Our experience
Increasing the SRS capacity for transfer pricing analysis
Beneficiary
State Revenue Service
Background
In 2018 Latvia implemented a corporate income tax (CIT) reform to give the national economy a competitive edge, reduce inequality of income, and increase tax revenues. The reform significantly changed how the CIT base is measured, focusing on the taxation of distributed profits and transfer pricing rules.
To achieve the goals of the reform, the State Revenue Service (SRS) implemented a project aimed at increasing their capacity for transfer pricing analysis. As part of the project, PwC helped the SRS assess the impact of the CIT reform on Latvian companies’ behaviour by delivering interactive training to the tax officers on how to assess related-party transactions and transfer pricing risks and by identifying technology solutions capable of increasing the SRS’s operational capacity.
Objective
Implementing the CIT reform successfully and efficiently comes down to adopting technology solutions that are capable of identifying risky transactions and promptly resolving cases of aggressive tax planning and tax avoidance. Solutions tailored to the SRS’s needs will provide significant support in achieving the goals of the tax reform and lead to optimal processing of data held by the SRS and improved quality of tax controls.
Main tasks
Analysing and suggesting technical solutions tailored to the SRS’s needs and improving the tax officers’ professional skills by delivering training with examples of good practice in transfer pricing analysis from an international perspective.
Key activities involved in the project
- Assessing the impact of the CIT reform on the position and behaviour of multinational enterprises in Latvia
- Training the tax officers to improve their expertise in assessing related-party transactions and transfer pricing risks
- Identifying technology solutions and good practices relevant to the SRS’s needs
The outcome
The project improved the SRS’s ability to identify and resolve cases of aggressive tax planning and tax avoidance undertaken by multinational enterprises. Working closely with the parties involved in the project, PwC advised the SRS on how to develop and implement specific technical solutions aimed at increasing the SRS’s capacity. PwC delivered staff training with examples of good practice in transfer pricing analysis from an international perspective.
The project was funded by the European Union.