Transfer Pricing 2025 Comparisons

In Peru, the provisions related to transfer pricing regulations are established in Article 32-A of the Peruvian Income Tax Law (ITL) and in Chapter XIX of its Regulations.

Through these regulations, the following relevant aspects have been addressed:

• the definition of related parties;
• the criteria for applying adjustments to the value agreed upon by the parties;
• the conditions for determining the comparability of transactions;
• the methods to be used;
• the guidelines for entering into advance price agreements;
• sworn declarations; and
• other formal obligations that taxpayers must comply with, as well as specific regulations regarding the treatment of intra-group services.

It should be noted that, for the interpretation of the aforementioned regulations, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the “OECD Guidelines”) are applied, as long as they do not contradict the provisions approved in Peruvian legislation.

Transfer pricing regulations in Peru entered into force in 2001, following the amendment of Article 32 of the ITL in October 2000 by Law No 27356. These regulations incorporated the OECD Guidelines and directives that had been adopted by various countries in the region since 1997.

Thus, for tax purposes, Peruvian legislation incorporates the application of the transfer pricing methods for transactions between related parties. In addition, it has been established that transactions with non-co-operative countries or territories with low or no taxation are subject to the same consideration. Aspects related to the market value of the services, the transfer pricing methods to be applied, the definition of related parties and the definition of non-co-operative countries or territories with low or no taxation were specified in Supreme Decree No 045-2001-EF of 16 March 2001, which amended the Income Tax Law Regulations (ITLR).

However, one of the most significant changes to the Peruvian transfer pricing regime was the incorporation of Article 32-A into the ITL by Decree-Law No 945 of 23 December 2003. The legal provisions contained in this Article form the basis of the current Peruvian tax regime. Similarly, Chapter XIX of the ITLR was incorporated into the ITL by Supreme Decree No 190-2005-EF of 30 December 2005, which entered into force on 1 January 2006.

In this way, both the ITL and ITLR covered various aspects, including:

• the scope of application of the standard;
• the provisions for the application of adjustments (primary, correlative and secondary);
• the elements or circumstances to be taken into account for the comparability analysis;
• the transfer pricing methods;
• the determination of the interquartile range and the calculation of the median;
• the necessary documentation to support the prices;
• the rules on advance pricing agreements; and
• the minimum information to be included as part of the Transfer Pricing Technical Report.

Regarding formal obligations, the parameters for having or not having a Transfer Pricing Technical Report were first established in October 2006 by Superintendency Resolution No 167-2006-SUNAT, depending on the level of income and the amount of related party and non-co-operative countries or territories with low or no taxation transactions. Subsequently, on 30 May 2013, Superintendency Resolution No 175-2013/SUNAT was published, which also established the conditions for taxpayers to file the annual Transfer Pricing Informative Return through Virtual Form No 3560.

However, in order to adapt local regulations to the new standard generated from the 15 Actions of the OECD BEPS project, Decree-Law No 1312 entered into force on 1 January 2017, representing a significant change in the field of transfer pricing in Peru. This legal norm modifies the guidelines regarding Transfer Pricing Returns and compliance, establishing the criteria currently in force (see 1.1 Statutes and Regulations). It also mandates submission deadlines for each obligation. In the same vein, Superintendency Resolution 014-2018/SUNAT of January 2018 established, among other things, the means for filing the Local File: Virtual Form No 3560, currently in use.

It is important to add that Decree-Law No 1312 also established the necessary conditions for the deduction of costs or expenses related to intra-group services, such as:

• compliance with the Benefit Test and the provision of documentation and information to demonstrate the actual provision of the service;
• the nature of the service;
• the real need for the service;
• the costs and expenses incurred by the service provider; and
• reasonable criteria for their allocation.

Additionally, other amendments to the transfer pricing rules concern the treatment of imports and exports (Legislative Decrees Nos 1381 and 1537) and the rules applicable to exported or imported goods with a known price in the international market (Supreme Decree No 327-2022-EF).

Lastly, the most recent amendments to the local rules introduced key changes with effect from 1 January 2025, which can be summarised as follows:

• advanced pricing agreements (APAs) can now be applied retroactively (roll-back) if relevant conditions are met (Legislative Decree No 1662); and
• alternative valuation methods like discounted cash flow and multi-period excess earnings (MPEEM) are allowed when traditional ones are not applicable (taxpayers must provide technical reports as support (Legislative Decree No 1663)).

