Corporation tax is levied at a flat rate of 31.8%, and this rate applies to a resident company and a registered branch office of a foreign corporation. Taxable capital gains are taxed at the same rate as the rate applying to taxable income from business operations.
Transfer pricing is regulated in article 36 of "Landstingslov nr. 12 af 2. november 2006". Payments such as interest, royalty, management fee payments, etc. that are made from Greenland to other countries under intercompany agreements are tax deductible in Greenland provided that the payments are effected on an arm’s length basis. Generally, this is also holds true for payments made between a Greenlandic permanent establishment and its foreign head office. Royalty payments from Greenland are taxable for the recipient as the recipient will always be considered liable to pay tax thereon in Greenland. The royalty payer must withhold and pay royalty tax to the tax authorities.
Greenlandic tax law includes specific provisions on documentation of related party transactions. Agreements between related parties must be documented, including written documentation as to how prices and terms are determined for intercompany transactions. Written documentation must be of such nature that it can be used to assess whether or not the prices and terms applied are consistent with the arm’s length principle. Documentation must be kept on file for five years.