Ahmed Shehata: Opposes the application of neutral price to related companies that are all subject to tax

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– Ahmed Shehata: Opposes the application of neutral price to related companies that are all subject to tax

Ahmed Shihata, public accountant and head of commercial profits tax sector at ATC, indicated that the Income Tax Law 91/2005 included the first attempts for applying the neutral price mechanism to related companies as stipulated in Article No.30. It states that: “If related persons have set conditions for their commercial or financial transactions other thanthose operative among non-related persons, either to reduce the tax base or to shift the tax burden from
a taxable person to an exempt ornon-taxable one, the Authority is entitled to determine the taxable profit on the basis of the neutral price.
The Commissioner may conclude agreements with such related persons to follow one or more ways in determining the neutral price in their transactions. The Executive Regulations of this Law shall determine methods of calculating the neutral price.”
Articles 38,39 and 40 of the Executive Regulations of Income Tax Law91/2005 illustrate how to control the transactions carried out between related parties. Article 38 states:(Read more En Magizen )