This document summarizes the transfer pricing requirements and regulations in Hungary. Hungary’s transfer pricing regulations are mainly prescribed by Section 18 of the Act on Corporate Income Taxation (CIT Act). Decree 32/2017 and Act XXXVII of 2013 outline additional documentation requirements, including Country-by-Country Reporting (CbCR). Hungary defines related parties based on criteria like shareholding, management control, and other key relationships. While Hungary doesn’t have an official tax haven list, it has faced scrutiny for having traits of a tax haven. Transfer pricing documentation is mandatory for controlled transactions but can be exempt in specific cases. APAs are available for future transactions, and audit practices are heightened for certain taxpayers.
Guatemala introduced formal transfer pricing documentation requirements in 2012, although the BEPS Action 13 initiative hasn’t been entirely implemented in this Central American nation.
The legal framework for transfer pricing in Guatemala was established by Decree 10-2012, with the regulations set to take effect from January 1, 2013. However, these regulations were temporarily suspended for two years and subsequently reinstated, becoming effective from January 1, 2015.
Guatemala’s tax authority, Superintendencia de Administración Tributaria (SAT), issued transfer pricing guidelines in September 2016. These guidelines offer information regarding content, presentation, and formulas required for conducting a proper transfer pricing analysis. These guidelines also make references to BEPS initiatives, although Guatemala is not a member of the OECD.
In Guatemala, two entities can be considered related parties under certain conditions, as defined by Article 56 of Guatemala´s Transfer Pricing Regulation Law. These conditions include when one entity directs or controls another, when one entity possesses at least 25% of the capital stock or voting rights of the other, or when five or fewer entities direct or control both parties or possess at least 25% of participation in their capital stock or voting rights. Various other circumstances are also outlined in this regulation for identifying related parties.
Since 2015, taxpayers in Guatemala are required to file a transfer pricing return titled “Operations with related parties” as an appendix to their annual income tax return.
Taxpayers in Guatemala can request an APA with the Tax Administration for the valuation of transactions among related parties. The taxpayer’s proposal, based on the value agreed upon by independent parties in similar transactions, must accompany this request. The SAT has the authority to accept, reject, or modify this proposal. An APA, if approved, is valid for a maximum of four fiscal periods, and if the SAT does not respond within 30 days, the APA is considered rejected.
The SAT has the authority to conduct transfer pricing audits for financial years beginning in 2015. While transfer pricing audits are part of the overall tax audit, the SAT follows standard procedures, such as on-site examinations or written requests. During these audits, additional information can be requested, and the SAT has access to the company’s accounting records.
The burden of proof lies with the taxpayer, who must demonstrate that transactions with foreign related parties conform to the arm’s length principle and adhere to transfer pricing regulations. The likelihood of transfer pricing audits in Guatemala is substantial, as the tax authorities have requested transfer pricing documentation from most taxpayers involved in intercompany transactions in 2016 and 2017.
The documentation required in Guatemala includes an “Operations with related parties” return and the preparation of a Transfer Pricing (TP) study, which justifies the correct determination of prices and profit margins in transactions with related parties.
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