The Minister of Finance, pursuant to Article 14a of the Law on Profit Tax, has issued the ordinance on the procedure for concluding the previous transfer pricing agreement. The ordinance was published in the Official Gazette No. 42/17 on 3 May 2017 and entered into force on April 29, 2017.
The Agreement is concluded in order to determine the tax treatment of one or more transactions between related parties before the transaction began, so that determining an appropriate set of criteria such as methods, parallels, proper alignment or key and critical assumptions regarding future events such transactions during a specific time period.
The criteria that may be agreed upon when concluding the agreement are the methods of transfer pricing, comparable companies transactions and profit indicators, alignment of transfer prices or assumptions regarding the future events of these transactions.
Tax authority may terminate the agreement, unilaterally or in mutual agreement if there is factually incorrect statement of the facts, error or omission in the filed declaration of intention to conclude the agreement and submitted annual reports and other accompanying documentation or submitted any information in this regard, which is not attributable to negligence or intentional failure to comply with obligations of the taxpayer.
The agreement is concluded for a period of up to five years, depending on the characteristics and type of transactions that are subject to the Agreement. The costs of the procedure of concluding unilateral agreement are ranges from HRK 15,000 to HRK 50,000 depending on the taxpayer’s turnover as stated in the most recent tax return.