The SII (Servicio de Impuestos Internos – Internal Revenue Service) of Chile has established a new procedure for subscribing to Advance Transfer Pricing Agreements (APAs), replacing previous regulations. This amendment, derived from Law No. 21.713, intends to strengthen tax certainty and transparency in cross-border related-party transactions.
What Is an Advance Transfer Pricing Agreement?
An APA is an agreement that pre-determines the methodology for establishing transfer prices in related party transactions abroad between a company and the tax administration. It mainly aims to ensure compliance with the Arm’s Length Principle and avoid unexpected tax adjustments.
Main Amendments in the APA Procedure
The new regulations introduce several requirements and procedures for requesting and approving an APA in Chile. The most relevant aspects include:
- Optional prior consultation: Taxpayers may file a previous consultation to the SII to evaluate the APA’s feasibility before applying for it formally.
- Formal APA application: It must include detailed information on taxpayers and related parties, a description of transactions, Transfer Pricing methods, and an effective agreement period.
- Required documentation: Financial and corporate information of the business group, relevant contracts, Transfer Pricing Studies, and data on comparable transactions are mandatory.
- SII analysis and resolution: The entity will review the request and may require clarifications or propose adjustments. The maximum term for the response is 12 months.
- Agreements with foreign administrations: For bilateral or multilateral APAs, the SII will coordinate with other tax jurisdictions.
- Retroactive application: APAs can be effective up to three years before their signature, avoiding tax penalties for Transfer Pricing adjustments.
- Monitoring and compliance: Taxpayers must file annual reports to demonstrate compliance with the agreed conditions.
APA Benefits for Companies
- Reduced tax risks: They reduce possible adjustments and tax penalties.
- Greater certainty in transactions: They allow planning international transactions with greater certainty.
- Better relationship with the SII: They facilitate dialogue and transparency with the tax authority.
Conclusion
This new procedure enhances Transfer Pricing regulations in Chile, ensuring alignment with international standards. Companies with cross-border transactions should evaluate the possibility of subscribing to an APA to optimize their tax compliance and reduce tax risks.
Does your company have any related party transactions 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).