North Macedonia became the 117th member to join the Inclusive Framework (“IF”) for the global implementation of the Base Erosion and Profit Shifting (BEPS) Project in August 2018. Under this framework, North Macedonia was committed to implement Action 5, Action 6, Action 13, and Action 14.
Even though the country adopted new TP rules and an analytical TP Rulebook aligned with documentation requirements as those described in Action 13 Transfer Pricing Documentation and CBCR, CBCR is not yet an obligation in the Republic of North Macedonia.
Who is affected?
Taxpayers with an annual Turnover exceeding revenues 300 Million MKD (almost 4.9 M Euro) are obliged to prepare and submit either a simplified TP report or full documentation depending on the volume of their intra-group transactions. Taxpayers exceeding the above threshold and at the same time are engaged in intra-group transactions with non-resident related parties in annual amount of up to MKD 10 million should fill out and submit only a simplified report.
The definition of related parties is very broad and includes parties that directly or indirectly participate in the management, supervision, or share capital of the other party with a percentage of at least 20%. Notable is the fact that it is mentioned clearly, in case a loan granted or guaranteed by one person (X) constitutes more than 20% of the net book value of the total assets of the other person (Z), then those 2 persons (X) & (Z) are considered to be related-parties.
Pursuant to the relevant provisions, if the agreed prices or conditions differ from those that would be agreed between unrelated parties (i.e. at arms length), then all the profit which would be achieved if these were unrelated party relations is included in the tax base of the related persons.
Transfer Pricing Methods & Data used
Documentation of related-party transactions should be covered by one of the following methods:
- The Comparable Uncontrolled Price (CUP) method
- The Resale Price Method (RPM)
- Cost Plus Method (CPM)
- Transactional Net Margin Method (TNMM)
- Profit Split Method (PSM)
Transfer Pricing Audit
There is currently no special audit procedure specific to transfer pricing that differs from the regular tax audit procedure.
The law requires that the transfer pricing documentation is submitted to the tax authorities by 30th September of the following year.
For further inquires contact our Transfer Pricing team or our local Skopje team in order to receive more detailed information on how Eurofast can assist you with your transfer pricing compliance in North Macedonia.