The Chilean tax authority (Servicio de Impuestos Internos—SII) issued Resolution No. 101 (31 August 2020) that establishes the annual requirements to file two “affidavits” regarding transfer pricing by taxpayers that are part of a multinational enterprise (MNE) group and when certain criteria are met.
The new requirements generally follow the recommendations of the OECD’s base erosion and profit shifting (BEPS) project.
In general, taxpayers that conduct transactions with related parties that are located abroad during “business year 2020” (Chilean fiscal year 2021) are required to file the following documents:
Concerning the Master file (F-1950), the reporting taxpayer is to provide an overview of the MNE group’s global business, including the nature of the global business operations, the overall transfer pricing policies, and the global allocation of income and economic activity. The Master file is intended to provide a high-level overview that places the MNE group’s transfer pricing practices in their global economic, legal, financial, and tax context.
Taxpayers that satisfy the following criteria will be required to file a Master file on form F-1950:
The resolution includes more details concerning the requirement under the Master file obligation.
Concerning the Local file (F-1951), taxpayers are to provide details about their transactions with foreign related parties, and the amount of applicable turnover is CLP 200 million or more. Other information to be reported concerns financial transactions (regardless of the amount) conducted during the last calendar year.
The Local file reporting is to include conclusions about the economic analysis (such as method used, comparables used, interquartile range obtained, comparability adjustments, and other information), and this implies that the taxpayer also must perform an adequate functional and economic analysis of its intra-group transactions in order to select the best transfer pricing method for purposes of documenting its transactions. Additionally, the taxpayer is directed to provide additional supporting documentation such as intercompany agreements, segmented financial information, and advance pricing agreement (APA) process, among others.
Taxpayers that satisfy the following criteria must file a Local file on F-1951:
The resolution includes more details on the obligations for filing F-1951.
The resolution includes other reporting requirements for both the Master and Local files, such as:
Read an August 2020 report [PDF 2.9 MB] prepared by the KPMG member firm in Chile
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in Chile:
Juan Pablo Guerrero | +56 229 971427 | firstname.lastname@example.org
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