Consultation Response for new regulations on transfer pricing documentation and minimum taxation act
42TAX provided comments and posed questions on the Ministry of Taxation’s proposal for the new Section 2 B of the Tax Assessment Act, on the simplified and streamlined approach for qualified distribution transactions, as well as the amended rules governing the preparation of transfer pricing documentation.
The Ministry of Taxation has, inter alia, clarified that under Section 2 B of the Tax Assessment Act that an individual pricing must be established where a distributor procures goods from multiple suppliers, and a segmentation of those suppliers so that an arm’s length assessment can be conducted in respect of the relationship between each supplier and the distribution company. Furthermore, the Danish Ministry of Taxation has clarified that yhe term “sales assets” is to be understood as “cost of goods sold,” and the draft legislation has been amended so that the wording now explicitly refers to “cost of goods sold.”
With respect to the proposed relaxed rules for the preparation of transfer pricing documentation, the Ministry has confirmed that it will be a matter of fact specific assessment whether gross negligence can be established where a taxpayer has determined that the aggregate controlled transactions do not exceed DKK 5 million (in the passed bill it is DKK 5 million in transactions or DKK 50 million on the balance sheet) or are otherwise immaterial, and the Danish Tax Administration disagrees in the course of an audit.