The transfer pricing regime in Peru has become one of the strictest in the region, driven by the adoption of OECD standards and the BEPS Plan. Since 2017, SUNAT has required three key obligations: the Local Report, the Master Report, and the Country-by-Country Report, each with different scopes and thresholds.
Failure to comply with these obligations—whether due to omission, late filing, erroneous information, or lack of documentation—can result in significant fines, which are regulated by the Tax Code, in addition to exposing the company to tax adjustments, surcharges, frequent audits, and reputational contingencies.
This article provides an in-depth look at the applicable penalties, their legal basis, the risks faced by taxpayers, and the most effective preventive measures to avoid them.
Peruvian regulatory framework
Legal basis
Transfer pricing obligations are based on:
- Income Tax Law (LIR) – Articles on related-party transactions and documentation obligations.
- LIR Regulations – Technical definitions, comparability criteria, valuation methods.
- Tax Code – Book IV: Violations and Penalties (applies to informative DJs and supporting documentation).
- SUNAT Rules – Formal requirements, filing dates, structure, and validations of Local, Master, and Country-by-Country Reports.
SUNAT publishes guides, instructions, and report templates that constitute the official sources for understanding the technical and formal details.
Transfer Pricing Obligations
Local Report
Includes detailed analysis of specific transactions with related parties, comparability, selected method, financial analysis, and supporting documentation.
Mandatory if certain income thresholds or transaction amounts are exceeded (according to current regulatory limits published by SUNAT).
Master Report
Contains global information on the multinational group: structure, transfer policies, functions and risks, intangibles, intragroup financing, among others.
Country-by-Country Report
Required for multinational groups with high consolidated revenues, following the BEPS Action 13 standard. Consists of tax, financial, and operational information by jurisdiction.
What constitutes a transfer pricing violation?
According to the Tax Code and SUNAT criteria, a taxpayer is in violation when:
Failure to submit:
- The Local Report
- The Master Report
- The Country-by-Country Report
- Technical support for the Transfer Pricing Study when requested by the administration
Submits after the deadline
Late submission constitutes a violation even if the information is correct.
Submits incomplete, inconsistent, or false information
SUNAT may request clarifications, ask for additional information, or initiate an audit.
Failure to present documentation during an audit
The Tax Code expressly penalizes failure to present documentation or books required for audit purposes.
Applicable fines: amounts, basis, and detailed calculation
Fine for failure to submit the Local Report
This is the most frequent violation and one of the most costly.
Legal basis
Tax Code – Table of Violations and Penalties (formal obligations related to information returns).
Amount of the fine
Generally applied as:
0.6% of the taxpayer’s net income
With legal limits:
- Minimum: 10% of 1 UIT
- Maximum: 25 UIT
Illustrative example:
- Taxpayer’s net income: S/ 30 million
- 0.6% = S/ 180,000
- Annual value of the UIT: depends on the year
- If 0.6% exceeds the cap of 25 UIT, the cap prevails.
Penalty for failing to submit Local Report documentation
This occurs when the taxpayer submits the Local Report but cannot substantiate:
- Comparables used
- Intragroup contracts
- Working papers
- Traceability of calculations
- Documentation of the method applied
- Audited financial statements of related entities
Applicable amount: same scheme 0.6% of income with limits in UIT.
This violation typically arises from audits.
Fines for Master Report and Country-by-Country Report
Although less common than the Local Report, they generate penalties for omission, late filing, or errors.
Applicable fine: 0.6% of net income, with the same limits.
CbCR involves additional risks due to the automatic exchange of information between tax authorities—a discrepancy can lead to simultaneous audits in several countries.
Additional penalties under the Tax Code
In addition to specific PT fines, non-compliance can trigger additional penalties:
Tax adjustment
If SUNAT concludes that the prices are not market prices:
- Determines a higher income tax
- Generates late payment interest
- Applies fines for omitted tax (percentages between 50% and 100%, according to the corresponding article)
Temporary closure of the establishment
Applicable in very serious and repeat cases.
Confiscation of assets
In cases of repeated refusal or resistance to inspection.
Inspection and risk behavior according to SUNAT
SUNAT applies risk models that detect inconsistencies in the financial and tax behavior of taxpayers. One of the most relevant indicators is the consistency of economic performance: companies with repeated losses while conducting transactions with related parties are often classified as cases requiring attention.
The substantiation of intra-group transactions is also reviewed. Services, royalties, loans, or intangibles without contracts, evidence of provision, or economic analysis are often considered red flags.
Likewise, the authority analyzes abrupt changes in declared prices or margins, especially when there is no economic explanation to support them.
Finally, there is a cross-check between the Local Report, the Informative Affidavit, and the financial information. Differences in sales, costs, expenses, declared or comparable functions trigger automatic alerts within SUNAT’s risk management systems.
How to avoid fines: practical recommendations
To minimize risks and avoid penalties in Transfer Pricing, companies can apply the following best practices:
- Implement an annual compliance system, including an internal schedule, threshold verification, review of related-party transactions, and early consolidation of financial information for the fiscal year.
- Have the Local Report prepared on time, as failure to submit it when requested will result in an automatic fine.
- Maintain intra-group contracts consistent with the actual transaction, especially for services, royalties, financing, and intangibles, avoiding gaps in documentation.
- Perform rigorous control of the analysis of comparables, ensuring consistent cleansing, properly supported adjustments, replicable benchmarking, and clear traceability of each filter applied.
- Verify that the margins and results reported are consistent with the audited financial statements, avoiding discrepancies that trigger observations by SUNAT.
- Take advantage of the gradualism regime of the Tax Code, which allows for reduced fines if the issue is remedied in advance or within the established deadlines.
What to do if SUNAT has already notified you of a violation?
When notified by SUNAT of a transfer pricing violation, it is advisable to act immediately and follow an orderly response route:
- Review the requirement to identify the type of violation: failure to file, late filing, omission of documentation, or inconsistencies in the information reported.
- Apply the correction gradually when the deadline allows, as this regime can significantly reduce the amount of the fine depending on the nature of the non-compliance.
- Prepare the necessary technical arguments if the case has escalated to an audit, including the accreditation of functions, assets, and risks, the support of the comparability analysis, and the defense of the method applied in the Local Report.
- Evaluate the filing of appeals if relevant, such as a complaint appeal, an appeal, a request for an extension of the deadline, or a well-founded letter of correction.
Conclusion
The Peruvian transfer pricing regime combines high formal penalties, strict comparability criteria, and an increasingly sophisticated audit approach by SUNAT.
Non-compliance can lead to severe financial contingencies, significant adjustments, and increased exposure to audits.
The best strategy is always preventative: solid documentation, up-to-date functional analysis, a consistent Local Report, and internal controls that detect discrepancies before filing. For multinational groups, it is critical to ensure consistency between Peru and other jurisdictions, especially in the context of the Master Report and CbC.
A proactive approach not only reduces the risk of fines but also strengthens the taxpayer’s position in the event of an audit.
Professional Advice to Avoid Fines and Tax Risks
Compliance with transfer pricing obligations in Peru requires technical rigor, consistent documentation, and a solid economic analysis to support each intra-group transaction. Having specialists on hand not only guarantees that penalties will be avoided, but also strengthens the taxpayer’s position in the event of any SUNAT audit.
Ensure full compliance with your obligations and eliminate contingencies before they occur. Trust TPC Group, a company specializing in transfer pricing, and guarantee compliance with your obligations with the technical support your organization needs.
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