The Czech Ministry of Finance has published Guidance GFR D-34 on the application of international standards in the taxation of transactions between associated enterprises - transfer pricing. The Guidance, which replaces Guidance D-332 of 2009, has been issued based on the updated 2017 OECD Transfer Pricing Guidelines and includes updated guidance on the arm's length principle, the comparative analysis, and transfer pricing methods.
The new Guidance also briefly covers transfer pricing documentation, noting that although a Czech tax law does not include a specific provision for the submission of documentation, that tax authority may request a taxpayer to prove the facts necessary for the correct determination of tax, including proof that transactions are at arm's length. For this purpose, Guidance GFR D-35 will be published to replace Guidance D-334 of 2009 on transfer pricing documentation. Guidance GFR D-35 will include the latest three-tiered documentation requirements as provided in the 2017 OECD guidelines, which includes the Local file, Master file, and Country-by-Country (CbC) report. Guidance GFR D-35 will be made available on the same website linked above.
Note - The Czech Republic already applies CbC reporting requirements, and Guidance D-334 already follows a Local/Master file type approach, although this will be expanded/updated in the new guidance.
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