Preparation of transfer pricing documentation

Taxpayers are required to prepare and submit to the tax authorities documentation confirming the economic feasibility of the applied price in a controlled transaction within 30 calendar days after receiving a request. The contents of documentation for tax control purposes are regulated by Article 193 of the Uzbek Tax Code.

Respective penalties:

• in the event of the non-payment or incomplete payment of tax due to applying prices that do not correspond to the market level, a penalty of 40% of the unpaid amount of tax applies;
• no penalties are envisaged for failure to submit documentation for tax control purposes.

However, if TP documentation is available the tax authorities are obliged to refer to it. If they disagree with it, they must first challenge the taxpayer’s approaches and only then apply what they believe to be acceptable approaches to assess market price levels. Therefore, a lack of documentation makes it easier for the tax authorities to challenge prices in controlled transactions. In addition, by preparing TP documentation the taxpayer demonstrates a willingness to comply with all legal requirements, and this in turn can increase the likelihood of a positive result to a tax authority audit (as well as any court case). Here the KPMG team can provide the following services:

• prepare documentation for tax control purposes on a turnkey basis for all types of transactions;
• check the correctness of documentation prepared by the taxpayer for tax control purposes;
• adapt documentation prepared by the taxpayer for tax control purposes, or separate sections of documentation (descriptions, functional analysis, benchmarking studies, etc.).

KPMG professionals have extensive experience and knowledge in TP, accounting and tax accounting, and international taxation. During projects, KPMG specialists prepare documentation, provide assistance during the resolution of disputes over its preparation, and advise on current issues.