The immediate impact on companies engaged in transactions with related parties will be an increased level of documentation and transparency required by the tax authorities. ANAF has published the draft of the new Order on Transfer Pricing Documentation, which will replace the current [ANAF Order No. 442/2016] and align Romanian legislation with the international standards set out in the OECD Transfer Pricing Guidelines, updated in 2022.
Thank you for reading this post, don't forget to subscribe!The need to amend the current framework is driven by developments arising from the BEPS (Base Erosion and Profit Shifting) project, through which OECD member states and the European Union have strengthened mechanisms to combat the artificial shifting of profits between tax jurisdictions.
The new draft promotes a more detailed approach to documenting intra-group transactions, focusing on the economic justification of transfer pricing policies and on demonstrating compliance with the arm’s length principle established under [Law No. 227/2015 regarding the Fiscal Code].
One of the most significant changes concerns the restructuring of the transfer pricing file based on each related party and each relevant category of transactions. In practice, this will require a more granular analysis of intra-group services, financial transactions, transfers of intangible assets, and business restructurings.
The draft introduces additional requirements regarding functional analysis, namely the identification of functions performed, assets used, and risks assumed by each entity involved. Taxpayers will also be required to explicitly justify the selection of the tested party and the methodology used to determine profitability indicators.
A separate chapter is dedicated to comparability studies. ANAF proposes more detailed rules regarding the selection of comparable companies, the geographical hierarchy of searches, the use of multi-year data, and the comprehensive documentation of selection strategies. In addition, taxpayers will be required to disclose companies excluded from the analysis and the criteria used for their exclusion.
The draft also clarifies the treatment of areas that have frequently generated tax disputes in recent years, such as pass-through costs without a commercial markup, transactions involving intangible assets, and intra-group reorganizations and restructurings.
A change with direct implications for tax audits concerns the definition of situations in which the transfer pricing documentation may be considered incomplete. In such cases, the tax authority may estimate transfer prices and perform corresponding tax adjustments, with a direct impact on the taxable base and corporate income tax liabilities.
From a tax risk management perspective, the draft aims to increase voluntary compliance, improve the quality of documentation submitted during tax audits, and reduce disputes arising from differing interpretations of transfer pricing rules.
For corporate groups, the new requirements will necessitate a careful review of transfer pricing policies, existing documentation, and internal monitoring mechanisms for related-party transactions in order to align with the OECD 2022 standards and the future ANAF procedural framework.