Introduction
In the field of Transfer Pricing, the application of international and regional guidelines is essential to ensure tax fairness and compliance. Decision 578 of the CAN (Comunidad Andina – Andean Community of Nations) establishes a framework to avoid double taxation and prevent tax evasion among its member countries. This article addresses how these regulations apply to digital and technical assistance services provided between companies from different CAN member countries, focusing on recent SUNAT guidelines.
Context of CAN Decision 578
Decision 578, published in the Official Gazette of the Cartagena Agreement in 2004, aims to avoid double taxation and prevent tax evasion among CAN member countries. This regulation is crucial for companies operating at a regional level, as it establishes clear guidelines on the taxation of income obtained from cross-border services.
Application of Article 14 for Technical Assistance Services
Article 14 of Decision 578 applies to income from networked customer support and software maintenance services provided through digital means that require human intervention. According to Report No. 000049-2024-SUNAT/7T0000, these services may be classified as professional, technical, or technical assistance services and will be taxable only in the country where the service generates profits.
Analysis
- Professional Services: Rendered by professionals with third-level or university undergraduate studies.
- Technical Services: Application of technological knowledge without transfer thereof.
- Technical Assistance: It includes the knowledge transfer necessary to exercise an art or technique.
Digital Services and their Regulation
Article 6 of Decision 578 applies to digital services requiring minimal human intervention, regulated by the Income Tax Law and its regulations. These services include software maintenance and technical support to the client in the network as long as they are used economically in the receiving country.
Characteristics of Digital Services
- Software Maintenance: It includes updates and network technical support.
- Network Technical Support: It provides online support, technical documentation, access to solution databases, and connection to technical personnel.
Tax Implications and Benefits of Decision 578
Decision 578 is based on the principle of effective profit, determining that services are taxable in the country where these generate profits. It ensures the country receiving the service profits can tax the income, avoiding double taxation.
Practical Example
- A healthcare company in country A contracts online medical consultation services from a company in country B. Country B provides the service, but the profit is generated in country A.
Conclusion
In conclusion, the correct application of Decision 578 and SUNAT guidelines is essential for businesses operating in the Andean region, ensuring tax compliance and avoiding double taxation. Companies must correctly identify the nature of their services and the country where they generate profits to apply the appropriate regulations.
Ensure your company complies with international and regional tax guidelines. At TPC Group, we offer specialized advice for the correct application of Decision 578 and SUNAT regulations, ensuring compliance and optimizing your tax processes. Please contact us today for a customized consultation!
Source: SUNAT
