How long does it take to carry out a Transfer Pricing Study?

The duration of carrying out a Transfer Pricing Study is around 20 business days from when we receive the required information.

Is it necessary to have the Transfer Pricing Study done before the tax authority asks me to do it?

From our experience, the tax authority gives you a deadline that is too short to be able to carry out and present the Transfer Pricing Studies on time. In this case, the company faces a fine for not presenting it. Our recommendation is to always have the EPT performed in case of review by the tax authority.

What is the objective of transfer pricing?

Transfer pricing is an instrument created to combat fraud and evasion that makes it possible to make more transparent the purchase or transfer of goods and services between economically linked companies

Who does the transfer pricing studies?

The Transfer Pricing Studies is carried out by professionals in the field who compare the operations using different methods allowed by the LISR, to determine if the operations are agreed upon at a fair value

International transfer pricing studies

¿Cómo de útil es esta información para la empresa?

At UR Global, we carry out Transfer Pricing Studies in Spain, Mexico, Colombia, Peru, Brazil, Chile, Portugal, Morocco, and the United States. Our team is supported by a team of international tax experts and certified auditors in each country. We conduct Transfer Pricing Studies in various sectors, such as renewable energy, engineering, cybersecurity companies, marketing agencies, and industrial plants, among others. A unique feature of UR Global is that, as we are present in several countries, we can conduct the study for the parent company and its subsidiaries and coordinate the Transfer Pricing Studies from Spain for all the countries in which we operate.

Where do we conduct the Transfer Pricing Study?

Transfer Pricing Study in Mexico

When should a Transfer Pricing study be carried out in Mexico?

The obligation to conduct a Transfer Pricing Study in Mexico is set forth in Article 76, Section XII of the Income Tax Law* regarding transactions between related parties held by a business entity. The objective of said study is to provide evidence that said transactions were carried out at the prices that independent companies would have agreed upon in comparable transactions. Therefore, the work of this business service will consist of applying the necessary methodology and processes applicable to the case, to validate that the obligation has been fulfilled under the terms of the current Income Tax Law. Taxpayers carrying out business activities whose income in the immediately preceding fiscal year exceeds $13,000,000.00, as well as taxpayers whose income derived from the provision of professional services exceeds $3,000,000.00, are required to carry out the Transfer Pricing Study in Mexico. Although the aforementioned Article establishes billing limits from which it is mandatory to have the Transfer Pricing Study, it is highly recommended to have this document, since in the event of a hypothetical review of intercompany operations by the SAT, it is likely that they will consider the expense of the invoices issued by the parent company as non-deductible if they are not justified with the EPT.

What is the risk of not having a Transfer Pricing Study in Mexico?

If you do not have a Transfer Pricing Study in Mexico, upon review of intercompany transactions by the SAT, it is likely that the expense of the invoices issued by the parent company will be considered non-deductible if we do not justify them with the EPT, with the corresponding fiscal impact of 30% of the corporate tax on the total amount of those invoices.

Transfer Pricing Study in Colombia

When should a Transfer Pricing study be carried out in Colombia?

In Colombia, companies must file the transfer pricing information return when, at 31 December of the previous year, annual turnover exceeds 61,000 UVT (COP 2,172,027,000, approximately €515,000 for 2020) or gross assets exceed 100,000 UVT (COP 3,560,700,000, approximately €845,000).

A Local File is also required when an individual related transaction exceeds 45,000 UVT (approximately €380,000) or transactions with tax havens exceed 10,000 UVT (approximately €85,000).

A Master File is required when the taxpayer belongs to a multinational group, broadly understood as two or more related companies in different jurisdictions.

Transfer Pricing Study in Peru

When should a transfer pricing study be carried out in Peru?

Peruvian taxpayers will be required to submit:

Informative Affidavit Local Report: Taxpayers with income exceeding 2,300 Tax Units (UIT) must submit the Informative Affidavit Local Report for transactions that generate taxable income and/or deductible costs or expenses for determining the tax.

Taxpayers are those whose accrued income exceeds two thousand three hundred (2,300) Tax Units (UIT) and whose transactions fall within the scope of transfer pricing regulations, with a transaction amount equal to or greater than one hundred (100) Tax Units (UIT) and less than four hundred (400) Tax Units (UIT).

Informative Affidavit Master Report: Taxpayers that are part of a group with accrued income exceeding 20,000 UIT must annually submit the Informative Affidavit Master Report, which contains the organizational structure, a description of the business or businesses, and the transfer pricing policies regarding intangibles and group financing, as well as its financial and tax position.

Taxpayers whose accrued income exceeds 20,000 UIT and who have carried out transactions within the scope of transfer pricing regulations, with transactions amounting to four hundred (400) UIT or more, are obligated subjects.

Country-by-Country Informative Return: Taxpayers that are part of a multinational group must file an annual Country-by-Country Informative Return (CDR). This return will contain information related to the overall distribution of income, taxes paid, and business activities of each of the entities belonging to the multinational group that operate in a given country or territory.

Whenever the income accrued in the taxable year prior to the one corresponding to the return, according to the consolidated financial statements that the parent company of the multinational group must prepare, is greater than or equal to two billion seven hundred million and 00/100 soles (S/ 2,700,000,000.00), the following are required to file: the parent company of the multinational group domiciled in the country; or the domiciled taxpayer that has been appointed as the representative parent company; or there are no agreements that allow the Tax Administration to obtain said Country-by-Country Report from other administrations.

