Transfer Prices in Nicaragua, regulations and formal obligations demanded by the Tax Administration

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Since 17 December 2012, the General Regulations of Transfer Prices were introduced through the Law 822, Law of Tax Pact (LCT), published in la Gaceta N° 241.
COMPULSORY TAXPAYERS:
According to the article 95 of the Law of Tax Pact, the obligation reaches any operation performed between related parties, between a resident and a non resident and between a resident and those that operate under the free trade zone règime, and have effects on the determination of the income tax of the fiscal year in which the operation was performed or in the following ones.
TECHNICAL STUDY OF TRANSFER PRICES
The Study of Transfer Prices will have to contain, at least, a list of fixed assets used in the connected operations, the group policy description in matters of transfer prices (if there is one), a description of the taxpayer or group’s organizational and operational structure, the taxpayer’s identification, as well as the connected entities with which the operations were performed, a general description of the company, the taxpayer and its related ones, a general description of the nature and amount of the operations between the group’s companies. What is more, activities developed by the taxpayer, financial statements and risks inherent to the activity, contracts, analysis of comparable operations, justification of the choice of the method or methods of Transfer Prices and the specification of the value or value interval.
The comparability analysis will let us determine if the connected operations in study, fulfill with the full competition principle.
Date of presentation:
It has been established the obligation of having available enough information, documents and analysis to value their operations with related parties, in an individual way or as a business group. That means, the Study of Transfer Prices. The deadline is 30 June2017.



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