Approval of the Transfer Pricing Regulation

In brief 

The Ministry of Finance order on the approval of the rules for the implementation of transfer pricing has been published (‘the Order’).

In detail

General overview 

The Order provides the procedure for establishing, applying and verifying transfer pricing as well as the content and the submission of the transfer pricing file and information.

The Order is applies to legal entities registered in the Republic of Moldova and to foreign legal entities that have a branch or permanent establishment in the country.

It defines the notions of the lower quartile, upper quartile and the median.

Comparability analysis

The comparability analysis investigates the:

• characteristics of the transaction object;

• functional analysis;

• contractual terms and conditions of the transaction;

• economic circumstances in which the transaction takes place;

• business strategy and other factual circumstances of the parties involved in the transaction.

Method of setting transfer pricing

The transfer pricing methods that can be used are:

• the comparable uncontrolled price method;

• the resale price method;

• the cost-plus method;

• the transactional profit split method; 

• the transactional net margin method;

• other method recognised by the Organisation for Economic Co-operation and Development’s transfer pricing guidelines.

The Order also includes provisions related to the application of the methods mentioned above.

Determining the interquartile range

The setting of the interquartile range requires selection of a range of values of the economic-financial indicators or the margin/result/price of the comparable transactions conducted between independent parties, and the identification of lower quartile and upper quartile.

Transfer pricing voluntary adjustment in accordance with the arm’s length principle

Affiliated persons have the right to voluntarily adjust transfer prices which occur from controlled transactions if:

• the transfer prices do not correspond with the arm’s length principle;

• such adjustment does not decrease the declared income tax to the budget;

• the transfer price verification has not been initiated at either of the parties involved in the controlled transaction.

Voluntary adjustment is carried out from the lower value to the upper value of the interquartile range.

Verification of compliance with the arm’s length principle

The verification of the controlled transactions to check whether they are following the arm’s length principle is carried out by the Tax Authorities through preliminary verification and tax inspection. 

The taxpayers that are not subject to transfer pricing verification are those that have transactions with related parties, with the total value of up to MDL 1,000,000 calculated by adding the value of all transactions carried out with all related parties, excluding VAT.

Transactions that have been voluntarily adjusted by the taxpayer during the preliminary verification will not be subject to a tax inspection. The transfer pricing adjustment/estimation during tax inspections is carried out at the median value of the interquartile range.

Transfer pricing file and information

The Order has approved the form and the instructions for completing of “the information regarding transfer pricing” and useful data on the content and preparation of transfer pricing files.

We remind the concerned subjects to respect the deadlines for submitting the transfer pricing file no later than June 30 of the fiscal period following the reporting one and for presenting information on transfer pricing no later than March 25 after the end of the fiscal period.

Source: [Order approving the rules for implementing transfer pricing, no. 9 of 26 January 2024, published in the Official Gazette no. 61–63 on February 9, 2024.]

To note

The rules for the implementation of transfer pricing, as approved by Minister of Finance Order no. 9/2024, came into force on 9 February 2024.