Transfer Pricing Audit Procedure

January 24, 2024

What is an audit Procedure?

It is the procedure applied by the Tax Administration, within the powers assigned in the Tax Code, which seeks to determine the adequate compliance of tax obligations by taxpayers.

In this instance, taxpayers are obliged to facilitate the inspection and determination tasks carried out by SUNAT, which implies allowing control, as well as the presentation or exhibition, in the offices of SUNAT or before the officials in charge, of declarations, reports, minute books, records, and accounting books and other documents related to tax obligations in the form, terms, and conditions required.

Likewise, it must provide all the information required by the Tax Administration or ordered by the tax regulations on the activities of the tax debtor or third parties with whom they are related under the form, deadlines, and conditions established.

Types of Audit Procedures

There are two types of audit:

  1. The final audit is the procedure by which SUNAT performs an exhaustive audit of the taxpayer’s books, records, and documentation.
  2. The partial audit is the procedure by which SUNAT partially reviews one or some of the elements of the tax obligation

Where Are Transfer Pricing Audit Procedures Located?

Transfer Pricing audit procedures are partial by definition due to the review of a specific aspect of income tax, such as the market value that should be met by those related party transactions or those carried out from, to, or through non-cooperative, low, or no taxation countries or territories; or those with subjects whose income, gains, or profits from such transactions are subject to preferential taxation.

Deadlines for Audit Procedures

Generally, the final audit procedure may be carried out within a maximum period of 1 year. A different case is that of a partial audit that, due to its specific nature, must be carried out within a maximum period of 6 months unless the Tax Administration chooses to transform it into a definitive rate, following the considerations of this type of audit.

Deadlines for Audit Procedures in Transfer Pricing

Mainly, the maximum period should be six months, while if carried out as part of a definitive audit procedure in which other aspects of Income Tax are reviewed, it should be one year. Conversely, the deadline referred to in Article 61 of the Consolidated Amended Text of the Tax Code will not apply to the definitive audit procedures in which the Transfer Pricing rules are applied each time the exception to the period provided for in numeral 3 of Article 62-A of the Consolidated Amended Text of the Tax Code will be applicable. In this sense, they do not have a maximum duration.

Aspects Considered by SUNAT in a Transfer Pricing Audit Procedure

It often questions the methodology applied by the taxpayer for determining the market value of those transactions within the scope of the Transfer Pricing rules. Likewise, it may do it with the selection of comparables in the application of a particular method.