Transfer Pricing Technical Study 2020

Local Report (Local File)

The Local Report is one of the types of affidavits that must be filed regarding Transfer Pricing. It is a financial (economic) measurement, which serves to place the transfer values of goods and/or services between companies belonging to economic groups within the context of market value.

The tax authorities of all countries consider that transfer pricing studies are a means to prevent profits from being transferred to territorial jurisdictions with lower or zero tax rates. Therefore, an informative affidavit on these operations is presented annually in all countries, under a system of price and cost comparability adopted from the OECD guidelines.

In application of Action 13 of the BEPS, adopted by the majority of the tax authorities of the countries in the region, the Local File is incorporated into each jurisdictional legislation.

Our Firm has a wide experience, as well as a multi-disciplinary team and first-level technology, which guarantees a high-performance final product and that duly supports the Informative Affidavit to be submitted to the Tax Authorities.

Technical Study Information Local Transfer Pricing Report

The Local Report is one of the types of affidavits that must be filed regarding Transfer Pricing. It is a financial (economic) measurement, which serves to place the transfer values of goods and/or services between companies belonging to economic groups within the context of market value.

The tax authorities of all countries consider that transfer pricing studies are a means to prevent profits from being transferred to territorial jurisdictions with lower or zero tax rates. Therefore, an informative affidavit on these operations is presented annually in all countries, under a system of price and cost comparability adopted from the OECD guidelines.

In application of Action 13 of the BEPS, adopted by the majority of the tax authorities of the countries in the region, the Local File is incorporated into each jurisdictional legislation.

Our Firm has a wide experience, as well as a multi-disciplinary team and first-level technology, which guarantees a high-performance final product and that duly supports the Informative Affidavit to be submitted to the Tax Authorities.

Transfer Pricing Information Statements in America

Transfer pricing is a financial-economic measurement that serves to place the transfer values of goods and/or services between companies belonging to economic groups within the context of market value.

The tax authorities of all countries consider transfer pricing as a means to prevent profits from being transferred to territorial jurisdictions with lower or zero tax rates. Therefore, an informative affidavit is presented annually in all countries on these operations, under a system of price and cost comparability adopted from the OECD guidelines.

This year, 2020, with the theme of the pandemic, in some countries the tax authorities have extended the original expiration dates, which in some way has made the requirement to present the Information Declarations more flexible and thus avoid the fines, which are very onerous in all countries.

Brazil

In Latin America, Brazil is the only country that does not regulate itself under these guidelines, but already in November of last year, Brazilian Treasury officials met with the main representatives of the OECD and agreed on the need to converge on Action 13 of the BEPS, so that very soon there would no longer be this gigantic exception in our continent; however, on July 31st they must present their Informative Statement of Related Parties in its “Brazilian version” to the Secretariat of Federal Revenue – SRF.

Argentina and Uruguay

In Argentina, the filing of the Information Statement in Argentina – Single Form 2668 with the Federal Administration of Public Revenues – AFIP was extended. As of October 10, 2020, it was usually filed on a half-yearly basis, but as of 2019 it was decreed that it be filed on an annual basis, as in all other countries; it should be noted that Argentina is also among the countries that have adopted Action 13 of the BEPS and therefore also submits Master Reports and Country by Country Reports. In Uruguay, a prosperous country where there is financial and sanitary peace of mind, they have a single transfer pricing regime. The Information Statement in Uruguay – Form 3001 for the period ending on 31-12-2019 will only expire in November 2020, and they also apply for the Master Report and Country by Country Report.

Paraguay, Nicaragua and Costa Rica

There are still few countries in Latin America that do not have regulation in the presentation of transfer pricing information statements, among them are Paraguay, Nicaragua and Costa Rica; this last one is a step forward concerning transfer pricing, that is to say, that they still do not have informative affidavits, but they are in the group of countries where we present the Local Report, Master Report and Country by Country Report, and additionally Costa Rica has been invited by the OECD to join this select group of countries, from where, this latitude there are only Mexico, Colombia and Chile, as well as Costa Rica.

Mexico, Guatemala and El Salvador

They are the first countries in the region to present their Transfer Pricing Information Statement, which expired on March 31st, without any extension; but Mexico is an emblematic case in the region since Annex 9 of the Multiple Information Statement (MIS) is presented, with highly segmented information from the Related Parties, so the studies have to be worked on since October of the previous year.

Panama and Ecuador

In both Panama and Ecuador, the deadlines for filing the Information Statement between Related Parties, Form 190 with the General Directorate of Income – DGI of Panama, and the Annex of Operations between Related Parties with the Internal Revenue Service – IRS, respectively, were extended. I would think that three months of extension is enough, I hope that the taxpayers regulated by this rule will take advantage of it, both Panamanians and Ecuadorians.

The Dominican Republic and Bolivia

In the Dominican Republic the Informative Statement of Operations between Related Parties – DIOR or Form 632 that is presented annually for 5 years before the General Direction of Internal Taxes – DGII was extended until July 29, 2020; by coincidence in Bolivia it was also extended for the end of July the presentation of Form 601- Informative Declaration of Transfer Pricing before the National Tax Service- SIN, it is not much time, but it helps the specialized consultants to have a month of extension.

Venezuela and Honduras

In Venezuela, the Informative Statement of Affected Operations with Related Parties PT99 was presented before the National Integrated Service of Customs and Tax Administration -SENIAT on June 30th of this year and those who could not comply with the formal obligation have the opportunity to present a brief justifying the unjustifiable and thus avoid the fines that are the most exorbitant in the region and the case of Honduras, For the presentation of the Annual Affidavit on Transfer Pricing before the Revenue Administration Service – SAR there was only an extension of one month as well, which expired at the end of May and where operations between Related Parties from abroad and locally were also declared.

United States (United States)

In the United States, there is no obligation to file any Informative Affidavit of Local Report or Master Report before the IRS, only the Country by Country Report is mandatory, but before an audit of this feared American entity, the taxpayer would have to present the support of the operations between Related Parties or better said, would have to present the economic analysis of the transactions subject to evaluation and support that they are at market value.

Chile

Something similar to what happens in the United States, my Chilean friends had their deadline on July 1, 2020, to present the Informative Affidavit 1907 before the Internal Revenue Service – SII, but they do it without any attached support, only the pure DJ as described by the local tax authorities, and in the case of having some inspection they will have to support it with an economic analysis, like the Americans, of the operations that took place between the Related Parties; However, we always recommend that the technical study be done before presenting the DJ, because the fines for errors or omissions are very high. However, Chile also has something that is not seen to exist in other countries and that is that only in that latitude you can ask for an extension one week before the expiration and it is granted to any taxpayer, but individually, so that they can present their 1907 Affidavit until September 30.

Peru

As always, there is something special going on in Peru, and that is that operations with international and local Related Parties are affected by the informative affidavit called PDT 3560, which is due in July by one group and in August by other groups of contributors; But that’s not what’s so special about it; all local economic groups, in addition to international ones, are subject to this obligation, and the informative sworn statement is filed with the National Superintendence of Tax Administration – SUNAT, attaching in PDF text the Technical Study on Transfer Pricing, now called the Local Report, all of which is a guide to Action 13 of the BEPS, which I commented on.

Colombia

The expiration of the Informative Statement – Form 120 and the Verifying Documentation supported by the Local Report and the Master Report, for the operations between international Related Parties, will begin its presentation on July 7 and will culminate on July 21, 2020, according to the last digit of the NIT before the National Tax and Customs Directorate – DIAN and also in the middle of December it will be time to present the Country by Country Report, this because the government of Colombia has also adopted Action 13 of the BEPS.

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