Does a taxpayer have the right to independently adjust the price of a controlled transaction?
According to subpara. 39.5.4.1 of the TCU, if a taxpayer applies conditions in the course of controlled transactions that do not comply with the arm's length principle and/or do not correspond to a reasonable economic reason (business purpose), the taxpayer has the right to independently adjust the price of the controlled transaction and the amount of tax liabilities, provided that this does not lead to a reduction in the amount of tax payable to the budget by calculating its tax liabilities in accordance with
♦ the maximum value of the price (profitability) range, if the price/profitability indicator of the controlled transaction was higher than the maximum value of the price (profitability) range
♦ and/or the minimum value of the price (profitability) range, if the price/profitability indicator of the controlled transaction was below the minimum value of the price (profitability) range.
An independent adjustment is a taxpayer's adjustment of the price of a controlled transaction, based on the results of which the calculated price complies with the arm's length principle, even if such price differs from the actual price set during the controlled transaction (sub-clause 39.5.4.2 of the Tax Code).
The amount of the tax liability calculated based on the results of the self-adjustment is payable within the terms specified in Article 57 of the TCU.
The taxpayer is not entitled to make independent adjustments to the price of controlled transactions and/or the amount of tax liabilities during the audit of the taxpayer on compliance with the arm's length principle of such controlled transactions (sub-clause 39.5.4.3 of the TCU).
Buhgalter 911 notes that the content of the author's materials may not coincide with the policy and opinion of the editorial team. The authors of the published materials include not only representatives of the editorial team.
The information presented in a particular publication reflects the position of the author. The editorial team does not interfere with the author's materials, does not edit the texts, and is therefore not responsible for their content.