Peruvian transfer pricing rules are applicable to:

• transactions carried out by taxpayers with their related parties;
• transactions carried out from, to or through non-co-operative countries or territories with low or no taxation; or
• transactions carried out with subjects whose income/gains from such transactions are subject to a preferential tax regime.

Consequently, it is necessary to have the relevant information, documentation and/or analysis that supports that, for tax purposes, the value assigned to goods, services and other benefits reflects the market value, in accordance with the arm’s length principle.

Under Article 32-A of the ITL, two or more individuals, companies or entities are considered related parties when one of them participates directly or indirectly in the administration, control or capital of the other; or when the same person or group of persons participate/s directly or indirectly in the management, control or capital of several individuals, companies or entities. Related-party status also applies when a transaction involves intermediary parties aimed at concealing a transaction between related parties.

Additionally, Article 24 of the ITL regulates the assumptions and criteria for establishing related-party relationships. For example, here are some situations in which two or more individuals, companies or entities are considered related parties.

• When a natural or legal person owns more than 30% of the capital of another legal entity, directly or through a third party.
• When more than 30% of the capital of two or more legal entities belongs to the same natural or legal person, directly or through a third party.
• When more than 30% of the capital of two or more legal entities belongs to common partners of them.
• When there is a business collaboration contract with independent accounting, in which case the contract will be considered linked to those contracting parties that participate, directly or through a third party, in more than 30% of the contract assets.

• When there is a joint venture contract, in which one of the partners, directly or indirectly, participates in more than 30% in the results or profits of one or more businesses of the partner, in which case it will be considered that there is a link between the partner and each of their associates.
• When there is the existence of permanent establishments, applicable to non-resident companies with establishments in the country or resident companies with establishments abroad.
• When the exercise of dominant influence over management decisions, indicating control over other entities’ management bodies.
• When there is a significant proportion of transactions between the parties – this is the case when 80% or more of a party’s transactions involve related parties, constituting at least 30% of the counterparty’s transactions.

The ITL establishes that transaction prices agreed upon in transactions – subject to transfer pricing rules – will be determined in accordance with any of the following accepted international methods, considering the most appropriate method to reflect the economic reality of the operation:

• comparable uncontrolled price method (CUPM);
• resale price method (RPM);
• cost plus method (CPM);
• profit split method (PSM);
• residual profit split method (RPSM); and
• transactional net margin method (TNMM).

It should be noted that, unlike the OECD Guidelines, which consider residual profit split analysis as part of the profit split method, the ITL treats them as independent transfer pricing methods.

The ITL considers the application of “other methods” when, due to the nature and characteristics of the activities and transactions, it is not appropriate to apply any of the methods mentioned at 3.1 Transfer Pricing Methods. In this regard, it should be added that the ITL also indicated that the application of the “other methods” would be carried out in accordance with what is outlined in the ITL Regulations. However, given that to date the ITLR have not yet established these provisions, it is currently not possible to apply methods other than those indicated in 3.1 Transfer Pricing Methods.

The IITL states that, in order to establish the most appropriate transfer pricing method, the following must be considered.

• The method that is most compatible with the line of business, business or commercial structure of the company or entity.
• The method that has the best quality and quantity of information available for its adequate application and justification.
• The method that contemplates the most adequate degree of comparability between parties, transactions and functions.
• The method that requires the lowest level of adjustments in order to eliminate the existing differences between the comparable facts and situations.

It should be added that, for the purposes of applying the most appropriate transfer pricing method, the concepts of costs of goods and services, production costs, gross profit, expenses and assets will be determined based on the provisions of the International Accounting Standards, if they do not oppose the provisions of the ITL. Therefore, the Peruvian regulations have not established a hierarchy of methods.

Notwithstanding the foregoing, the ITL indicates that in export or import operations of goods (listed in Annex 2 of the ITLR) with known quotations in the international market, local market or destination market, including those of derivative financial instruments, or with prices that are fixed taking as a reference the quotations of the indicated markets, the market value is determined on the basis of such quotation values. In these cases, the method to be used is the CUPM; however, the ITL adds that, if the taxpayer uses a different method for the analysis of the transactions, the corresponding supporting documentation must be submitted to the Tax Administration, as well as the economic, financial and technical reasons justifying its use.

