The format of transfer pricing documentation is not explicitly laid down by the Corporate Profit Tax legislation in any of the three jurisdictions. However, the legislation does stipulate which transfer pricing methods may be used to establish the market value of the goods / services.
Under a rule specific to RS and BD, in order for the transactions to be tax recognised the taxpayer must keep documentation:
- Establishing the legal status and business activities of the taxpayer;
- Identifying the related party transactions (relevant data must be kept for five years);
- Listing the activities and providing information about business partners, insofar as relevant to the transactions;
- Identifying the chosen transfer pricing method and explaining reasons for applying it.
a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
All transactions with related persons have to be documented.
b) What is the definition of “associated enterprises” for the purposes of this requirement?
RS and BD:
A natural or legal person is considered to be associated with an entity if it owns, directly or indirectly, 10% or more of the shares in the entity.
The definition refers to:
- An individual or legal entity which is capable of exercising control over or exerting significant influence on business decisions,
- A legal person in which the same legal entities participate in control, supervision or capital or influence business decisions.
It is provided that control over a taxpayer is achieved by holding a share of 50% or more in the taxpayer (as a highest single percentage of shares). Additionally, it is considered that having 50% or more of voting rights (as the highest percentage of voting rights) in the taxpayer enables an entity to exert significant influence over the taxpayer’s business decisions. Significant influence may also be achieved through an extraordinary volume of mutual transactions, technological dependency etc.
c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
N / A – BiH is not an EU Member State.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
The tax authorities can require the taxpayer to submit all the business books, records, business documentation and any other document held by the taxpayer (or any other person holding required documentation).
Additionally, international cooperation agreements enable the tax authorities to request the relevant information from tax authorities in other jurisdictions.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
The tax authorities generally accept regional benchmark studies in all three jurisdictions.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
For all three jurisdictions, the legislation regulating tax administration and tax procedures prescribes that one of the official languages in RS, BD, or FBiH has to be used (Serbian, Bosnian or Croatian).