Bill on multinationals’ pricing

Development Ministry introduces provisions to curtail price differences from country to country

MARIA SIDERI

The Development Ministry intends to put an end to overpricing practices by multinational companies that see their products sold in the Greek market at higher prices than in other countries.

The bill that the ministry has prepared institutes transfer pricing which already applies to 45 countries across the world. This will document the pricing policy in transactions within the group, between the parent company and the subsidiaries. This is expected to address any distortions in the local market as well as revealing their real extent in a way that cannot be seen today.

This would force subsidiaries or associate companies to conduct transactions between them as independent companies in free competition conditions. This will ensure they generate the same earnings as any independent company and that the final price reflects real market conditions.

“Unjustified high-pricing will stop,” said Minister Christos Folias, adding that the law will show the full extent of overpricing. On the European Union level this measure has already been adopted by 16 other members.

Consumers have repeatedly noticed the same product of the same brand being more expensive in Greece than in other countries.

From now on, if there is a difference in prices from country to country, the companies will have to explain and justify the difference, citing the price in Greece and in other countries.

That will allow the authorities to force the firm into adopting a pricing policy that does not make distinctions from between countries.

If the company does not have the documents required or its data are inaccurate, it will face fines of 10 percent calculated for its turnover for the product in question.

Given that price differences are mostly for tax purposes, the monitoring will not only be at a market level but also at a level of taxation. It is hoped that this will oblige companies to keep the necessary documents. The measure will be valid as of 2009, and apply to financial year 2008.