The ITLR establish that, when determining the price, consideration amount or profit margin that would have prevailed among independent parties in comparable transactions and resulting from the application of any of the previously mentioned methods, a range of prices, consideration amounts or profit margins should be obtained when there are two or more comparable transactions.

It should be noted that if the value agreed upon by the related parties falls within this range, it will be considered as agreed upon at market value. On the contrary, if the agreed value falls outside this range and, as a result, a lower income tax is determined in the country for the respective fiscal year, the market value will be the median of that range. The range will be calculated using the interquartile method.

Lastly, in the application of the CUPM, if the transactions exhibit a high level of comparability, the range will establish the minimum value at the lowest of the prices or consideration amounts of the comparable operations and the maximum value at the highest of these. For this purpose, the prices or consideration amounts of the comparable transactions are considered to have a high level of comparability if the coefficient of the variation applied to the values of the comparable transactions does not exceed 3%.

The ITLR establish that it is possible to eliminate differences (through reasonable adjustments) between the transactions being compared or between the characteristics of the parties conducting them or the functions they perform.

To achieve this, consideration must be given, among others, to the following elements, as applicable:

• payment terms;
• quantity negotiated;
• advertising and publicity;
• intermediary costs;
• packaging;
• freight;
• insurance; and
• physical and content nature.

The ITL has not established any notable rules relating to the transfer pricing of intangible assets; however, the Peruvian regulations rely on the OECD Guidelines and the Final Report of Actions 8-10 of the BEPS Plan as sources of interpretation for the treatment of such operations.

Notwithstanding the above, the Regulations stipulate that in order to conduct a proper comparability analysis, certain criteria reflecting the economic reality must be considered. Therefore, in the case of transactions related to the transfer or use of intangible assets, factors such as the contractual typology of the intangible, identification and characteristics, duration, degree of protection, and expected benefits of its use should be taken into account.

Additionally, concerning the application of the most appropriate valuation method, the Regulations provide guidelines for determining transfer prices associated with intangible assets.

• Regarding the application of the CUPM, it is indicated that it is not suitable for transactions involving the definitive transfer or use of significant intangible assets, nor when the involved intangible products or assets are not comparable in nature or quality.
• Additionally, with regard to the RPSM, it is underscored as an approach for transactions within closely integrated intercompany operations, particularly when significant intangible assets are present, rendering segregation impractical and imprecise.

The ITL does not have any special rules regarding the treatment of hard-to-value intangibles. As mentioned in 1.1 Statutes and Regulations, the Peruvian regulations use the OECD Guidelines as a source of interpretation.

The ITL lacks any special provisions on cost sharing agreements concerning intangibles between related parties. However, Article 117 of the Regulations mandates that the master file must, at a minimum, include a group policy on intangibles, which encompasses a listing of significant agreements on intangibles entered into between related parties, particularly cost sharing agreements.

Taxpayers are allowed to submit substitute and/or rectifying declarations for the informative returns:

• local file;
• master file; and
• country-by-country report (CbCR).

Regarding the local file, pursuant to Superintendence Resolution No 014-2018/SUNAT, the taxpayer required to submit the referred return may substitute and/or rectify it. This requires re-entering all the required information in Virtual Form No 3560; said declaration renders the last one submitted null and void.

Similarly, under Superintendence Resolution No 163-2018/SUNAT, taxpayers have the option to submit rectifying returns for the master file. This process involves entering all the required information in Virtual Form No 3561, including data they do not intend to replace or rectify. Additionally, this rectifying return supersedes any previously submitted ones. Likewise, entities obligated to submit the CbCR return may substitute and/or rectify it by re-entering all the required information in the IR Automatic Exchange of Information (AEOI) system, including data they do not wish to substitute or rectify. However, it is important to note that if, as a result of an audit procedure, the taxpayer accepted the adjustments imposed by the Peruvian Tax Administration (SUNAT), and these adjustments are linked to the aforementioned informative sworn statements, they can no longer be modified or rectified. SUNAT may adjust the agreed value between related parties if it results in a lower tax burden in Peru under the transfer pricing regulations. Additionally, such adjustments may be made even if this condition is not met, provided that the adjustment increases the tax liability in transactions with other related parties.

