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Tunisia Publishes Ministerial Orders on Transfer Pricing Documentation Content Requirements and CbC Reports

Tunisia has published a Ministerial Order setting out the country's new transfer pricing documentation requirements, which apply from 2020, as well as an Order on Country-by-Country (CbC) reporting. The Orders, which are dated 16 October 2019, were published in Tunisia's Official Gazette No. 086 of 25 October 2019.

The required documentation includes both a Master file and a Local file that follows OECD guidelines. The specific content requirements as set out in the Order are as follows:

Master File

The Master File should include information on the following:

  • Organizational structure, including a chart illustrating an MNE group’s legal and ownership structure and geographical location of operating entities;
  • The MNE Group's areas of activity, including:
    • Important sources (drivers) of profit;
    • A description of the supply chain for five core products or services provided by the group, as well as other products or services that provide more than 5% of the group's turnover;
    • A list and description of the important service arrangements between members of the group, other than research and development (R&D) services, including a description of the capabilities of the main locations providing important services and transfer pricing policies adopted for allocating services costs and determining prices to be paid for intra-group services;
    • A description of the main geographic markets in which the group’s products and services are marketed;
    • A functional analysis of the principal contributions by individual entities within the group to value creation, i.e., the core functions performed, significant risks assumed, and important assets used; and
    • A description of important business reorganizations, as well as acquisitions and divestitures that occurred during the financial year;
  • Intangible assets, including:
    • A general description of the group's strategy for the development, ownership, and exploitation of intangibles, including in particular the location of principal R&D facilities and the location of R&D management;
    • A list of intangibles or classes (groups) of intangibles of the group that are important for transfer pricing purposes, as well as the entities that own them;
    • A list of important agreements between associated enterprises related to intangible assets, including cost contribution agreements, principal research service agreements, and license agreement; and
    • A general description of significant transfers of interests in intangibles assets between associated enterprises, including mention of the countries and related remuneration;
  • Financing activities between group members, including:
    • A general description of the method of group financing, including a description of the significant financing agreements entered into with independent lenders;
    • Information on all group members that provide a central financing function for the group, including the countries in which they are organized and their place of effective management; and
    • A general description of the group's transfer pricing policies relating to financing agreements between associated enterprises; and
  • Financial and tax position, including:
    • The annual consolidated financial statements of the group for the year concerned if prepared for financial disclosure purposes or as required by law or related to internal management; and
    • A list and description of advance pricing agreements concluded by the group and other tax rulings concerning the distribution of profits between countries.

Local File

The Local File should include information on the following:

  • The Local entity, including:
    • A description of the management structure and organizational structure of the local entity;
    • A detailed description of the activities carried out and the strategy of the local entity, including special mention of whether the entity has been involved in a reorganization or the transfer of intangible assets during the current or previous financial year, and an explanation of the aspects of such operations involving the entity; and
    • Key competitors;
  • Controlled transactions, including:
    • A description of material controlled transactions with associated enterprises and the conditions in which the transactions took place, including in particular transactions relating to manufacturing services, purchase of goods, provision of services, loans, financial guarantees, and licensing of intangibles;
    • The amount of intra-group payments and receipts for each category of controlled transactions involving the local entity, broken down by tax jurisdiction of the foreign payor or recipient;
    • Information on the associated enterprises involved in each category of controlled transactions and the relationships;
    • Copies of all important inter-company agreements concluded by the local entity;
    • A detailed comparability and functional analysis of the local entity and relevant associated enterprises for each category of controlled transactions, including an analysis of changes, if any, compared to previous financial years;
    • Indication of the most appropriate transfer pricing method for each category of transactions and the rationale for their selection;
    • A statement on which associated enterprise has been selected as the tested party, where appropriate, including an explanation for the choice;
    • A summary of the important assumptions made in applying the transfer pricing methodology;
    • Clarification, where appropriate, of the rationale for adopting a multi-year analysis methodology;
    • A list and description of comparable uncontrolled transactions and financial indicators for independent enterprises relied on within the transfer pricing analysis, including a description of the method used to search for the comparable data and the sources of such data;
    • A description of adjustment made, if any, indicating whether the adjustments were made to the results of the tested party, the comparable uncontrolled transactions, or both;
    • A description of the rationale for concluding that the transfer pricing for the transactions is considered to be in full conformity with the arm's length principle;
    • A summary of financial assumptions used to apply the transfer pricing methodology; and
    • Copies of unilateral, bilateral, or multilateral APAs and other tax rulings to which Tunisia is not a party and which are related to the relevant controlled transactions; and
  • Financial statements, including:
    • The annual financial statements of the local entity for the financial year concerned;
    • Information necessary to understand the financial data used in applying the transfer pricing method links to the annual financial statements; and
    • Summary tables of the comparable financial data used in the analysis and the sources of such data.

CbC Report

The Ministerial Order on Tunisia's Country-by-Country (CbC) reporting requirements includes the relevant definitions and basic instructions in line with OECD guidelines, as well as a general form for submitting the CbC report. The form follows the standard three CbC report tables and may be prepared in French or English.

Tunisia's CbC reporting requirements apply for financial years beginning on or after 1 January 2020 for MNE groups with consolidated annual revenue equal to or exceeding TND 1,636,000,000 in the previous year. When required, CbC reports are due within 12 months after the end of the reporting financial year.

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