Deloitte: The new transfer pricing regulation brings many changes

The new transfer pricing regulation of the Ministry of National Economy is expected to enter into force this year. The aim of the legislation, which was recently submitted for public consultation, is to reduce administrative burdens, take more effective action against tax evasion, and support tax authority risk analysis and control. The new regulation on transfer pricing accounting obligations and data reporting was developed taking into account the OECD Transfer Pricing Guidelines, feedback from relevant market participants and consultants, and experience gained during tax audits. It will be larger and more detailed than the current one, promoting transparency and clarifying the rules.

“In order to meet the requirements of the new regulation, taxpayers will need to adapt to the new documentation requirements and review and, if necessary, modify their internal processes. The complexity of the regulation may justify the involvement of transfer pricing experts in order to interpret, comply with the changes and develop tax strategies”

– highlighted Péter Gémesi, Director of the Tax Department at Deloitte.

If the new transfer pricing regulation enters into force unchanged, one of the significant simplifications for taxpayers will be that the documentation threshold will be raised and only transactions exceeding HUF 150 million will be subject to the transfer pricing registration obligation. In some cases, it will be possible to compile documentation with limited content, but new mandatory content elements will also be introduced, such as the utility test or the presentation of the characterization of the parties. In addition, the rules on aggregation will be supplemented, and low-value-added services will be re-regulated. It is also important to mention that the revised regulation will provide taxpayers with more precise guidelines for preparing database searches.

The requirements for transfer pricing data provision are modified based on the experiences of recent years. The new regulation is expected to have a significant impact on the daily operations of businesses, so it is crucial that those affected prepare for the changes in a timely manner.