Worldwide transfer pricing reference guide 2014

Estonia (continued)
Transfer pricing penalties (continued)
Categories of documentation required:
• Company analysis
• Industry analysis
• Functional analysis
• Economic analysis
Documentation deadlines
There is no deadline for preparing transfer pricing documentation. However, taxpayers are obliged to submit the documentation within
60 days of the tax authority’s request.
Statute of limitations on transfer pricing assessments
The statute of limitations for making an assessment of tax is three years. In the event of intentional failure to pay or withhold an amount
of tax, the limitation period for making an assessment of tax is six years. The statute of limitations begins to toll as of the due date of
submission of the tax return that was either not submitted or contained information leading to an incorrect determination of tax due.
Return disclosures/related party disclosures
An annual report, including a description of transactions with related parties, must be filed within six months of the end of the relevant
financial year. If the taxpayer has the obligation to prepare the transfer pricing documentation, such documentation must be completed
every financial year.
The documentation does not have to be filed with the tax return or annual report.
Transfer pricing–specific returns
Currently, the Estonian tax laws do not require a separate return for related party transactions.
Audit risk/transfer pricing scrutiny
In general, the likelihood of an annual tax audit is characterized as medium. The likelihood that transfer pricing will be reviewed as part of
a general tax audit is high. Further, the likelihood that the transfer pricing methodology will be challenged is characterized as medium.
APA opportunity
Currently, the Estonian tax laws do not provide any opportunity to conclude APAs.
Expected reaction to OECD Report on BEPS
The Estonian tax authorities have started to approach permanent establishments with respect to transfer pricing with a higher degree of
diligence. But as BEPS is a rather new subject; the tax authorities have not yet formed their official opinion on the matter.
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