The last time Chilean Transfer Pricing (“TP”) regime was updated was in September 2019. In said opportunity, the modifications were aimed at aligning formal obligations such as the F1907 (transactions with related parties) and F1937 (CbCR). Later in February 2020, just before the COVID-19 outbreak worldwide, a modernised Income Tax Law and Tax Code (its art. 64 provides specific case examples for appraising and adjusting prices in transactions within an enterprise group in Chile) was finally published. Although minor changes in TP issues were introduced, they added pressure to taxpayers and to the Internal Revenue Service itself. But are these the implementations that we expect and need?
With the F1907, Chilean taxpayers are complying to disclose their related parties and operations performed during the previous fiscal year; and with the F1937, economic group information exchange standards are being met successfully.
We certainly expect practical modifications in accordance with the current and future post-COVID-19 scenario, for example:
Clearly, the Chilean TP landscape has been broadening in recent years. It is worth mentioning that this has happened not only regarding cross-border transactions, but also for domestic transactions within the economic group. We hope that the present circumstances serve to include these elements and can provide greater certainty for the Internal Revenue Service and elements of defence for taxpayers with regard to audits.
1 The banking regulator (SBIF) joined the Commission for the Financial Market (CMF) in 2019, as provided in the amendment to the Banking Law. The CMF is the government agency that oversees the entities and activities involved in the securities markets and insurance in Chile.
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