To determine whether the agreed value results in a lower tax liability, the independent effect of each transaction or group of transactions on income tax will be assessed. Adjustments made by SUNAT or the taxpayer will impact both the transferor and the acquirer. In the case of non-resident entities, adjustments will only apply to taxable income in Peru or deductions in tax determination.

Adjustments must be allocated to the corresponding tax period in accordance with established imputation rules. If allocation to a specific period is not feasible, the adjustment will be proportionally distributed across the periods in which the income or expense was recognised. For income not attributable on an accrual basis, specific rules apply, as set out below.

• In onerous transactions, the adjustment for the unpaid portion will be allocated on the date of the last or only payment.
• In non-remunerated transactions, the adjustment will be allocated:
1. to the period in which the income would have accrued if compensation had been agreed upon, for resident taxpayers; and
2. to the period in which the expense would have accrued, even if non-deductible, for non-resident taxpayers.

When adjustments involve non-resident entities, the corresponding withholding tax must be paid by the party that would have acted as the withholding agent had compensation been paid.

If a foreign tax authority makes a transfer pricing adjustment to a taxpayer residing in its country under a double taxation treaty (DTT) and SUNAT accepts the adjustment, the related party in Peru may submit a corrective tax return reflecting the adjustment, even if it results in a lower tax liability in Peru, without incurring penalties.

As a result of the transfer pricing adjustment, the dividends referred to in Article 24-A of the ITL will not be triggered, except in the circumstances outlined in the relevant provision, which stipulates that any amount or in-kind transfer qualifying as taxable income under Category III, representing an indirect disposition of such income not subject to subsequent tax control, including amounts charged to expenses and undeclared income, will apply.

Currently, Peru has entered into DTTs with the following countries: Chile, Canada, Brazil, Mexico, South Korea, Switzerland, Portugal and Japan, all of which include clauses for information exchange.

Peru has also signed Decision 578 by which it can obtain information from Colombia, Ecuador and Bolivia in order to consult and exchange information to establish administrative controls necessary to prevent tax fraud and evasion.

Moreover, Peru is a member of the Convention on Mutual Administrative Assistance in Tax Matters, which involves 149 jurisdictions. Peru is also a participant in the Global Forum on Transparency and Exchange of Information for Tax Purposes of the OECD.

Regarding information exchange related to transfer pricing, Peru has activated agreements for the automatic exchange of information concerning CbCR. As of January 2025, Peru can receive CbCR information from 80 jurisdictions worldwide and can send such information to 98 jurisdictions worldwide.

Peru does not actively participate in audits of other countries. Nevertheless, it actively participates in international frameworks, including the OECD Guidelines, DTTs and tax information exchange agreements (TIEAs). Although there is no distinct, standalone legal framework for joint audits, the existing co-operation mechanisms within the OECD, along with its adoption of BEPS Actions, facilitate enhanced audits for multinational enterprises, focusing on compliance with transfer pricing regulations.

The ITL stipulates that the Peruvian tax administration may enter into APAs with taxpayers domiciled in the country, whereby the valuation of various transactions falling within the scope of transfer pricing rules is determined based on the methods and criteria mentioned in section 3. Methods and Method Selection and Application. Furthermore, the ITL specifies that SUNAT may also conclude APAs with other tax administrations of countries with which Peru has entered into an international agreement to avoid double taxation. It is worth reiterating that, currently, Peru has signed DTTs with Chile, Canada, Brazil, Mexico, South Korea, Switzerland, Portugal and Japan. Additionally, Peru is a party to Decision 578 of the Andean Community (CAN), establishing the Regime to prevent double taxation and prevent tax evasion among member countries: Bolivia, Colombia, Ecuador and Peru. However, to date, Peru has not yet signed any APAs.

Peru allows the conclusion of unilateral APAs with resident taxpayers. However, to date, no programmes for bilateral or multilateral APAs have been established in the country.

The scope of the APA programme in Peru is limited to transfer pricing matters. To date, it does not cover other tax aspects.

