Considering that it is very close to the presentation of the Local Report transfer pricing affidavit, the specialist Renato Vila, Partner of the Consulting Division of PKF Vila Naranjo, answers certain concerns on the subject, to avoid fines and complications.
What are transfer prices?
These are the prices agreed upon by linked or related parties in their commercial operations, which may even be operations between natural and legal persons. What the legislation pursues worldwide is that these operations be agreed at market value, that is, as would be agreed by independent third parties, preventing the tax base from being reduced and/or profits from being diverted to countries or territories with a tax. income tax lower than the Peruvian.
When is it within the scope of transfer pricing under Peruvian law?
All taxpayers domiciled in Peru who carry out operations with related parties located in the national territory or abroad, with countries or territories with low and/or no taxation (tax havens), with preferential tax regimes or with non-cooperative countries would be within the scope transfer pricing.
When is the link generated to define what is a related party?
There are several grounds according to the provisions of article 24 of the Income Tax Regulations. Mostly these causes are related to the level of capital shareholders, however, they can also be linked by degree of consanguinity and affinity, consolidation of financial statements, if the companies have directors, managers, common administrators who have decision-making power or under some consortium contract and joint venture.
So, meeting the linkage criteria and that these companies carry out transactions between them, would it be enough for them to present the annual affidavit of transfer prices Local Report?
No, local regulations establish certain parameters and limits for this. If the companies exceed these limits then they should present the declaration.
What are these parameters and limits for the presentation of the Local Report Sworn Statement?
For purposes of the local report, the taxpayers who must present the affidavit are those who meet the following 2 requirements: i) income earned in the fiscal year that exceeds two thousand three hundred (2,300) Tax Units (UIT) that would be S/ 10,120,000 for the year 2021 and ii) that the sum of the entry and exit transactions between related parties, countries or territories with low and/or zero taxation, preferential or non-cooperative tax regimes exceeds 400 UITs, which would be S / 1,760,000 for fiscal year 2021.
It should be noted that in addition to this local report, companies must have another report called Benefits Test when they receive services from related parties. The focus of this report is to analyze the reliability, reasonableness, formality and market value of the services received; It even discriminates between high and low value-added services, where, if the latter were, the profit margin on costs and expenses would be limited to 5%, that is, the company that receives a low value-added service should repair the excess. above the 5% margin, a situation that must be analyzed in the aforementioned Profit Test.
When are the expirations of the Local Report?
The filing date is next month, between June 15 and 23 according to the last digit of the RUC.
Is the presentation mandatory, if yes, is there a fine for not presenting the local report?
The presentation of the informative declaration local report is mandatory when it is within the scope of transfer prices and exceeds the limits mentioned above, failure to present originates a fine of 0.6% of net income with a limit of 25 UIT, equivalent to S / 110,000 soles for the fiscal period 2021.
According to Renato Vila, Partner of the Consulting Division of PKF Vila Naranjo, considering that in recent years, the Tax Administration has placed greater emphasis on the control of transfer prices, his recommendation is to comply with their timely presentation through a correct and thorough analysis of the operations carried out between related parties, trying to start the analysis at the end of the year to correct any potential contingency and even be able to seek some future planning within the legal framework that can generate some tax efficiency if possible.
