The Chilean Internal Revenue Service (SII) has established a new procedure for signing Advance Transfer Pricing Agreements (APAs), replacing previous regulations. This change, derived from Law No. 21,713, seeks to strengthen fiscal certainty and transparency in cross-border transactions between related parties.
What is an Advance Transfer Pricing Agreement?
An APA is an agreement between a company and the tax administration that pre-determines the methodology for establishing transfer pricing in transactions with related parties abroad. Its main objective is to guarantee compliance with the arm’s length principle and to avoid unexpected tax adjustments.
Main Changes in the APA Procedure
The new regulations introduce a series of requirements and procedures for the application for and approval of an APA in Chile. Among the most relevant aspects are:
- Optional Prior Consultation: Taxpayers may submit a prior consultation to the SII to assess the feasibility of the APA prior to its formal application.
- Formal APA Application: This must include detailed information on the taxpayer, related parties, a description of operations, transfer pricing methods and the period of validity of the agreement.
- Required Documentation: Financial and corporate information of the business group, relevant contracts, Local Files and comparable operations data are required.
- Analysis and Resolution by the SII: The entity will review the application and may request clarifications or propose adjustments. The maximum response time is 12 months.
- Agreements with Foreign Administrations: In the case of bilateral or multilateral APAs, the SII will coordinate with other tax jurisdictions.
- Retroactive Application: APAs can have effect for up to three years prior to signature, avoiding tax penalties for transfer pricing adjustments.
- Monitoring and Compliance: Taxpayers must submit annual reports to demonstrate that they comply with the agreed conditions.
Benefits of APAs for Companies
- Reduction of Tax Risks: Minimizes the possibility of tax adjustments and penalties.
- Greater Certainty in Operations: Allows for more secure planning of international transactions.
- Better Relationship with the SII: Facilitates dialogue and transparency with the tax authority.
Conclusion
This new procedure strengthens the control of transfer pricing in Chile, aligning it with international standards. Companies with cross-border operations should evaluate the possibility of signing an APA to optimize their tax compliance and reduce tax risks.
Does your company carry out operations with related parties abroad? Contact transfer pricing experts for advice on implementing an APA under the new Chilean regulations.
Source: Internal Revenue Service, SII Exempt Resolution No. 28 (2025).