If the transfer price is not the market value, the basis for determining
income tax should be the market value – the difference between the transfer
price and the market value is subject of taxation on the basis of ITA §§ 14, 50
or 53, if it is not a fringe benefit (§ 48).
In Estonia, the tax authorities have issued the transfer pricing guidelines
which defines a common goal in transactions between associated persons -
maximizing profits. To achieve that goal the profits will be moved through
various tax jurisdiction or forms of business, which ultimately ensures a lower
tax burden. As a rule, profits will be moved through the agreements that are
not economically justified, and that non-associated persons would not transact
with each other.
Tax liability optimization with transaction between associated persons puts
entrepreneurs in an unequal position and fails state tax revenue.
Latest articles
26
Mar
1
Jul
3
Jun
We will send you articles keeping you up to date with the latest trends and developments in accounting, taxation or legal fields.
