Friday May 20, 2022

How does your company teach me on these lines?

Every entrepreneur tries to dream as much of his tax liability as possible. With regard to the relatively high tax profit of the first persons in the country, some entrepreneurs follow the path of establishing subsidiaries in tax areas.

When the word daov rj is said, most people probably imagine an island in the Caribbean. As for the term tax, take into account that there is no precise and unambiguous definition of which data system belongs to this group and which does not. In general, the tax pay is considered to be countries with zero or low income tax rates. In an effort to minimize their tax obligations, companies do not necessarily have to set up their subsidiaries on coconut islands, but they can simply take a dramatic way to set up a subsidiary in another EU country with a substantial first-rate tax rate.

In any case, the law does not prohibit the first person from establishing a company in any other state and trading with him (including goods and services). Problematic from the point of view of possible tax control is, however, determined in transfer prices between these subjects. The first unusually low selling prices between capital-related companies are often a means of accumulating profits in one company for a certain type. It is logical that the tax legislation of individual states is such a shift in Brno. Key to controls by financial authorities in the implementation of so-called transfer prices between these entities. So where to look for support in the law and how the price between the various subjects is considered defensible and how not?

Transfer prices should be comparable to normal market values

The practice is such that the financial authorities check whether the transfer prices between the capital related persons observe the principles of market distance. In other words, these must be the prices at which the controlled company sells to other entities in the market, especially those with whom it has no capital ties. If the control by the financial office finds that this rule is not fulfilled (related to the sale of the price), then the financial office will make this difference in sales prices and, in addition, will invite the company to pay money from this price.

Here, someone may argue that the thorn economy is based on free pricing, and so prices are set by the company, regardless of whether they are suitable for it or not. In addition, if an entrepreneur believes that some orders are realized and there will be a rational reason for such a step (strike the order, eliminate competition, the price includes the choice of delivery conditions, quantity discount, low risk, etc.). The first such arguments will be tried by the entrepreneur, who will derive the right of the fact that his related person sells for me suitable prices (lower) than other customers. How do counter-arguments make me financial?

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Our legislation does not offer models and recommended prices, a guide in the EU and OECD

Due to the uniqueness of each product and service, the tax administrator does not have in hand a list of recommended prices for all products or any support in terms of how high the specific price can be. The finals for this type of control can be based on the recommended OECD guidelines (R belong to the group of OECD countries), which stipulates the general principles of these controls.

The most frequently asked question by the tax administrator will most likely lead to a comparison of the sales prices of a specific product of a related party and an independent customer. If the taxpayer and the tax administrator will be able to find such business cases (it is necessary that it is not only the same product and service, but also the same quantity, delivery conditions, etc.), then it can be won or put on paint. This, as well as similar prices of the related party and the current supplier, is usually sufficient to justify the fact that the taxpayer is not intended to transfer the profit to the benefit of the related party and does not reduce its own tax liability. On the contrary, lower prices in favor of a person will lead to a probable domain tax on first persons and a penny.

If there is no similar transaction, I can start comparing the profit spread

Some companies can go the way of only one person and service being offered by a variety of people and not offering it to anyone else for various reasons. Regardless of the reasons for these sales tactics, with this step the administrator will be able to apply the basic method described in the previous paragraph (comparison of prices by related persons and independent customers).

In such a case, the financial means can be a way that the comparison of the achieved profit spread from transactions to a different entity and to other transactions (this is a comparison of order value with different types of products and services. then I have the financial opportunity to argue such a difference.

However, the reality is that tax control with an emphasis on retail prices can be expected especially by taxpayers in the loss of those whose profits drop dramatically. The temporary loss may not be in the event of a business handicap, but ending the year in the red hearing will lead to financial control and it will turn to transfer prices. It is not only the income tax regime, but also the income tax regime (excessive deduction at low sales prices).

With increasing globalization and the creation of more complex holding structures (in different tax regimes), the issue of fixed prices will continue to be the subject of controls. Therefore, it would not be at all a code to pay attention to this issue in companies and to carry out several random and in-depth inspections and preventive prevention of tax domains.

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Have you encountered the control of the financial series for transfer prices between related parties? How did you defend such an issue? Do you think that data tax does not belong to the sun of business and similar possibilities of tax optimization? Dark on your nzory.

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