Transfer Pricing documentation

In Malta, Rule 6 of the Transfer Pricing Rules (Subsidiary Legislation 123.207 and hereinafter referred to as the TPR) provides that when a company is in scope of the Maltese TPR, it shall prepare on a timely basis and retain such records as may reasonably be required for the purposes of determining whether, in relation to the arrangement, the total income of the company has been ascertained in accordance with the provisions of the TPR.

The Transfer Pricing Guidelines released by the Malta Tax and Customs Authority (MTCA) further elaborate on the records to be kept and the document retention period. The taxpayer would be required to disclose its transfer pricing documentation to the MTCA only upon a specific request by the MTCA. This means that there is no requirement to effect an annual submission of the applicable transfer pricing documentation, and such files are to be provided only upon request.

However, the MTCA , in the interest of conducting an informed examination of the taxpayer’s transfer pricing practices, retains the right to request further information and documentation on the arrangements under review. The taxpayer would be required to make its transfer pricing documentation available, upon request by the MTCA, within a reasonable timeframe. 



Documentation required

The documentation which is required to be held by taxpayers shall be in line with Chapter V of the OECD Transfer Pricing Guidelines, as follows: 

• Master file: the Master file shall include the information outlined in Annex I to Chapter V of the OECD Transfer Pricing Guidelines. 
• Local file: the Local file shall include the information outlined in Annex II to Chapter V of the OECD Transfer Pricing Guidelines. 

The Master file and the Local file shall be made available to the MTCA in English or Maltese. 

Over and above the requirements arising out of the TPRs, MNEs with a Maltese ultimate parent entity UPE), that have an annual consolidated turnover of €750,000 or higher are also required to file on an annual basis the Country by Country Report (CbCR). The CbCR is an additional transfer pricing document/return the submission of which was required (where applicable prior to the introduction of the TPRs. Additionally, in the case of MNEs with a consolidated turnover exceeding €750, with a non-Maltese UPE but with a Maltese constituent entity are required to effect an annual notification that the Maltese constituent entity is part of an in-scope MNE and which is the UPE (or designated UPE) responsible for filing of the CbCR. 

Document retention period

The TP guidelines clarify that the documentation required to be kept in terms of the TPRs, constitute part of the record keeping obligations in terms of Article 19(1) of the Income Tax Management Act. The time limit (nine years) referred to in Article 19(5) of the Income Tax Management Act for the retention of such records shall start to run from the end of the period to which the arrangement in question refers to or the date of that arrangement, whichever is the later. 

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With our deep understanding of transfer pricing regulations and methodologies, we assist in identifying relevant commercial or financial relations, accurately delineating transactions, and selecting appropriate transfer pricing methods. Our comprehensive analysis ensures compliance with arm's length requirements and provides robust support for substantiating loan transactions and determining arm's length interest rates, thereby optimising your transfer pricing strategies.

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