On 19 October 2020, the Ministry of Finance in Lithuania published new transfer pricing documentation requirements. The new requirements for transfer pricing documentation correspond to the recommendations of OECD base erosion and profit shifting (BEPS) Actions 8-10. The requirements added a simplified approach to low value-adding intra-group services by allowing taxpayers to apply a mark-up of 5% of the allocated costs without the need to justify it through a benchmarking study. This provision will apply for the calculation of corporate income tax for 2020 and subsequent tax periods.
The requirements also added simplified tax administration processes related to controlled transactions with regard to hard-to-value intangible assets and provisions that allow the tax administrator to retrospectively adjust the price of the controlled transaction based on information received after the transaction. This will apply for controlled transactions carried out as from 23 October 2020.
The new requirements adopt a simplification process for documenting controlled transactions by eliminating the requirement to prepare transfer pricing documentation for transactions carried out between Lithuanian taxpayers applicable from 23 October 2020.
