Transfer Pricing Agreement

The new Law «On transfer pricing» which entered into force since 01.01.2009 provides with the option of conclusion of the Transfer pricing agreement (further – the Agreement) with the Tax and Customs Committees. The content of the Agreement and procedure of its conclusion are regulated by the Rules of transfer pricing application, which became effective from 14th of April 2009.

Before introduction of the new law, tax inspectors during audits on issues of transfer pricing always required from taxpayers to prove legality of application of certain method of determining the oil price as well as applicability of certain source of information. In practice there were equal chances that courts accepted or rejected taxpayers method and source of information.

Introduction of possibility of signing the Agreements will allow to limit the subject of any dispute only to correct application of agreed method of market price calculation according to agreed source of information.

We would like to draw your attention to some features of the Agreements conclusion. At signing the Agreement parties have strictly defined purpose that is to establish a method of determination of market price (according to the Law there are 5 methods) and an official information source (the Law provides for 31 sources). The Rules stipulates main provisions of the Agreement, validity term, list of documents and information required for signing the Agreement, responsibility of the parties, order of cancellation and unilateral termination of the Agreement.

We hope that presented information will be useful for you. Should you have any further questions or require any information please feel free to contact Talgat Sariev (Tbs@signum.kz) and Rakhat Baisuanov (Rdb@signum.kz).

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.