Chile has implemented several innovations in Transfer Pricing documentation to align with international best practices and improve tax transparency. The following are some of the main innovations in this area:
Local Report and Master File
Since 2016, Chile has required multinational companies meeting certain parameters to file a Local Report and a Master File. The Local Report must contain detailed information on intra-group transactions affecting Chilean entities, and the Master File must provide an overview of the multinational group, including its organizational structure, business description, strategies, and Transfer Pricing policies.
Country by Country Report
Chile has also adopted the Country-by-Country Report (CbC) according to OECD recommendations. This report, mandatory for multinational groups with consolidated revenues exceeding EUR 750 million, provides aggregated information on the global income allocation of revenues, profits, and economic activities of the group. The CbC enables tax authorities to identify potential Transfer Pricing risks and assess multinationals’ tax policies more effectively.
Comparative Analysis and Benchmarking
Chilean regulations require comparative analysis and benchmarking studies to ensure intra-group transactions are at Arm’s Length. Companies must use comparable market data and apply internationally recognized Transfer Pricing methods to support their Transfer Pricing policies.
Audits and Taxation
The Chilean tax authority has increased its Transfer Pricing audit and enforcement capabilities. Through advanced technological tools and risk analysis, reviews of intra-group transactions have been intensified to detect and correct possible deviations from Transfer Pricing rules.
Advance Pricing Agreements (APAs)
Chile has established a framework for Advance Pricing Agreements (APAs), allowing multinational companies to obtain certainty about accepting their transfer pricing policies before entering into transactions. APAs provide greater legal certainty and reduce the risk of tax disputes.
Conclusion
Innovations in Transfer Pricing in Chile reflect an ongoing effort to improve tax transparency and fairness. Multinational companies operating in Chile must keep up with these regulatory changes and ensure compliance with the new documentary requirements to avoid penalties and optimize their tax planning.
