The Ministry of National Economy of Hungary had announced a draft bill in March 2013. The draft bill proposed significant changes to the reporting requirements regarding the determination of arm’s length prices.
According to the proposed changes the transfer pricing reporting requirements may not apply to transactions for which an advance pricing arrangement (APA) request has been provided and accepted by the tax authority. The exemption would apply to the tax year of the submission of the APA application until the last day of the tax year when the APA resolution is in effect.
According to the draft bill the taxpayer will not have to do a benchmark study if the margin applied in the transaction is qualified as the low value adding service within the range of 3 to 10%.
Also in case of low value adding intra-group services while determining whether the transaction value is below HUF 50 million, or HUF 150 million if the related party contract is in a currency other than HUF, the effective MNB exchange rate will have to be used.
In determining the transaction value whether it falls below the HUF 50 million limit only those transactions performed in the concerning year will have to take into account and this will confirm the reporting requirements.
