal amount (Article 11l (1)(1) of the CIT Act) under an agreement or other document (Article 11l (2)(2) of the CIT Act), in the case of a bond issue it is the nominal value (Article 11l (1)(2) of the CIT Act), while the value of a service transaction is usually  the value resulting from invoices received or paid (Article 11l (2)(1) of the CIT Act).

These examples of TPR challenges illustrate why transfer pricing reporting should begin with the TPR form.

How we can assist

Our support includes:

  • a tax breakfast at which we will together complete a TPR form for a fictitious entity, which will help you to later independently complete the form for your company;
  • completing the form on your behalf;
  • verification of your completed form.

 

Transfer pricing: almost 400 TP audits, errors in TPR forms submitted

We have further arguments confirming the conviction that transfer pricing is of interest to tax authorities and that the area is worth more focusing on.

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