The Regulation of the Law Regulating Transfer Pricing was published last month and is based on the principle of free competition (arm's length) where transactions between related parties should be carried out at market prices, i.e. those used in comparable transactions between independent parties in similar conditions.

The regulation determines who are considered related parties, how the comparability analysis must be carried out and the methods to determine the value of commercial and financial operations in conditions of free competition. The law also regulates transactions with persons with residence or domiciled in "tax havens", as defined by the law and which were not previously identified as such.

Companies must submit an informative sworn statement on transfer prices to Tax Authority between January 1 and April 31 of each year, except for the 2014 fiscal year which should be submitted within 3 months following the publication of the regulation.

Penalties for breaching the Law on Transfer Pricing and its Regulation range from USD 5,000.00 to USD 20,000.00.