What is the risk of not having a Transfer Pricing Study in Peru?

If a Transfer Pricing Study in Peru is not available, and the prices agreed upon by the taxpayer are not valued in accordance with the Arm’s Length Principle, the Tax Authority has the authority to adjust the value agreed upon by the parties when it determines a lower tax rate in Peru than would be applicable under transfer pricing rules. Furthermore, according to Article 177, paragraph 27 of the LIR (Tax Law), failure to exhibit or submit the documentation and information referred to in the Income Tax Law or, where applicable, its translation into Spanish, which, among other things, supports the informative sworn statements (Local Report, Master Report, and/or Country-by-Country Report), will result in a fine of 0.6% of net income (no less than 10% of the UIT and no more than 25 UIT). Note: 1 UIT is equivalent to 4,300 soles in 2020.

Transfer Pricing Study in Brazil

When should a transfer pricing study be carried out in Brazil?

Brazilian companies must prepare a transfer pricing study when they transact with foreign parties linked by corporate relationship or economic dependence, and for dealings with entities in low-tax jurisdictions. Law 9.430/96 requires compatible prices and conditions between linked Brazilian and foreign companies.

The legislation applies control methods to goods and services exported during the year. The Spanish source identifies three methods: CAP, based on a fixed 15% margin over domestic production cost; PVEX, directly comparing related and independent prices; and PVA/PVV, using retail or wholesale prices in the international market.

The company must document market practices and prices in the customer’s country. The study assesses the alternatives, recommends a method and identifies any tax-return corrections, providing support for compliance and defence.

Transfer Pricing Study in Spain

When should a Transfer Pricing study be carried out in Spain?

The Transfer Pricing Study is required for companies that have carried out related-party transactions with a value exceeding €250,000, valued at market price, with any of their subsidiaries during the tax period, with the same related person or entity. Depending on the group’s billing level, one type of documentation or another must be used:

*Group Size*	Documentation
Group <10M	Standardized Document (Local File)
10M>Group <45M	Simplified Taxpayer Document (Local File)
Group <45M	Group Documentation and Specific Taxpayer Documentation (Master File + Local File) File)

In addition, a benchmark must be performed for each existing group of transactions with those subsidiaries that exceed the aforementioned 250,000 euros in related-party transactions.

Transfer Pricing Study in Chile

When should a Transfer Pricing study be carried out in Chile?

There are two different obligations: the Annual Transfer Pricing Declaration and the obligation to complete the Transfer Pricing Study:

Annual Transfer Pricing Declaration (DJ 1907):

This declaration must be submitted annually by June 30th. If necessary, an extension of up to 3 months can be requested from the Chilean Internal Revenue Service (SII). This Affidavit must be submitted by the following taxpayers, with respect to the transactions indicated:

Taxpayers who, as of December 31 of the reporting year, belong to the Medium-Sized or Large-Sized Enterprises segments and who, in said year, have carried out transactions with related parties that are not domiciled or resident in Chile, in accordance with the rules established in article 41 E of the Income Tax Law.
Taxpayers who, not being included in the segments indicated in letter a) above, in the period to be reported, have carried out transactions with related parties without domicile or residence in Chile for amounts exceeding $500,000,000 (five hundred million Chilean pesos), or its equivalent according to the exchange rate between the national currency and the foreign currency in which said transactions were carried out, in force as of December 31 of the reporting year, according to a publication made by the Central Bank of Chile.
Taxpayers not classified in the previous segments, who have transactions with persons domiciled or resident in a territory or jurisdiction with a preferential tax regime referred to in Article 41 H of the Income Tax Law.
Transfer pricing study:

As established by the SII in the published instructions, the threshold to determine whether or not a transfer pricing study is required is CLP 200,000,000. Therefore, for all transactions with related parties, a transfer pricing study will only be required if the transaction value is equal to or greater than CLP 200,000,000.

Why choose UR Global for your Transfer Pricing Studies in Spain, Mexico, Colombia, Peru, Portugal, Brazil, Chile, Morocco, and the United States?

Because by hiring our international tax experts to develop the UR Global business consultancy for the performance of a Transfer Pricing Study, the company will have several important factors to consider.

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Seguimiento

Gestionaremos desde Spain, con nuestro equipo de trabajo experto en fiscalidad internacional, la realización de los Estudios de Precios de Transferencia a los que la empresa en conjunto tenga obligación, que dependerá de la operativa que tenga en cada una de sus filiales. Por tanto, revisaremos la actividad en cada una de ellas para determinar si tienen obligación o no, otorgando en consecuencia nuestra asesoría y la ejecución de los Estudios de Precios de Transferencia en cada país.

Transfer pricing studies

What are Transfer Pricing and what are they for?

¿Cómo de útil es esta información para la empresa?

Where do we conduct the Transfer Pricing Study?

Transfer Pricing Study in Mexico

Transfer Pricing Study in Colombia

Transfer Pricing Study in Peru

Transfer Pricing Study in Brazil

Transfer Pricing Study in Spain

Transfer Pricing Study in Chile

Why choose UR Global for your Transfer Pricing Studies in Spain, Mexico, Colombia, Peru, Portugal, Brazil, Chile, Morocco, and the United States?

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Seguimiento

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