Transfer pricing records 2013: the rules are changing
On March 5, 2013 the Ministry for National Economy has published on the government’s website the draft of the amendment of decree nr. 22/2009. (X.16.) of the Ministry of Finance on recording obligation related to the determination of the normal market price.
The aim of the draft is to clarify the open questions and specify the cases of excemption from recording obligation, thus making it easier for the taxpayers who are concerned to meet the transfer price documentation obligation.
Determination of the threshold of 50 million HUF: in respect of the exemption it’s a crucial change that the value of a transaction shall be examined on an annual basis and not from the date of conclusion of the contract. After the change takes effect, it has to be taken into account that the normal market value of the given transaction is less than 50 million HUF in the fiscal year examined. In this case the taxpayer is not subject to transfer pricew documentation obligation in respect of the transaction in question.
Refining exchange rates: The proposal eliminates the previous uncertainty about what exchange rate shall be applied to convert the transaction value of contracts concluded in curriencies other than forint into national currency. Under the new regulation, the value of these transactions shall be converted on the basis of the national exchange rate published by the Central Bank of Hungary and valid on the day on which the contract has been concluded.
The assessment of transactions not related to the main activities: the rule which says that there is no need to keep records of product sales and supply of services not related to the main activity provided that their offset is established at the same price (at the purchase price at which it has been aquired from an independent third party) for the related party has been clarified. The draft rule makes it clear that the conditions according to which the given transaction is not related to the main acitivty shall be fulfilled by the sellers and service providers.
Making records individually by contract: it seems to be a significant simplification that the usual market price records shall be prepared not by transaction but by contract, whereas previously a separate transfer price documentation had to be prepared for these transactions if aggregation is not possible.
Entry into force: according to the draft rule, the above changes would apply to the transfer price documentation the deadline of which to be prepared would fall on a date after January 1, 2013. However, the above changes in the law cannot be applied in practice until the announcement of the proposal.
Draft rule: http://www.kormany.hu/