Iceland Introduces Transfer Pricing Framework
Iceland has recently enacted its own transfer pricing legislation, which became effective from January 1, 2014. Prior to that date, there were no specific transfer pricing provisions in Icelandic law.
Iceland’s new transfer pricing legislation, included in Article 57 of the Income Tax Law (No 90/2003), is based on the arm’s length standard. Iceland will follow the Organisation for Economic Cooperation and Development (OECD) Guidelines, both for transfer pricing methods and documentation.
Icelandic businesses must prepare documentation if their turnover or assets in the preceding year exceeded ISK1bn (USD8.8m). If a company’s turnover exceeded this threshold in 2013, documentation must be prepared for the 2014 financial year. These documents should include details of the extent to which the parties are connected, a description of the controlled transactions, and the basis for the transfer prices claimed.
The Government has yet to issue transfer pricing regulations, but it is expected to do so in the coming months.
Credit: Tax News