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Costa Rica: Transfer pricing reports required from taxpayer group

Costa Rica: Transfer pricing reports required

The Costa Rican tax authority issued guidance to clarify when transfer pricing reports are required of a taxpayer group.


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The tax authority (Dirección General de Tributación (DGT)) on 13 December 2019 published an official letter (DGT-2007-2009) in response to a taxpayer question concerning whether a taxpayer group must file several transfer pricing reports when all of the companies that are members of the group are subject to an income tax rate (ISR) of 30%.

In presenting this question, the taxpayer group stated that from its point of view, it was not required to create and provide a transfer pricing report for each member company of the group because all of the companies were subject to 30% income tax rate—and therefore, the transactions between the related parties could not have resulted in reduced taxation or deferral of tax.

The tax authority, however, explained in the official letter that the only way to determine that the amounts of income, expenses, and deductions among the related parties complied with the arm’s length principle was through a transfer pricing report—regardless whether the related parties were subject to the 30% tax rate or not. The requirement for a transfer pricing report applies to all cross-border and domestic transactions if the standards listed in article 68 of the ISR regulation are satisfied.

The tax authority, therefore, concluded that the member companies of a cross-border or domestic taxpayer (economic) group must comply with the provisions set forth in Title V of the ISR regulations, including the requirement for preparing a transfer pricing report that shows the intercompany transactions have complied with the arm’s length principle.

Read a December 2019 report (Spanish and English) [PDF 88 KB] prepared by the KPMG member firm in Costa Rica

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