Slovakia shared lessons learned in DRM at ATI General Assembly 2022

At the ATI General Assembly in March 2022, Slovakia presented on domestic revenue mobilisation support implementation experience in context of the COVID-19 recovery.

Slovakia has much to offer with regard to expertise in public finance management. In cooperation with the UNDP, it has been providing valuable know-how to the Eastern Europe and Western Balkans countries via the Public Finance for Development Programme. During the ATI General Assembly 2022, a Slovak expert shared best practices for establishing transfer pricing rules in North Macedonia.

Ms. Silvia Karelová is a Senior Expert and Head of International Taxation Methodology Unit at the Financial Administration of the Slovak Republic. She presented lessons learned from the provision of tailored-made technical assistance for the Ministry of Finance and Public Revenue Office in North Macedonia.

Transfer pricing in North Macedonia

North Macedonia has made significant progress in developing legislative provisions to implement the so-called Arm’s Length Principle[1] in its Corporate Income Tax (CIT) law. The structure of the legislation is functional and complies with the OECD Guidelines for Transfer Pricing (TP) and the BEPS Action 13 Report. However, there is very little experience in enforcing transfer pricing in the country and the Public Revenue Office lacks operational capacities to deal with transfer pricing. Strengthening transfer pricing auditing procedures and setting up a specialized transfer pricing unit at the Public Revenue Office are two main objectives of the Support of transfer pricing rules implementation in North Macedonia project. It has been running since 2019, when North Macedonia became a partner country of the Public Finance for Development Programme.

Ms. Karelová stressed that enforcement and implementation of the transfer pricing in North Macedonia could not be ensured only by capacity building activities. Instead, complex support is needed, and this includes:

  • Review of the legal framework regulating transfer pricing based on comparative analysis;
  • Policy advice to the Ministry of Finance to improve legislation and transfer pricing procedures;
  • Capacity building of administrative capacities of Ministry of Finance of North Macedonia as well as the Public Revenue Office of North Macedonia;
  • On the job training for tax administrators with a focus on sharing tax audit knowledge and skills with tax officials through real time “learning by doing” approach;
  • Strengthening institutional capacities by creating a specialized transfer pricing unit;
  • Facilitation of peer-to-peer knowledge exchange study visits.

About ATI General Assembly

The ATI General Assembly was held online on 23 – 24 March 2022 and provided a forum for ATI members to reflect on progress and challenges towards the fulfilment of the four new ATI commitments included in the ATI Declaration 2025 in the context of the COVID-19 recovery. ATI development partners (Ministry of Finance of Paraguay) member countries (Ministry of Finance of Slovakia and Swedish Tax Agency) and supporting organizations (South Center, Tax Justice Network Africa, Save the Children in Kenya, Central American Institute of Fiscal Studies, OECD) exchanged experiences related to the implementation of DRM-related reforms or the provision of DRM support.

The forum also provided strategic guidance to ATI, bringing the needs and priorities of the ATI members together. The 2022 ATI General Assembly revisited the ATI Matchmaking Platform, provided the presentation of the 2019 ATI Monitoring Report, and enabled ATI Consultative Groups meetings to agree on further steps towards the accomplishment of the ATI Declaration 2025.

[1] This valuation principle is commonly applied to commercial and financial transactions between related companies. It says that transactions should be valued as if they had been carried out between unrelated parties, each acting in his own best interest.