engleski

Transfer Pricing Methods Applied in Croatian Companies

Multinational companies which are organized as holding companies can use transfer pricing as an instrument for (1) shifting its profits in countries with favorable tax conditions in order to avoid or to decrease tax liabilities and (2) trying to obtain competitive advantages in order to increase its market share on defined markets. In order to prevent manipulations with transfer pricing and to obtain fair and objective taxation at international level, OECD defined the framework for transfer pricing treatment at international level which should be included in national tax regulations of all members’ states and therefore become the unique transfer pricing treatment at international level. Transfer pricing methodology set by OECD directions is analyzed in the article as well as the possibilities of their more qualitative implementation in Croatian tax regulations. Although, OECD directions of transfer pricing methodology and control are included in Croatian tax regulations, it still should be prescribed more detailed and more concrete in order to obtain more qualitative control over transfer pricing. The purpose of this article is to present and describe the transfer pricing methodology applied in Croatian companies and to give recommendations for improvement of OECD directions implementation in Croatian tax regulations as well as to obtain more qualitative control on transfer pricing for Croatian tax administrations. Croatian tax regulations regarding transfer pricing should (1) define the circumstances in which a concrete transfer pricing method can be applied for transfer price determination, (2) prescribe the necessary content of transfer pricing documentation and (3) improve institutional framework of control of transfer pricing in Croatia.

transfer pricing; transfer pricing methods; OECD directions; tax administrations; related companies

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