Representatives of the professional community have long insisted on the specification of these requirements, as well as the development of a detailed matrix that would describe the list of necessary data point by point. Responding to these calls, the Ministry of Finance submitted for public discussion the next amendments to the Regulation on Transfer Prices. Their development is dictated by the need to bring the regulatory framework in line with the requirements of the legislation on transfer prices and reporting on transactions with affiliates.
In particular, it is proposed to supplement the Regulations with three new concepts. First, to introduce the concept of “Group of enterprises”, which is defined as “a group of affiliated enterprises registered in the Republic of Moldova and/or in two or more states”.
The concept of “Master File” is also introduced. This is “a document at the level of the group, which gives an overview of its business model and transfer pricing policy”. As well as the “Local Dossier” – “a document at the level of the local enterprise that details its transactions with affiliates”.
According to the draft, the Main Dossier contains data on the organizational (legal and proprietary) structure of the group and the geographical location of its enterprises. As well as a general description of the group’s activities: factors that influenced profitability; the price formation chain; a list and description of significant intra-group services, capacities of the main production sites, markets for products/services, etc.
For intangible assets, a description of the overall development, ownership and operation strategy is required; a list and description of agreements entered into between affiliates, etc. In addition, the Master File describes intra-group financial transactions; the financial and tax position of the group: consolidated financial statements; a description of the provisional pricing agreement and other tax rulings concerning the distribution of income between countries/states.
The Master File will be submitted upon request of the State Tax Service, starting from the tax period 2025, in accordance with the requirements of the Tax Code.
The local dossier should contain information on the organizational structure of the taxpayer; a list of affiliated entities, including branches/permanent representative offices; indication of direct and indirect affiliate relationships of the taxpayer; a general description of its activities, main markets, pricing policy, competitors, etc.
Other changes concern the updating of annexes to the Transfer Price Information; verification of compliance with the principle of market price in the context of the introduction of a preliminary price agreement, etc.
The first few years of its practical application will show how comprehensive the developed document will be. This is probably why the application of sanctions against violators of the transfer pricing system has been postponed for two years. In the meantime, experts note the vagueness of the definition of the concept of “group of enterprises”. It is unclear whether a foreign company must be present in it.
Proposals to improve the draft are accepted until November 10.
