BANJA LUKA (Bosnia and Herzegovina), June 21 (SeeNews) – The tax administration of Bosnia's Serb Republic has launched an investigation into suspected transfer pricing among companies operating under the Nestro Group umbrella, local media reported on Wednesday.
A probe into transfer pricing in oil refineries Modrica and Brod, fuel retailer Nestro Petrol and Optima Group, units of Russia's NeftegazInCor, is currently underway, with details to be revealed once the investigation is completed, news portal Capital.ba reported, quoting the tax administration director, Zora Vidovic.
Vidovic told Capital.ba that although the Nestro Group is the largest exporter and importer in the Serb Republic, its units have not been monitored over 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, its operating income totalled 82.9 million marka ($47.2 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.
Oil refineries, Modrica and Brod, fuel retailer 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.
Russia's Zarubezhneft, via its subsidiary NeftegazInCor, owns 80% of Brod, 75.65% of Modrica and 80% of Nestro Petrol.
(1 euro= 1.95582 marka)