On February 3, 2025, Juan Pablo Guerrero, KPMG’s Tax & Legal lead partner in Chile, published an article in Ex-Ante entitled “Transfer Pricing: Certainty and Collaboration in the New Tax Framework,” where he analyzes the recent amendments to Chilean Transfer Pricing legislation.
Regulatory Progress Since 2012
Since 2012, Chile has aligned its Transfer Pricing regulations with international standards promoted by the Organization for Economic Cooperation and Development (OECD) and the United Nations (UN). The recent enactment of the Tax Compliance Law, through Law No. 21,713, reinforces this commitment by introducing amendments that benefit both companies and the SII (Servicio de Impuestos Internos – Internal Revenue Service).
Strengthening Key Tools
The new Transfer Pricing rules belong to the Arm’s Length Principle, according to the OECD’s criteria. It implies considering a detailed analysis of functions, assets, and risks, as these aspects are essential to determining transfer prices.
Likewise, they allow corporate restructurings to be reviewed when they involve the transfer of functions, assets, or risks from abroad to Chile, following the OECD guidelines. Restructuring includes operations in which related companies adjust their functions, assets, or risks, complete current contracts, or modify them significantly.
Finally, the 5% penalty on Transfer Pricing differences is removed, clarifying that these adjustments will not affect other taxes stipulated in the Income Tax Law unless explicitly stated otherwise.
In addition, other key aspects related to updating the rules were addressed during a seminar organized by KPMG and SOFOFA, with the participation of the Chilean SII. At this event, the following significant advances in the regulations were highlighted:
- Advance Pricing Agreements (APAs): Chile leads South America with 14 APAs signed and 13 under negotiation. The new law introduces the “rollback,” which extends the effects of an agreement to the three years before its signature and extends its total validity to five years, following international best practices. In addition, prefiling meetings are allowed, facilitating a transparent and constructive dialogue between taxpayers and the tax authority.
- Transfer Pricing self-adjustment: The legislation allows companies to correct below-range profitability without penalties, encouraging voluntary compliance and generating additional revenue for the State.
Conclusion
Law 21.713, published in October 2024, introduces significant reforms to Transfer Pricing rules in Chile, aligning with the OECD guidelines. These reforms intend to improve legal certainty and promote transparency in business operations, facilitating a constructive dialogue between taxpayers and the tax authority.
By strengthening tools such as APAs and self-adjustment, this legislation balances monitoring and clear incentives, encouraging voluntary compliance beneficial to both businesses and the State.
For further information and expert Transfer Pricing advice, please do not hesitate to contact us.
Source: Ex-Ante / UGC