Reform of Transfer Pricing Rules in the Republic of Armenia
The article analyzes legislative novelties in the area of transfer pricing in the Republic of Armenia through the best practices comparison and country's economic and institutional specifics. The authors' research approach is based on determination of national economic and institutional special features and outlining the riskiest types of transfer pricing transactions. Through the collected data and the best foreign practices the authors analyze the national transfer pricing rules and policy. As a result of such analysis there are presented several practical recommendations for the modification of tax legislation and transfer pricing rules in the Republic of Armenia. The authors also suggest implementation of possibility to use stock exchange quotes as benchmarks for commodity transactions when applying comparable uncontrolled price method. Introduction of safe harbor rules is also recommended for interests of financial arrangements on related party debt, based on key rates of fiscal markets (Central Bank rate, EURIBOR, LIBOR, SHIBOR and so on). The authors also discuss in details the problems of application of thin capitalization rules in combination with transfer pricing rules and double tax treaties. In addition, the article recommends several practical ideas on streamlining tax administration (setting up transition period without fines and sanctions or testing the existing thresholds for transfer pricing control).