Growing international cooperation among tax administrations is transforming the way tax authorities identify risks associated with Transfer Pricing. Today, the exchange of information between jurisdictions has become a key tool for detecting structures that could lead to tax base erosion and artificial profit shifting.
According to the report Fiscal Transparency in Latin America 2026, prepared within the framework of the OECD Global Forum, information exchange mechanisms have enabled Latin American countries to significantly strengthen their audit processes and increase the identification of tax revenues derived from international audits.
The Case of Ecuador: Import Triangulation and Transfer Pricing Risks
One of the most significant cases highlighted in the report involves Ecuador, where the Internal Revenue Service (SRI) identified potential risks of Transfer Pricing manipulation associated with import transactions conducted through a related company located in a foreign jurisdiction.
According to the analysis presented, an Ecuadorian company purchased agricultural inputs through a related company acting as an intermediary. However, during the audit, it was observed that the shipments originated from multiple countries other than the jurisdiction where the related supplier was formally located. Furthermore, the documentation submitted indicated that this intermediary entity did not perform significant functions or add value within the supply chain.
According to the report, during the audit process, the SRI requested documentation related to the transactions between the Ecuadorian company and the related intermediary entity, as well as information on the transactions carried out by the latter with the actual suppliers of the imported goods. However, the requested documentation was not provided.
Faced with this situation, the tax authorities resorted to international information exchange mechanisms, including requests directed to various jurisdictions linked to the transaction, to identify the actual suppliers and verify the economic substance of the transactions. As a result, a potential cost-overpricing scheme was identified through the triangulation of imports between related companies.
Economic Substance and International Tax Audits
The case highlights an increasingly common trend in Transfer Pricing audits: tax authorities no longer limit their analysis to formal documentation or contracts signed between related parties.
Currently, the review focuses on aspects such as:
- The functions actually performed by each entity.
- The actual creation of value within the multinational group.
- The economic justification for the intermediaries involved.
- The consistency between the margins obtained and the risks assumed.
When a related entity participates in a transaction without contributing relevant functions, significant assets, or assuming substantial economic risks, the authorities may question the reasonableness of the structure and the deductibility of the associated expenses.
Information exchange as a control tool
The report also highlights that the tax transparency standards promoted by the OECD have strengthened the ability of tax administrations to access financial, accounting, and corporate information located in other jurisdictions. This cooperation makes it possible to identify complex structures used to shift profits or artificially reduce the tax burden.
In the case of Ecuador, information obtained through international exchange mechanisms made it possible to identify non-deductible expenses exceeding EUR 5.1 million and an additional tax liability of nearly EUR 1.7 million.
The case study presented in Fiscal Transparency in Latin America 2026 demonstrates that the combination of Transfer Pricing, fiscal transparency, and international information exchange is redefining audit processes globally. Multinational companies must ensure that their operational structures reflect genuine economic substance and that transactions between related parties are properly supported from a functional, economic, and documentary perspective.
At TPC Group, we have Transfer Pricing specialists ready to advise multinational companies on tax risk analysis, technical documentation, and compliance with international standards aligned with OECD guidelines.
Source: OECD