Only large taxpayers with annual gross sales of $500,000 or more must, at the time of their transactions, keep transfer pricing documentation to determine whether the transfer price used is arm`s length. Transfer pricing rules are inherently complex, with large taxpayers with a turnover of $US 500,000,000 or more with related party transactions being encouraged to instruct the technical specialist unit and the Large Taxpayer Office to determine the most appropriate methodology for a given transaction. No penalty is imposed for the 2015 assessment year, for failure to report transactions with relatives, or for lack of full restitution or timing. However, sanctions are imposed for the 2016 evaluation exercise and beyond. Amendments to the Income Tax Act 2015 now provide that, when reporting his or her activities for the year, the taxpayer informs the Commissioner General of the bases used to obtain the transfer prices indicated. This is in line with the system of self-taxation in which the taxpayer would be aware of all the conditions of his trade. In 2011, the firm authorized the introduction of transfer pricing rules. The bill was then introduced by the Honourable Minister of Finance on May 5, 2015 and was discussed and passed in November, with the inclusion of proposed amendments from external stakeholders. Starting with the 2015 tax year, all taxpayers who transact with related parties will be required to complete a “Business and Related Business Transaction Plan” (Schedule 8) that will be attached to the income tax return until March 15, 2016. A transfer price is a price that is borne by a company for internal accounting purposes and reflects the price at which goods/services are provided between related companies.
Transfer pricing can be used to value transactions at artificially low or high prices between related enterprises, to make an income payment or a transfer of capital between these enterprises. Transfer pricing has become a key theme for multinationals and tax authorities in different jurisdictions, as it can play an important role in shifting corporate profits to weaker tax areas. Taxpayers involved in highly complex transactions or specialized sectors can apply to the Commissioner General of the Jamaica Revenue Authority (TAJ) to negotiate an ex ante price agreement. The advantage of the Advanced Pricing Agreement is that taxpayers have certainty of the acceptable economic conditions applicable to each transaction made by the related parties before the transaction is completed. The parties to the negotiations determine the start of the agreement, which does not apply retroactively. The amendment to the Income Tax Act 2015 builds on the transfer pricing rules that have existed in our legislation since 1970. The amendment to the Income Tax Act (ITA) 2015 builds on the transfer pricing rules that have existed in our legislation since 1970. This amendment adds the “Arms-Length” principle, which obliges companies that transact with related persons to take into account in the calculation of their income tax debt.
The 2015 amendments also introduce transfer pricing agreements (APAs). A TPA is an agreement between a person (or company) and the Commissioner General who can define a number of criteria before any related transaction (or transaction), such as for example. B the methodology, comparisons and appropriate adjustments, 2 to determine whether a transaction was carried out under specific market conditions. The advantage of an AA is that the controls carried out by the Commissioner are accompanied by a regular tax audit, as related transactions subject to the ECA can only be examined within the framework of the provisions of the agreement. . . .
