Ilieva, Voutcheva & Co. `s team participated in a workshop on the topic of “Transfer pricing. New rules for transfer pricing documentation for transactions with related parties.” During the workshop, we updated our expertise with the last insights of regulator’s, being National Revenue Agency (“NRA”), representatives regarding the main practical problems before the business, following the new rules, and how to effectively deal with them. The process of preparation of the transfer pricing documentation of our business clients has begun. We will be happy to assist you as well. It`s your turn.
You should be ready with your local file within the term for submission of the annual tax return, i.e. until the 31st of March of the year, following the financial year subject to reporting, and with your master file – up to 12 months after the term for drawing up the local file. Obliged parties as per the Tax and Social Insurance Procedure Code (“TSIPC”) are:
- Companies, who are obliged to pay corporate tax and sole traders, who form taxable income under the rules of the Corporate Income Tax Act (“CITA”), and
- Who have transactions with related parties (“Controlled transactions”) during the tax year concerned. You don’t fall within the scope of the new rules for transfer pricing documentation if:
- as of 31st of December of the previous year you did not exceed the following indicators:
– book value of the assets – BGN 38,000,000, and
– net sales revenue – BGN 76,000,000, or
– average number of personnel for the reporting period – 250 people; or
– You are conducting controlled transactions only in the country. According to CITA, the companies subject to alternative tax are also exempted from preparing a local file.
The local file should be prepared only for transactions that exceed the following annual monetary thresholds:
- BGN 400 thousand from sale of goods,
- BGN 200 thousand for all other transactions, except loans;
- BGN 1 million for loan granted or BGN 50 thousand for interest accrued and other revenues or costs, related to the loan.
Thresholds should be calculated separately for each transaction. This rule is not applicable when there are two or more transactions with one or more related parties, concluded under comparable conditions. Each obliged entity in a multinational group, should also have master file for the group. Do not hesitate to contact our team if you have any questions regarding the transfer pricing documentation or in case you need assistance with its preparation.