APAs are administered by SUNAT. In relation to the conclusion of APAs with taxpayers domiciled in the country, the ITLR have governed the following important aspects:

• the features of APAs;
• the presentation and content of the proposal;
• the period for evaluating the proposal;
• the acceptance or rejection of the proposal;
• the execution and duration of the APAs;
• the modification and invalidation of the APAs;
• the auditing authority;
• the submission of an annual report; and
• other relevant matters.

With regard to the conclusion of APAs with tax authorities of countries with which Peru has entered into DTTs, the ITLR have indicated that this will be carried out within the framework of the amicable procedures provided for therein. Furthermore, it is worth noting that SUNAT has published a Guide to the Mutual Agreement Procedure (MAP) established in agreements to avoid double taxation and prevent tax evasion and avoidance in relation to income tax and assets.

In this regard, the MAP is a procedure that is carried out when the taxpayer considers that the measures taken by one or both contracting states imply, or may imply, taxation that is not in accordance with the provisions of the DTT or encounter difficulties and doubts arising from the interpretation or application of a DTT, regardless of the remedies provided for in the domestic law of those contracting states. Transfer pricing adjustments are among the matters that may be submitted to an MAP.

With respect to the execution of APAs with taxpayers domiciled in the country, the ITLR have outlined that these are civil law agreements entered into between SUNAT and taxpayers domiciled in Peru engaging in transactions with related parties. These agreements cover transactions conducted to, from, or with entities located in non-co-operative or low- or no-tax jurisdictions, or transactions involving entities subject to a preferential tax regime.

However, the Regulations also specify that the proposal will not be approved if it is demonstrated that the taxpayer or any related parties involved in the transactions to be covered by the APA, or their representatives acting as such (in the case of legal entities), have an outstanding conviction for tax or customs offences. Additionally, while there are no established limits regarding the transactions, the Regulations have provided guidelines for the approval or rejection of the proposal to enter into APAs. Furthermore, it has been stipulated that these agreements will apply to the ongoing taxable year at the time of approval and for the subsequent three taxable years. Regarding the conclusion of APAs with tax administrations, the ITL has restricted them to countries with which Peru has entered into international agreements to avoid double taxation.

The roll-back of an APA is prohibited if SUNAT has already made and communicated a determination regarding the value of the transactions in question as a result of applying the transfer pricing rules.

The ITL specifies that SUNAT may enter into APAs with taxpayers domiciled in Peru to establish the valuation of transactions within the scope of transfer pricing rules, utilising the established methods and criteria. Pursuant to Superintendence Resolution No 377-2013/SUNAT, SUNAT has outlined various provisions for the execution of APAs between domiciled taxpayers and SUNAT. These provisions detail the format, deadlines and conditions for holding preliminary meetings, submitting the supporting information and documentation for the APA proposal, including any modifications to the proposal, the procedures and requirements for formalising APAs, and the submission of the annual report.

The Resolution mandates that a taxpayer interested in initiating an APA and engaging in preliminary meetings with SUNAT must declare their intention before submitting their proposal. If a taxpayer deems the meetings unnecessary, they may submit their proposal along with the required information and/or documentation directly. Additionally, the Resolution specifies the minimum information that the declaration of intent must contain. Taxpayers are required to submit their proposal within 90 business days following the last meeting. If this period elapses and the taxpayer remains interested in proceeding with an APA with SUNAT, they must reaffirm their intention and either schedule new preliminary meetings or submit the proposal directly. Lastly, SUNAT has a 24-month period from the date of the proposal’s submission to approve or reject it, which can be extended by an additional 12 months.

Peruvian legislation has not established fees for taxpayers to enter into APAs with SUNAT.

The ITLR stipulate that APAs shall be applicable to the taxable year in which they are approved and for the next three taxable years thereafter.

Peruvian legislation does not grant APAs retroactive effect. It should be noted that APAs contain a clause permitting their modification or annulment in instances where significant changes in a company’s operations or economic circumstances severely affect the reliability of the methodology employed, in such a way that third parties would have deemed these changes significant for the determination of their prices. In this context, any modification or decision to annul the APAs will take effect from the taxable year in which the proposal for modification was submitted.

