Belgian tax authorities have been sending out lengthy and detailed questionnaires concerning transfer pricing. Companies are required, in principal, to respond to these questionnaires within a month. This is the first step in initiating an audit of the company and sets the stage for the audit. Note that this is an increase in both the number of new audits being initiated and the scrutiny being applied to audits in progress.
The Belgian authorities are proceeding on the basis of ensuring accurate transfer pricing and protecting against the erosion of the tax base within the country. Within this context, companies should review their current transactions within the country; gather all supporting documentation, agreements, supporting schedules and other relevant data and information supporting their position. The narrow time frame for a response places increased need for internal organization of documents and tracking of information flows to ensure clarity and consistency in responding to subsequent information requests.
The authorities are using all available resources to pursue this project to the extent of asking regional tax inspectors to assist in transfer pricing audits. The core group of auditors, while smaller in number than neighboring countries, is very experienced and brings this forward in both their approach in the selection of audits and sophisticated techniques utilized within the audit.
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