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06 September 2018 Peru amends transfer pricing rules On 24 August 2018, Peru published Legislative Decree No. 1381 (Legislative Decree) amending the applicability of the Peruvian transfer pricing (TP) rules and the treatment of import and export transactions that involve products for which a quoted price is used by independent parties to set prices. The Legislative Decree generally aligns with the approach of Action 10 of the Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD). Before the Legislative Decree, the TP rules applied to cross-border and domestic transactions between related parties, and to all transactions with residents in tax haven jurisdictions. The Legislative Decree expands the TP rules to transactions with residents in "non-cooperating jurisdictions," as well as transactions with residents whose revenue or income is subject to a "preferential tax regime." Unfortunately, neither term is defined in the Decree. The Legislative Decree amends the TP rules on the treatment of import and export transactions involving products for which a quoted price is used by independent parties to set prices. This includes transactions involving derivative financial instruments whose value is based on an agreed-upon underlying financial asset. When applying the Comparable Uncontrolled Price (CUP) method to cross-border transactions involving commodities, the Legislative Decree establishes that the arm's-length price for Peruvian income tax purposes must be determined by reference to a publicly quoted price. The actual pricing date or period of pricing dates should be used as a reference to determine the price for the transaction, as long as independent parties in comparable circumstances would have relied upon the same pricing date. The taxpayer needs to notify the SUNAT (i.e., Peruvian Tax Authority) of the actual pricing date or period of pricing dates used to determine the price for the transaction. The aforementioned notification to SUNAT is considered a sworn statement and must be completed within 15 working days of the shipment date or the date of disembarkation. As part of the notification, the taxpayer must also provide a copy of the contract and/or details of the transaction, such follows: In the event the notification is not presented, is incomplete or contains inconsistent information, the date to be used as a reference to determine the price is either: If the selected TP method differs from the CUP, the taxpayer needs to provide the local tax authority with the supporting documentation explaining the economic, financial and technical reasons as to why the selected TP method is the most appropriate one. Further guidance is expected to be included in future regulations on the type of: (i) commodities; (ii) markets from which the quotation must be obtained; (iii) quotations to be used; and (iv) adjustments covered by the new rules.
Document ID: 2018-6053 |
