Czech Republic Steps Up Transfer Pricing Scrutiny
The Czech Republic’s Specialized Tax Office (STO) has confirmed that it has undertaken a nationwide control operation to scrutinize multinationals’ related-party transactions to ensure they are being taxed based on arm’s length prices.
A first phase of the operation took place during January and February, with a second phase now underway. The Czech Financial Directorate said the initiative is intended to prevent the intentional or unintentional transfer of profits from the Czech Republic abroad, through the misallocation of taxable income between Czech-based companies and their overseas subsidiaries or an overseas parent company.
Taxpayers were selected based on data received from questionnaires voluntarily completed by taxpayers last year and data obtained from the STO’s investigations.
The STO’s activities are limited to those Czech companies with an annual turnover exceeding CZK2bn (USD81.7m) and also banks, insurance companies, and other financial institutions.
