Worldwide transfer pricing reference guide 2014

Former Yugoslav Republic of Macedonia (contd)
Documentation requirements (continued)
transactions is obligated to present, upon the tax authority’s request, sufficient information and analysis for proving that the prices
applied are in line with the arm’s length principle. In practice, a transfer pricing analysis prepared in line with the OECD Guidelines should
be sufficient for the taxpayer to comply with the tax authority’s request.
Documentation deadlines
There are currently no specific provisions for documentation deadlines. In the tax authority’s request, the timeframe within which the
taxpayer should provide the documentation is specified. However, in practice, the timeframe is very short; hence, it is advisable that the
documentation is compiled as soon as practicable after the close of the tax year.
Statute of limitations on transfer pricing assessments
There is a five year statute of limitations for all taxes after which the tax authorities may not audit the taxpayer’s reported position and
reassess his tax liabilities. Audited tax periods can be re-audited further to the decision of the tax authority, as long as the five year time
period has not elapsed.
Return disclosures/related party disclosures
There are currently no specific disclosure requirements.
Transfer pricing-specific returns
There are no transfer pricing-specific return requirements.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
There is no mandatory frequency of performing tax audits. Initiation of a tax audit rests at the discretion of the tax authority, exercised in
accordance with the audit plans. In general, the likelihood of an annually recurring tax audit is high. Likewise, the likelihood that transfer
pricing will be reviewed as part of that audit is also high. This is due to the reforms of the corporate income tax regime in 2009, under
which the annual tax base of a taxpayer includes expenses not recognized for tax purposes and additional income resulting from any
transfer pricing adjustments, whereas any reported profits are subject to taxation only upon distribution. The likelihood that the transfer
pricing methodology will be challenged is medium.
APA opportunity
The tax legislation does not provide for a binding advance pricing agreement. However, companies are entitled to file an application to
the tax authority for a ruling with respect to the tax position they intend to take, to which the tax authority is obliged to reply. Due to lack
of training in tackling transfer pricing issues, the responses are often ambiguous. In any case, the request should be accompanied by
a transfer pricing analysis and a request to the tax office for its opinion on the compatibility of the methodology followed in setting the
transfer prices with domestic law requirements. Although the tax authority’s opinion is not binding, it represents the tax administration’s
position and should be considered by a tax auditor, unless the factual or regulatory background has changed.
Expected reaction to OECD Report on BEPS
There has not been any domestic reaction to the OECD Report on BEPS yet and no local guidance exists on the documentation contents.
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