The Bulgarian revenue administration has made available a “Transfer Pricing Manual” on its web-site (www.nap.bg), which affects enterprises carrying out related party transactions.
Useful piece of guidance.
Though addressed to tax officials, the Manual represents a useful piece of guidance for taxpayers too, as it elaborates on a wide range of transfer pricing topics, such as documentation requirements and intra-group services.
The Manual provides more predictability to taxpayers in a time when the revenue authorities are becoming even more active in the transfer pricing area.
Based on OECD Transfer Pricing Guidelines.
Most of the Manual’s contents are based on the 1995 OECD Transfer Pricing Guidelines. Furthermore, it also includes certain important remarks derived from local practices. For example, as regards the pricing of intra-group services on a cost-plus basis, the Manual indicates that a mark-up between 3% and 8% has proved customary in recent years, suggesting that a mark-up within this range does not necessitate an in-depth transfer pricing analysis.
Another country-specific feature of the Manual relates to documentation: It sets thresholds in the value of transactions (per type of transaction) below which they do not need to be supported by a detailed transfer pricing documentation. For instance, the threshold for transactions relating to sale of goods or provision of services is BGN 200,000 (approximately EUR 102,000). For such transactions the Manual envisages the preparation of “simplified” transfer pricing documentation, and describes its elements.
Next steps. Companies belonging to multinational groups are encouraged to inform their headquarters about the Manual, and take appropriate actions in order to bring their transfer pricing policies in line with it.
Liked this post? Follow this blog to get more.