According to the OECD and Peruvian legislation on transfer pricing, there are three levels of documentation such as Local Report, Master File and Country by Country Report, being mandatory the two latter in Peru from 2017 onwards.
The importance of this last report lies in the fact that SUNAT will be able to obtain relevant information from each of the companies of the multinational group the subject obliged to file the Country-by-Country Report belongs, meaning it can observe whether any type of tax evasion or avoidance is taking place.
What is the Country-by-Country Report?
The Country-by-Country Report is a transfer pricing declaration for multinational groups. In this declaration, the obligated entity must report information such as the amount of income, profit or loss, taxes paid, among others in relation to the different jurisdictions the group operates.
Who are the obligated entities?
In principle, the entities obligated to declare Country-by-Country Report on January 29th will be the parent companies, whether of local origin, branches, and/or subsidiaries of multinational groups domiciled in Peru, provided their income exceeds S/. 2,700,000,000,000.00, according to consolidated financial statements of the previous taxable year. However, the rule regulating Transfer Pricing in Peru provides that multinational companies whose parent company is located in a country such as the USA or China, among other jurisdictions lacking information exchange agreement with the Peruvian tax authorities and having their branch or subsidiary in the country must file the Country-by-Country Report.
When is the Country-by-Country Report filed?
The Country-by-Country Report must be filed in October of the year following the fiscal year the filing is required, according to the TIN the last digit.
On this point, it is worth considering that for the years 2017, 2018, and 2019 the filing of this report was suspended for those taxpayers obliged by the assumptions from 1 to 3, paragraph b) of Article 116 of the Regulations of the Income Tax Law, i.e., taxpayers forming part of a multinational group and obliged because the non-domiciled parent company was not obliged in its jurisdiction, or there was no agreement between competent authorities for the exchange of information or there was a systematic breach of this agreement.
This suspension was maintained until the last working day of the month following the one in which the approval of the OECD confidentiality standard for the automatic exchange of information is published on SUNAT’s website, being published in December 2020, the new due date of the Country-by-Country Report for fiscal years 2017, 2018, and 2019 will be the last working day of January 2021.
What is the procedure to file the Country-by-Country Report?
To file this report, SUNAT has implemented a system called IR AEOI, which can be found on its website, sending through this the required information in an XML format file.
This file must be prepared based on a scheme (XSD Schema file), according to technical specifications and validations indicated by SUNAT, which are based on OECD standards.
It is recommended that taxpayers comply with this statement in the established forms, i.e., considering the technical specifications mentioned for the xml file. Otherwise, it could cause rejection at the time of filing.
Likewise, it is recommended to file within the deadlines established above to avoid incurring in an infraction which may be penalized with 0.6% of the taxpayer’s net income.