North Macedonia became the 117th member to join the Inclusive
Framework ("IF") for the global implementation of the
Base Erosion and Profit Shifting (BEPS) Project in August 2018.
Under this framework, North Macedonia was committed to implement
Action 5, Action 6, Action 13, and Action 14.
Even though the country adopted new TP rules and an analytical TP Rulebook aligned with documentation requirements as those described in Action 13 Transfer Pricing Documentation and CBCR, CBCR is not yet an obligation in the Republic of North Macedonia.
Who is affected?
Taxpayers with an annual Turnover
exceeding revenues 300 Million MKD (almost 4.9 M Euro) are obliged
to prepare and submit either a simplified TP report or full
documentation depending on the volume of their intra-group
transactions. Taxpayers exceeding the above threshold and at the
same time are engaged in intra-group
transactions with non-resident related parties in
annual amount of up to MKD 10 million should fill out and submit
only a simplified report.
The definition of related parties is very broad and includes
parties that directly or indirectly participate in the management,
supervision, or share capital of the other party with a percentage
of at least 20%. Notable is the fact that it is mentioned clearly,
in case a loan granted or guaranteed by one person (X)
constitutes more than 20% of the net book value of the total assets
of the other person (Z), then those 2 persons (X) & (Z) are
considered to be related-parties.
Pursuant to the relevant provisions, if the agreed prices or conditions differ from those that would be agreed between unrelated parties (i.e. at arms length), then all the profit which would be achieved if these were unrelated party relations is included in the tax base of the related persons.
Transfer Pricing Methods & Data used
Documentation of related-party transactions should be covered by one of the following methods:
- The Comparable Uncontrolled Price (CUP) method
- The Resale Price Method (RPM)
- Cost Plus Method (CPM)
- Transactional Net Margin Method (TNMM)
- Profit Split Method (PSM)
Transfer Pricing Audit
There is currently no special audit procedure specific to transfer pricing that differs from the regular tax audit procedure.
The law requires that the transfer pricing documentation is submitted to the tax authorities by 30th September of the following year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.