In the dynamic global economic environment, proper Transfer Pricing management has become imperative for companies operating in several jurisdictions. Chile, along with its growing economy and robust regulatory framework, is not exempted. In 2024, it will offer crucial benefits for companies due to several Transfer Pricing studies in place. Herein, we address the main compliance advantages of these studies in Chile and detail the reports to be filed.
Main Transfer Pricing Reports
In Chile, companies must file the following Transfer Pricing reports:
- Transfer Pricing Study (Affidavit 1907): It reports the transactions carried out by the local entity with foreign related parties in the SII website in a pre-established format, and the company must have the Study as support of the declared ones, which must be filed to the SII at the request of this entity.
- Master File (Affidavit 1950): It overviews the multinational group, including its organizational structure, strategy, and Transfer Pricing policies.
- Country by Country Report (Affidavit 1937): It contains financial and tax information on all entities of the multinational group, broken down by country.
Regulatory Compliance and Penalty Avoidance
Chilean Transfer Pricing regulations require companies to prepare detailed studies supporting related party transactions. These studies ensure compliance with current legislation, avoiding significant penalties and fines affecting the financial stability of a company.
Tax Optimization and Efficiency
A well-prepared Transfer Pricing study allows companies to optimize their tax burden, ensuring that intercompany transactions are at market values. It not only avoids tax adjustments by the authorities but also allows for efficient tax planning, maximizing tax benefits within the legal margins.
Improved Transparency and Corporate Governance
Transparency in financial transactions is key to good corporate governance. Transfer Pricing studies provide detailed documentation of related party transactions, improving transparency and facilitating internal and external auditing. It, in turn, reinforces investor and stakeholder confidence in corporate management.
Reducing Audit and Litigation Risks
Tax authorities are stepping up their Transfer Pricing audit efforts. Having well-documented and justified studies significantly reduces the risk of adjustments during an audit. In addition, in case of disputes, these studies provide a solid basis for defense, reducing the risk of costly and lengthy litigation.
Adaptation to International Guidelines
The OECD and other international Transfer Pricing guidelines are constantly evolving. Up-to-date studies ensure that companies in Chile adapt to these guidelines, keeping up to date with international best practices and avoiding transnational regulatory conflicts.
Identification of Business Opportunities
Transfer Pricing studies involve an in-depth analysis of corporate transactions. This process can reveal operational inefficiencies and areas for improvement, as well as identify new business opportunities and optimization strategies that might otherwise go unnoticed.
Conclusion
By 2024, the benefits of Transfer Pricing studies in Chile are clear. Not only do they enable regulatory compliance and tax optimization, but they also improve transparency, reduce audit risks, and align companies with international guidelines. In addition, these studies can become valuable tools for identifying new business opportunities.
Please ensure your company’s success and competitiveness in the global market through well-founded and up-to-date Transfer Pricing studies!
Contact TPC Group for expert and personalized Transfer Pricing advice and ensure your company complies with all regulations while optimizing tax efficiency. Our expert team is ready to assist you in navigating the complex Transfer Pricing world in 2024!
