Bosnia's Serb Republic tax body looks into transfer pricing in Nestro Group - report
September, 27th 2017
The tax administration of Bosnia's Serb Republic has found evidence of transfer pricing among companies operating under the umbrella of oil group Nestro that can be open to different interpretations, local media reported.
A months-long inspection of oil refineries Modrica and Brod, fuel retailer Nestro Petrol and Optima Group, units of Russia's NeftegazInCor, has revealed transfer pricing among the companies and the results have been sent to the higher authority to make a decision, news portal Capital.ba quoted the tax administration director, Zora Vidovic, as saying on Monday.
Vidovic told Capital.ba earlier this year that although the Nestro Group is the largest exporter and importer in the Serb Republic, its units have not been monitored for possible transfer pricing since 2011. Independent auditing company KPMG, which reviewed Nestro Group's latest financial statement, warned of the issue of transfer pricing earlier this year.
"Although the management believes that the group has sufficient and adequate supporting documents regarding transfer pricing, uncertainty exists as to whether the requirements and interpretations of tax and other authorities comply with those of the management," the auditor said.
When examining the companies' financial statements it becomes apparent that significant transactions are made within the group, it added.
According to Brod's audited consolidated financial statement for 2016, the refinery's operating income totalled 82.9 million marka ($50.1 million/42.4 million euro), 76.49 million marka of which was derived from sales to its sister companies. Out of this amount, 76.46 million marka was earned from Optima for the processing of crude oil.
Modrica and Brod, Nestro Petrol and Optima Group all operate under the Nestro Group umbrella.
The oil refineries located in Bosnia's Serb Republic suffered great losses in 2016 and their combined debt reached hundreds of millions of marka. The fuel retailer saw a very slim non-consolidated net profit but its debt remained high.