On 31 May 2019, Czech Ministry of Finance published Guidance GFR D-34 on the application of international standards to the taxation of related party transactions. The guidance replaces existing Guidance D-332. Together with this new guidance, the Czech translation of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2017 Edition) has been also published in the Financial Bulletin of the Ministry of Finance no. 5/2019.
The new guidelines shortly cover the TPD, noting that although a Czech tax law does not contain a specific provision for the submission of documents, the tax authority may require a taxable person to prove the facts necessary for the correct determination of the tax, including proof that transactions are at arm’s length.
The guideline provides more detailed recommendations for bench-marking, including the recommended update period. The new analysis should be prepared at least every three years with an annual review of the independence and profitability of the selected independent companies. In line with common practice, the guideline for determining a market price range recommends using data over several years, usually over a period of 3 to 5 years.
