About the Survey
The survey has been conducted by PwC Romania during the period April – May 2020, based on the information provided by companies that activate in a wide variety of industries.
The goal of the survey was to offer up to date information with regard to the impact of the Covid-19 pandemic on the transfer pricing practices of Romanian companies.
The data used in our research has been collected via an online survey platform, and shall be treated as confidential.
The survey entails several questions which permitted a multiple answer from the respondents, in order to provide an accurate depiction of the business reality.
In what industry does your company operate?
June 25, 2020
What is your main economic activity as part of your group?
June 25, 2020
Most respondents activate as Service providers within their MNE groups, closely followed by Manufacturers and Wholesalers.
In terms of business model you operate locally, which is your main functional profile:
June 25, 2020
In terms of business model operated locally, most respondents have a limited functional profile, where group decisions are implemented locally.
For 2020, you expect Covid-19 to decrease your revenues compared with similar period of 2019 with:
June 25, 2020
Around 75% of the responses indicated that the company’s revenues shall decrease with less than 25% during 2020, as compared to 2019. Furthermore, none of the respondents indicated that their business activity will be closed.
Will Covid-19 bring an issue of cash flow for the following 3 months?
June 25, 2020
Most respondents have enough cashflow to support their activity, and will not experience any cash flow issues.
How do you intend to address a potential cash / flow financing issue for 2020:
June 25, 2020
60% of the answers indicated that companies will address potential liquidity and financing issues by renegotiating payment terms, without contracting new financing. Only 10% of the responses pointed towards the option of obtaining additional funds from local third parties.
Please indicate the main new type of expenses you expect to incur due to the Covid-19 situation in Romania, if any.
June 25, 2020
The main new type of expenses expected to appear due to Covid-19 is related to Workforce.
Will these specific expenses be reimbursed by the group?
June 25, 2020
Any specific expenses will most likely not be reimbursed (i.e. 36%), while there is also a chance of splitting the expenses between the affiliates (i.e. 20%).
Which is the time span in which you expect such expenses will be incurred?
June 25, 2020
These expenses have most likely been incurred already, or are expected to be incurred during the following 3 months.
Do you have IT tools in place to accurately record and measure the financial effects of Covid-19 on related party transactions for 2020?
June 25, 2020
Most respondents have the necessary IT tools in place to record and measure the financial effects of Covid-19 on related party transactions. The other respondents are either unsure of the impact, or do not have the necessary resources.
What type of transfer pricing challenges do you expect during 2020, in the context of Covid-19?
June 25, 2020
The respondents expect a decrease of profit margin level, as well as operational loss and decrease in demand.
To answer the above challenges, I will undertake the following actions during the following 3 months:
June 25, 2020
Companies will most likely take corrective actions towards the end of 2020.
If you have an Advance Pricing Agreement in place in Romania, do you expect an impact on the negotiated terms with the tax authorities due to Covid-19:
June 25, 2020
Most respondents do not have an APA in place. However, 12% of respondents mentioned that they don’t expect a renegotiation of the terms, while 8% expect to take such action due to the impact of Covid-19.
If you have workforce stranded in certain abroad locations under Covid-19 lockdown, do you expect a permanent establishment issue to appear?
June 25, 2020
Most respondents do not face the issue of workforce stranded abroad during the lockdown (i.e. 76%), while 24% do face such issue, but do not expect a permanent establishment to appear in those locations.
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