Chile: Adoption of new transfer pricing requirements: master file & local file

On 31 August last year, Chile’s Internal Revenue Service (SII) published Resolution 101, which incorporates two new affidavits (‘‘annual master file affidavit-F1950” & ‘‘local file affidavit-F1951”) regarding transfer pricing compliance. The scope and content of these new requirements are in line with the commitments agreed in Action 13 of the BEPS Action Plan, and imply a large amount of information. These efforts are intended to fully align Chile with the global trend of greater fiscal transparency in multinational transactions.

The master file affidavit (F1950) must be submitted by the following taxpayers:

→ Parent or controlling entity of the Multinational Enterprise (MNE) with residence in Chile, to the extent that the consolidated revenue of the MNE is at least EUR 750 billion as of 31 December of the reported year; or

→ The entity belonging to the MNE with residence in Chile that has been designated as the sole substitute to file the CBC report affidavit, on behalf of the parent or controlling entity.

Additionally, an Annex must be submitted online to F1950, referring to the descriptive information of the annual master file such as: (i) Information on the main activities of the MNE, supply chain analysis, main geographic markets, risk & functional analysis for each entity of the MNE and business reorganisation operations; (ii) Information regarding intangible assets of the MNE, global strategies, transfer pricing policies and some relevant details about intangible assets within the MNE; and (iii) information regarding financial activities of the MNE and description of financing sources and centralised financing if this is the case.

On the other hand, the local file affidavit (F1951) must be submitted by the taxpayers:

→ Considered within the segment of ‘‘large companies”1 ;

→ The parent or controlling entity of the MNE had to file the CBC report in Chile or abroad; and

→ Having carried out operations for amounts greater than CLP 200 billion (approx. EUR 216 million) with related parties abroad.

Among the items to be declared online in this F1951: organisational structure; business strategies, main competitors; chain value analysis; business restructuring activities; contractual support between the local entity and its related parties; transactions and its benchmarking analysis with related parties, individual annual financial statements of the local entity and full financial information of the comparable used in the benchmarking analysis.

Finally, the deadline for submitting the aforementioned annual affidavits and their annexes will expire on the last business day of June of the respective year, with regard to the operations carried out during the immediately preceding business year. This term may be extended only once, for up to three months.

Read the WTS Transfer Pricing Newsletter here