TRANSFER PRICING
Transfer Pricing rules allows to establish the market value of the transactions carried out between related parties; with residents in non-cooperating countries or territories, or with low to no taxation countries; and, those that are made with individuals whose income or savings, come from those transactions which are subjected to a preferential tax regime.
Taxpayers must comply with the transfer pricing regulations that includes the submission of tax information returns to the Tax Administration (Local File, Master File, and Country by Country Report), according to certain parameters.
Our extensive experience in the public and private sector provides a unique proposal, allowing us to assist our clients to carry out their transactions, minimizing their tax risks.
Our advice in Transfer Pricing includes the following:
COMPLIANCE OF FORMAL OBLIGATIONS
We offer support in the preparation, adaptation and / or second review of the formal obligations required by law, considering the needs of each client, according with the Peruvian regulations:
➢ Local File.
Annex I: For taxpayers whose taxable income exceeds 2,300 UIT (Tax Unit) and would have made transactions within the scope of the transfer pricing rules, which amount equals or exceeds 100 UIT, and is less than 400 UIT. Annex II, III and IV: For taxpayers whose taxable income exceeds 2,300 UIT (Tax Unit) and would have made transactions within the scope of the transfer pricing rules, which amount of operations equals or exceeds 400 UIT.
The Report must contain a detailed description of business activities and strategies. As well as operations with related parties and / or tax havens, including the analysis of transfer prices that support its market value.
Master File.
For taxpayers who are part of an economic group, whose income exceeds 20,000 UIT (Tax Unit) in the year. And, would have made transactions within the scope of the transfer pricing rules, whose transaction amount is equal to or exceeds 400 UIT.
The Report must include, among other things, the organizational structure, the description of the business or businesses, and the transfer pricing policies in relation to intangibles and financing.
Country by Country Report
For taxpayers who are part of a multinational group, whose income accrued is equal to or exceeds S/ 2'700,000,000 in the previous fiscal year according to the consolidated financial statements.
The Report must contain, among others, the information related to the global distribution of income, taxes paid and activities of each of the entities belonging to the group that carry out their activity in a certain country or territory.
Documentation and Information Report that supports the test of benefit and reliability of intragroup services.
In order to support the deductibility for expenses of intragroup services, taxpayers must comply with providing the minimum documentation and information. That should include, among others, the accreditation of the benefit test, a list of reasons why the service qualifies as high or low value added, and the determination of the value of the consideration.
TRANSFER PRICES DIAGNOTIC
We evaluate operations before the closing of the fiscal year or the Income Tax Return in order to verify that they have been carried out according to the applicable guidelines on Transfer Pricing rules. Or, in this case, identify problems in determining the market value, in order to take corrective measures.
Transfer Pricing Diagnostic contributes on solving potential Transfer Pricing problems, avoiding future observations by the Tax Authority. It also allows projecting a possible restructuring business supported by prior tax and economic planning.
TAX AUDITS
We provide comprehensive advice and support in transfer pricing auditing proceedings, establishing the best strategy, seeking to prevent or minimize challenges by the Tax Authority.
Knowing the problem
We carry out an economic and legal evaluation of the operation to know its nature and tax treatment.
Defining a strategy
We elaborate the comprehensive defense strategy, taking into consideration, both the legal procedure established, the rights of the taxpayer, the market value methodology which should be the most appropriate for the transaction subject to analysis, as well as all the external and internal elements necessary for the support of the transaction.
Escort in the Audit Process
We provide the assessment on all queries and prepare the responses for the Tax Administration.
ADVANCE PRICING AGREEMENTS
We advise in choosing the most appropriate method for determining market value. As well as the analysis of the potential contingencies that the company could have in the execution of the Advance Price Agreement, walking through before, during and after the process.
TAX PLANNING
We advise in order to generate fiscal efficiencies and reduce tax risks. Some examples correspond to the elaboration of intragroup service planning, financing policies, valuations of companies or intangibles from the tax perspective, accompaniment in business restructuring, among others.
Characterization of the company or transaction
We proceed to know the business as a whole, the functions, assets and risks involved, the market in which the company operates and the objectives it pursues in the short, medium and long term.
b. Structuring the operation
We review the different scenarios and the expected results in each one of them. Likewise, it is important to make a comprehensive evaluation that involves all the relevant areas of the business.
Determination of market value
We advise in choosing the most appropriate method under which the transaction amount will be defined. As well as the determination of the price or price range that will be applicable.
Documentation
In this phase, recommendations will be given on the documentation that proves the reliability of the operation.
Implementation Advice
We carry out the whole implementation process with our clients and ensure that what is planned becomes a reality. In addition, we ensure that responsible personnel adequately internalize changes until the company incorporates them as part of its regular operations.
