Costa Rica continues to make progress in strengthening its tax enforcement framework by implementing new reporting requirements related to related-party transactions. In this context, the General Tax Directorate (DGT) has introduced the Transfer Pricing Informative Affidavit (Form D-273), a mechanism designed to improve tax transparency and facilitate the identification of risks associated with intra-group transactions.
The measure is part of an international trend in which tax administrations have increased their oversight capabilities to verify that transactions between related companies are conducted in accordance with the arm’s length principle, as recognized by the Organization for Economic Cooperation and Development (OECD).
A New Landscape for Tax Compliance
In accordance with the provisions issued by the Costa Rican Tax Administration, certain taxpayers must submit detailed information on their transactions with related parties using Form D-273.
This requirement represents an additional step in the process of strengthening tax controls over intra-group transactions and aims to provide the tax authority with tools that enable better risk assessment and more efficient auditing.
Furthermore, the implementation of this reporting requirement is aligned with international practices adopted by various Latin American jurisdictions that have incorporated specific Transfer Pricing reporting mechanisms.
Who is required to file?
The obligation to file the Transfer Pricing Informative Affidavit does not apply to all taxpayers, but rather to those who engage in transactions with related parties and meet certain criteria established by Costa Rican regulations.
Among the main entities required to file are:
- Large National Taxpayers.
- Companies operating under the Free Trade Zone Regime.
- Taxpayers exceeding the threshold for transactions with related parties defined by the Tax Administration.
These provisions apply to transactions with both local and foreign related parties, significantly expanding the scope of tax oversight.
The Importance of Supporting Documentation
One of the most critical aspects of the Transfer Pricing regime is that filing an Informative Affidavit constitutes only part of the compliance process.
Companies must have technical documentation supporting the terms agreed upon in their related-party transactions and demonstrating that such transactions were conducted in accordance with the arm’s-length principle.
Although Transfer Pricing documentation is not necessarily submitted along with the Informative Affidavit, the Tax Administration may request it during review or audit processes. Therefore, it is essential that organizations keep their economic analyses, comparability studies, and transfer pricing policies up to date.
Toward a More Sophisticated Audit
The evolution of the Costa Rican regime reflects a regional trend toward greater tax transparency and a strengthening of control mechanisms over intra-group transactions.
Countries such as Mexico, Colombia, Peru, Chile, and Brazil have, in recent years, introduced stricter documentation requirements and reporting obligations inspired by the OECD Transfer Pricing Guidelines and the recommendations stemming from the BEPS (Base Erosion and Profit Shifting) Project.
As a result, tax authorities now have more tools to analyze corporate structures, identify risks, and verify the proper allocation of profits across jurisdictions.
Recommendations for Businesses
Given this scenario, it is advisable for organizations to:
- Timely identify all transactions with related parties.
- Review the consistency of their Transfer Pricing policies.
- Verify that financial and tax information is consistent with supporting documentation.
- Keep their technical studies and economic analyses up to date.
- Periodically assess the tax risks associated with their intra-group transactions.
Proactive preparation helps reduce tax contingencies and facilitates the handling of any requests from the Tax Administration.
The Informative Affidavit for Transfer Pricing represents a new step in Costa Rica’s strategy to strengthen tax transparency. Beyond formal compliance, this obligation highlights the growing importance that tax authorities place on transactions between related parties and on the proper documentation of intercompany policies.
In an increasingly digitized and sophisticated tax enforcement environment, the proper management of Transfer Pricing has become essential for mitigating tax risks and ensuring the sustainability of business operations.
At TPC Group, we have a team specialized in Transfer Pricing and International Taxation, providing comprehensive advisory services for tax compliance, the preparation of technical documentation, and the efficient management of tax risks in Costa Rica and throughout Latin America.
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