In September 2024, the Chilean Congress approved the “Tax Compliance Bill” (Newsletter 16621-05), introducing significant reforms to the Transfer Pricing and Multinational Group tax framework. These reforms aim to improve transparency and ensure companies comply with the Arm’s Length Principle. This article underlines the most relevant points of this reform below.
New Provisions on Taxation of Business Groups
The new Article 59 ter of the Tax Code will allow the SII (Servicio de Impuestos Internos – Internal Revenue Service) to conduct comprehensive audits of business groups. It will allow a joint review of all taxpayers involved in intra-group operations, ensuring these are at market value.
Article 64 Amendments: Appraisal of Transactions and Market Values
The reformulation of Article 64 allows the SII to appraise transactions when the agreed values differ from market prices significantly. Companies will provide valuation reports supporting their transactions to comply with the market value principle.
Transfer Pricing Amendments: Arm’s Length Principle and Self-Adjustments
Article 41 E strengthens the Arm’s Length Principle, according to the OECD Guidelines. In addition, introducing “Transfer Pricing Self-Adjustments” will allow companies to improve their economic performance by adjusting their prices under common market values. These adjustments will be incorporated into the taxable base of the first category tax.
Amendments in the Law on Passive Income and Preferential Tax Regimes
Article 41 G extends the regulations on passive income generated by controlled entities abroad, including family relationships up to the second degree. Likewise, Article 41 H redefines the criteria to consider a jurisdiction as a preferential tax regime, ensuring that only those jurisdictions failing to comply with international transparency standards are included. These reforms will be effective as of 2025 for multinational companies remaining compliant with Transfer Pricing regulations in Chile.
Call to Action
At TPC Group, we have an expert team to assist you in implementing the new Transfer Pricing regulations. Contact us to receive customized advice and ensure compliance with these new tax provisions.
Source: Tax Compliance Project (Bulletin 16621-05).
