We have analysed the CIT treatment of doing business with companies on the blacklist of uncooperative tax havens earlier. This article explores new changes to the list and how they affect transfer pricing (TP).
It’s been quite a while since Latvia adopted new transfer pricing (TP) rules, yet the State Revenue Service (SRS) did not issue guidelines on charging fines for breaches of requirements for duly submitting or preparing TP files until late September 2023 (approved by SRS order No. 201 of 11 September 2023). This article explores the new guidelines.
On 12 September 2023 the European Commission published its proposal for a transfer pricing (TP) directive to align TP requirements across the EU. While most of the member states, including Latvia, are to some extent applying recommendations made by the OECD TP guidelines, the European Commission is proposing the directive and calling on the member states to adopt the same TP standards in order to secure a level playing field. If the new rules are approved in their current version, they will be passed into the member states’ national law by 31 December 2025 and applicable from 1 January 2026.
We have written before about the directive on the multinational enterprise (MNE) group’s public country-by-country report (CbCR) and how this is being passed into the national laws of EU member states. In this article we will look at Latvia’s progress in passing the directive and find out what aspects Latvian taxpayers need to consider and what issues and challenges they may face.
A directive requiring multinational enterprise (MNE) groups to prepare public country-by-country reports (“CbCR”) was published in the EU Official Journal in December 2021. The member states had until 22 June 2023 to pass the directive into their national laws. In this series of articles we will look at the progress made by Latvia and other member states and will explore the directive’s history, goals, potential benefits and taxpayer challenges.
Transfer pricing (TP) experts of the State Revenue Service (SRS) have agreed to meet up with Latvian TP consultants on several occasions in late September to debate some pressing TP concerns and to set out the SRS opinion on how to solve current and future TP problems. In this article we will outline SRS comments on TP validation and look at some of the topics and questions put up for debate with the SRS.
Latvia’s current transfer pricing (TP) rules came into force back in 2018, bringing changes to the structure of TP documentation (TPD) and to materiality thresholds that require taxpayers to prepare a specified form of TPD. Many taxpayers are still confused about the right way to measure the amount of a controlled financial transaction, which results in an obligation to prepare, or to prepare and file, a specified form of TPD if the taxpayer has no other types of controlled transactions. This article explores the procedure for determining the controlled transaction amount (CTA) for various types of financial transactions according to Latvian TP rules and international law, as well as looking at the practice in Lithuania and Estonia, the most similar economies to Latvia.
In an earlier MindLink article we evaluated transfer pricing (TP) challenges facing distributors in multinational groups and the scope for using Berry ratios in assessing whether the value of a controlled transaction is arm’s length. In this article we look at a practical example of how Berry ratios can be used, as well as discussing requirements and conditions you need to consider when it comes to segmenting your financial data.
In our previous articles we discussed the transfer pricing (TP) aspects of guarantees and looked at methods that can be used to arrive at an arm’s length price. We will close out this series of articles with key insights from international case law and compare how the tax authorities treat the validation of guarantee transactions in a TP file.
Our experience suggests that intragroup services represent the most common centralised activities in a multinational enterprise (MNE) group and they are also transactions being scrutinised by the tax authority.
Our previous article looked at the need for a taxpayer’s transfer pricing (TP) file to support his guarantee transactions, and explored a general approach to assessing whether a guarantee transaction is arm’s length. In this article we are discussing aspects to consider when the substance of guarantee transactions is analysed, and we are taking a closer look at methods used in analysing such transactions.
On 5 July 2022 the Regional Court passed ruling No. A420275316 on whether interest rates charged on loans between related parties are arm’s length. The ruling emphasises the significance of the economic substance approach and strengthens the understanding of whether the Bank of Latvia (BOL) statistics are suitable for analysing transfer prices (interest rates).
When it comes to performing a transfer pricing (TP) analysis of financial transactions, attention is usually paid to loans and cash pool transactions. Yet there are some other financial transactions between related parties that often fail to receive a proper assessment in the TP documentation: financial guarantees. The current market environment has more creditors such as banks asking for a guarantee before they lend to customers. In this series of articles we explore TP aspects of guarantees, compare different approaches to determining an arm’s length price of a guarantee, and analyse relevant case law.
