SMEs and its Compliance Cost of Transfer Pricing: Czech, Slovak and Poland Case

Current literature revealed that compliance costs of taxation are regressive with regard to firm size and significantly higher in case of enterprises with foreign branch or subsidiary in comparison with enterprises which are not internationalized Moreover, compliance costs are increasing through strict and difficult transfer pricing rules among European countries. Unfortunately, there is not exist study determining compliance costs of transfer pricing issue in the literature. Therefore the aim of paper is to determine compliance costs of transfer pricing issues in case of SMEs and Medium-sized enterprises in the selected countries. The results are based on the questionnaire distributed between Czech, Slovak and Poland parent companies having subsidiaries in Europe and Czech, Slovak and Poland subsidiaries having parent company in Europe. The survey of compliance costs of transfer pricing revealed that compliance costs of transfer pricing are very significant and in case of SMEs represent range between 32.5 % (Slovak Republic) up to 98.9 % (Czech Republic) of corporate tax collection based on the costs indicator and the range of 20.1 % (Slovak Republic) up to 51.7 % (Czech Republic) of corporate tax collection based on the time indicator.