Italy's Tax Administration Issued Guidance on Transfer Pricing Documentation
Today Italy's Tax Administration issued Circular 58/E which provides guidance and instructions on transfer pricing documentation for multinational companies. New provisions in the Italian Tax Code now require that Italian multinationals and foreign companies doing business in Italy prepare and keep transfer pricing documentation to be able to avoid stiff penalties applicable in case of transfer pricing audits and adjustments. Taxpayers must notify the tax administration that they have prepared the transfer pricing documentation upon filing their annual income tax return, for the documentation relating to the tax year year 2010 and following years, and within December 29, 2010 for the documentation relating to prior years, and in any event before they receive any requests of information or audit notices from the tax administration. The tax administration clarified that failure to file the transfer pricing documentation notice may be considered as a factor to select taxpayers to be subject to audit.
