מחירי העברה: בלארוס- יוני 2012

BELARUS- TRANSFER PRICING 

At the end of 2011 Law No. 330-З of the Republic of Belarus made more than 200 amendments to the Tax Code of the Republic of Belarus, including amendments concerning transfer pricing control. It is worth noting that before these norms were adopted, transfer pricing control had not been developed in the national legal thought, but there was background for its development in law – Article 20 of the Tax Code of the Republic of Belarus provides a definition of related parties.

Individuals and/or entities are recognised as related parties when their relationships directly influence conditions or economic results of their activity or the activity of entities represented by them. The list of related parties includes a number of categories.

Adoption of transfer pricing control legislation in the Republic of Belarus is an integral part of the law harmonisation process within the Customs Union, as transfer pricing rules have already been adopted by the Russian Federation and the Republic of Kazakhstan.

Transfer pricing control is a new form of tax control aimed at preventing tax evasion by means of price manipulation. Thus since 1 January 2012 the tax authorities are entitled to compare the taxable profit in respect of a transaction based on the prices used by the taxpayer with the taxable profit determined considering market prices. Where these prices differ, resulting in tax evasion, the tax authorities are entitled to adjust the taxable profit and recalculate the tax payable.

Current profits tax payments in the tax period following an audited period are not recalculated. Taxpayers can independently adjust their taxable profit prior to the commencement of an inspection by the tax authorities.

The Article specifies the types of transactions under the control of the tax authorities: 

• Sale of real estate, if the transaction price is more than 20% below the market price on the date of sale;
• Foreign trade, if the price of the transaction (transactions with one party), within one calendar year, exceeds BYR 20 billion on the date of acquisition or sale of goods, and the price of the transaction differs by more than 20% from the market price for the goods on the date of acquisition or sale;
• Foreign trade with a related party, if the price of the transaction (transactions with one party), within one calendar year, exceeds BYR 20 billion on the date of acquisition or sale of goods, and the price of the transaction differs by more than 20% from the market price for the goods on the date of acquisition or sale.

For these purposes foreign trade includes sales of goods to foreign legal entities and/or individuals (including commission and agency agreements and similar civil law agreements), and acquisitions of goods from foreign legal entities and/or individuals (including commission and agency agreements and similar civil law agreements).

The tax base is determined on the basis of market prices for goods by using one of the following methods:

• Transaction Value of Identical (Similar) Goods Method. This method involves comparing the transaction value with the prices for identical goods (where this is not available, similar goods) within the range of market prices. The range of market prices is two or more market prices determined on the basis of available information on prices in the reviewed period or on the nearest date of the analysed transaction settlement. If the price of the analysed transaction is lower (higher) than the minimum (maximum) value of the market price range, the minimum (maximum) price from the range is used for the tax calculation;
• Resale Price Method. The market price is determined as spread between the resale price and resale costs (regardless of the acquisition price) and market promotion of the goods as well as ordinary income of the purchaser from the goods’ subsequent resale;
• Cost Plus Method. The market price for the goods sold by the taxpayer is determined as a sum of incurred costs and ordinary income for this activity (profitability). Ordinary costs for this activity, including production (acquisition) costs and/or sale costs, transportation costs, insurance expenses, storage costs and others are taken into consideration.

Your BDO contact in Belarus:
ALEXANDER ZAFORSKY
azagorsky@bdo-belarus.by