Transfer pricing
20.05.2009 - PricewaterhouseCoopers' Transfer Pricing network was named as 'European transfer pricing firm of the year’ and winners of the award for ‘Best use of the internet’at the annual International Tax Review European Tax Awards 2009 event. We would like to thank our clients, cooperation partners and colleagues, and we appreciate how highly regarded we are across the continent for our skills and expertise in this specialist area.
International transfer pricing 2008 (pdf) - This publication demonstrates that transfer pricing is a matter that is of fundamental importance to multinationals. It is vital for every company to have a coherent and defensible transfer pricing policy, which is responsive to the very real climate of change in which companies are operating.
The primary objective of transfer pricing (‘TP’) rules is to ensure that the price applied to a transaction between two related parties (two companies or a company and an individual) matches the arm’s length price, i.e. a fair market price that would be applied to a similar transaction between two unrelated parties in similar circumstances. The TP rules enable the revenue authorities to ensure that:
- group companies resident in different countries do not transfer their income to a jurisdiction with a more favourable tax regime and double taxation is avoided;If the price applied to goods or services purchased from a related party exceeds the market price or if the price applied to goods or services supplied to a related party is below market, then the difference between the related party price and its market price must be added back to the company’s taxable income.
- several group companies (or persons) in one country do not transfer their profits to a company that is eligible for tax relief or has accrued tax losses.
In recent years, the Latvian revenue authorities have increased their competence and resources available to identify any TP discrepancies during a tax audit. This prompts taxpayers to think about TP policy and documentation to prove that their transfer prices are calculated by statutory methods and conform to market prices.
PricewaterhouseCoopers has been advising its clients on TP matters for several years, including the development of corporate TP policy and documentation according to Latvian and international statutory requirements, with the result that we have accumulated both knowledge and practical experience in these matters.
For more information please visit our Transfer Pricing section.
If you have any questions, please do not hesitate to telephone our TP specialists Vita Sakne or Ilze Berga at +371 67094400.
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