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17 July 2018 Peru requires taxpayers to file master file and country-by-country report annually In Ruling No. 163-2018/SUNAT (Ruling), issued 29 June 2018, the Peruvian tax authorities (SUNAT) require taxpayers to electronically submit the master file and country-by-country (CbC) report annually. The due date for filing the first master file and CbC report for fiscal year 2017 is in November 2018. For fiscal year 2018 and onwards, the submission deadline will be in October of the year following the close of the fiscal year. The exact filing date for each taxpayer depends on an official schedule based on the taxpayer's identification number. The Ruling generally aligns with the three-tiered approach of Action 13 of the Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD). The OECD and G20 initiated the BEPS project in 2013. On 5 October 2015, the OECD released the final BEPS package, consisting of 15 Actions, based on the core principles of coherence, substance and transparency. One of the cornerstones of the project, Action 13, Transfer Pricing Documentation and Country-by-Country Reporting, provides tax administrations with relevant information to conduct transfer pricing risk assessment analyses and audits of transfer pricing practices. This report contains guidance on transfer pricing documentation. It also includes a template and model legislation for CbC reporting (CbCR). On 31 December 2016, Peru published Legislative Decree No. 1312 (Legislative Decree), amending the Peruvian transfer pricing (TP) reporting requirements by implementing the changes proposed by the OECD under the BEPS Action 13 final report. The Legislative Decree expanded the TP documentation requirements by requiring taxpayers to submit both a master file and a local file, as well as the CbC report. The Peruvian Government followed up the Legislative Decree with detailed implementation rules on 17 November 2017, through Supreme Decree No. 333-2007-EF (Supreme Decree). The Supreme Decree included regulations with guidance for the preparation and submission of the local file, master file and CbC report. To a great extent, the contents of the master file and the CbC report adopted in Peru align with the recommendations specified in BEPS Action 13. These two documents will require taxpayers to articulate consistent TP positions and will provide SUNAT with useful information to assess TP risks. They will also help the SUNAT in determining where audit resources can most effectively be deployed. If audits are necessary, the documents provide SUNAT with information to commence target audit inquiries. This marks a new era of TP documentation and disclosure requirements in Peru that are much more comprehensive, more detailed and more thorough than those previously required. The master file reporting requirements will apply only to taxpayers that are constituents of a group of companies, both domestic and multinational, whose annual revenue for the fiscal year exceeds 20,000 Tax Units (approximately US$25 million). Under the Ruling, taxpayers exceeding the annual revenue threshold will only be required to prepare and submit the master file if aggregate annual related-party transactions equal or exceed 400 Tax Units (approximately US$500,000) during the year concerned The master file provides high-level information on the group's business operations, its TP policies and its global allocation of income and economic activity. Specifically, the information required in the master file provides a "blueprint" of the group and contains relevant information that has been grouped in five categories: (1) the group's organizational structure; (2) a description of its business or businesses; (3) the group's intangibles; (4) the group's intercompany financial activities; and (5) the group's financial and tax positions. In general, the master file is intended to assist the tax administration in evaluating the presence of significant TP risks and provide an overview of the group to place its TP practices in their global, economic, legal, financial and tax contexts.
The exact filing date for each taxpayer depends on an official schedule based on the taxpayer's identification number. CbCR requires aggregate tax jurisdiction-wide information relating to the global allocation of revenue and profits (or losses), as well as income taxes paid (and accrued). It also requires information regarding the tax jurisdictions in which the multinational enterprise (MNE) group operates. Additionally, CbCR requires a listing of all the MNE group's constituent entities, including the tax jurisdiction of incorporation, if different from the tax jurisdiction of residence, and the nature of the main business activities carried out by that constituent entity. Under BEPS Action 13, the CbC report should be filed in the jurisdiction of tax residence of the ultimate parent entity (UPE) of an MNE group and shared between jurisdictions through the automatic exchange of information, under government-to-government mechanisms under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, bilateral tax treaties or Tax Information Exchange Agreements. If the UPE of an MNE group is a Peruvian tax resident with annual gross revenue equal to or greater than PEN 2.7 billion (approximately US$830 million), the entity must prepare and submit a CbC report to SUNAT annually. For these purposes, an MNE has been defined to include two or more enterprises or entities that are residents of different countries or territories, and at least one of them is resident in Peru. The Peruvian group entity that is not the UPE of the MNE group should also file a CbC report with the SUNAT if one of the following cases applies:
In these cases, a Peruvian entity will need to notify the SUNAT of the designation by the end of the month preceding the submission deadline. Additionally, when more than one constituent entity of the same MNE group is resident for tax purposes in Peru, the MNE group may designate one of the constituent entities to file the CbC report and notify the SUNAT that the filing is intended to satisfy the filing requirements of all the MNE group's constituent entities that are resident for tax purposes in Peru. Unless SUNAT is notified of such designation by the end of the month preceding the submission deadline, CbCR filing requirements will apply to all constituent entities of the same MNE group that are resident for tax purposes in Peru. Nevertheless, the Ruling indicates that there is no obligation to file locally a CbC report in cases 1 through 3 above, if the MNE group is required, by the local submission deadline or before, to provide, and indeed provides the CbC report, through an SPE residing abroad. This exception will only apply when:
The exact filing date for each taxpayer depends on an official schedule based on the taxpayer's identification number. Taxpayers must submit the master file and CbC report electronically in accordance with the specifications to be prescribed by SUNAT. Failure to comply could result in penalties. In general, the master file and the CbC report should be translated to Spanish and the documentation and information supporting their content kept by the taxpayer for five years or during the statute of limitations period established by the Tax Code, whichever is longer. The information contained in these documents can be used by SUNAT for tax audit purposes and may be shared with other jurisdictions through the automatic exchange of information, under government-to-government mechanisms such as bilateral tax treaties or information exchange agreements. These new reporting requirements may lead to more extensive obligations to submit and prepare TP documentation. Overall, taxpayers must disclose more information. These disclosure requirements will increase the workload of both the finance and tax teams of the reporting entities. Therefore, taxpayers should address these new reporting requirements as soon as possible.
Document ID: 2018-5862 |
