December 12, 2023


The case referred to in this resolution focuses on a company whose economic activity is the distribution of motor vehicles, importing goods of its related parties for resale in the domestic market in 2009. Hence, the taxpayer could support the prices established in the importation with its related parties were at market values through its Transfer Pricing Study this year, reporting the profitability obtained by the Company in 2019 was under the profitability ranges of the companies selected as comparable in a 3-year economic period (2007 – 2009).

Based on the aforementioned, the Tax Administration questioned the calculation of the Company’s profitability during the tax audit process, given that the taxpayer excluded the commissions and incentives expenses. Therefore, the Tax Administration considered the expenses to determine the Company’s profitability, as well as the financial information of companies selected as comparable in 2009. The Company applied an adjustment of around S/. 44 MM due to the losses reported in the results.

On the other hand, the Company stood in its position by arguing that the exclusion of the commission expenses did not correspond because of these implied efforts due to the international financial crisis that affected the automotive industry at the end of 2008. Therefore, these would be considered “extraordinary expenses” if the expenses or income unrelated to the normal business activity must be excluded under the application of the Transactional Net Margin (TNM) method.

RES. 04508-9-2022

As a result, the Tax Administration has not demonstrated to have performed a new comparability analysis supporting the modification of the periods corresponding to the financial information of the companies selected as comparable. This is due to the lack of an evaluation of the information exclusively for the fiscal year 2019 if it would qualify as comparable compared to the financial information of the Company for the same period.

According to the OECD Guidelines, the existence of an economic, business, or product cycle is one of the economic circumstances that may affect comparability, and the analysis of financial information for several years could expose facts that may have influenced (or should have influenced) the determination of the transfer price.

Therefore, the Tax Court exhorts, according to Article 32A (d) of the Income Tax Law, the Tax Administration to analyze. Additionally, Article 110 of the regulation indicates that the selected companies should be sufficiently comparable or if there were others better or more reliable than those selected by the taxpayer in the Transfer Pricing Study to identify the set of companies to be used as comparables to verify the market value of the transactions under analysis, considering elements and/or circumstances such as: (a) characteristics thereof, (b) functions, assets, and risks assumed, and (c) economies of the markets.