In line with this, regarding the termination of APAs, the ITLR stipulate that SUNAT has the authority, under certain conditions, to unilaterally invalidate these agreements. Nonetheless, transactions between related parties should be valued in accordance with the general provisions outlined in Article 32-A of the ITL, effective from the date the agreement is deemed null and void.

There are various specific penalties and fines for infractions related to transfer pricing, against which taxpayers may file appeals (if they disagree), within the established deadlines. Such infractions can be divided into the following three categories.

• Infractions related to the obligation of permitting oversight by the tax authority, reporting to, and appearing before it: for example, the infraction specified under numeral 27 of Article 177 of the Tax Code concerns not submitting the documentation and information that supports the local file, master file, and/or CbCR as demanded in the specified manner, within the designated timeframe, and according to the required conditions. The defence strategy in this scenario is focused on proving that the taxpayer has complied with the tax authority’s documentation requests in accordance with the regulatory stipulations.
• Infractions related to the obligation of filing declarations and communications: for example, the infraction identified in numeral 2 of Article 176 of the Tax Code pertains to the failure to submit reports within the prescribed deadlines. The defence strategy in this context is designed to establish that the taxpayer is not required to present said reports. Moreover, the infraction delineated in numeral 4 of Article 176 concerns the submission of reports either incompletely or inaccurately reflecting the truth. The defence strategy here aims to prove that the reports submitted comply fully with all prescribed guidelines and accurately depict the taxpayer’s operational realities.
• Infractions related to the fulfilment of tax obligations: for example, the infraction specified in numeral 1 of Article 178 of the Tax Code relates to the declaration of false figures or data. The defence strategy in this scenario is aimed at clarifying that the reports have no bearing on the determination and payment of the taxpayer’s tax liabilities. In Peru, there is a Graduated Penalty Relief System, through which taxpayers can obtain reductions for the tax infractions they have committed. For this purpose, each penalty and/or infraction is associated with a procedure through which taxpayers can rectify them. It is important to note that, depending on the timing of such rectification, different levels of reduction apply. For instance, in the case of the infraction outlined in numeral 4 of Article 176 of the Tax Code, taxpayers will be eligible for a 100% reduction of the penalty if they resubmit the reports (including any previously omitted information) before receiving any notification from SUNAT regarding the said infraction.

Peru has adopted transfer pricing documentation rules: SUNAT requires taxpayers to prepare all the files and reports contemplated in the OECD Guidelines. This obligation became effective on 1 January 2017, with the enforcement of the Legislative Decree No 1312 (for more details, see 1.2 Current Regime and Recent Changes).

Regarding the formal requirements to be submitted by those taxpayers subject to transfer pricing rules, these were implemented in accordance with Action 13 of the BEPS project. The Peruvian legal framework establishes different thresholds for reporting requirements based on the documentation to be submitted. These thresholds take as reference the tax units that correspond to the value in soles established by the Peruvian state for the determination of taxes, infractions, penalties and fines and other tax aspects.

In the case of the Local File Informative Return, this requirement corresponds to taxpayers whose income in the fiscal year is greater than 2,300 tax units. This Return should detail transactions that generate taxable income as well as those considered as part of the deductible cost or expense in the income tax (IR) calculation.

The Master Report Informative Return is required to be submitted by taxpayers who are part of an economic group with accrued income in the fiscal year exceeding 20,000 tax units and controlled transactions over tax units. This Report should contain, among other elements:

• the transfer pricing policies related to intangibles;
• information on the group’s financing methods;
• its financial and fiscal position;
• the organisational structure of the group; and
• a description of the business operations involving the group and its members.

Lastly, regarding the CbCR Informative Return, provided that the revenue accrued by a taxpayer’s multinational group is equal to or greater than PEN2.7 billion in the fiscal year before the reporting fiscal year, the following entities are legally required to submit the Return:

• the parent entity of the multinational group if it is based in Peru;
• the taxpayer that is a member of the multinational group when:
1. it has been appointed by the group as the surrogate parent entity;
2. the ultimate parent entity of the group is not required to file the CbCR in its country of residence;
3. the CbCR is submitted to the country of residence of the ultimate parent entity, but Peru has not established procedures for the automatic exchange of CbCR with that jurisdiction; and
4. the ultimate parent entity has submitted the CbCR, and even though Peru has an information exchange mechanism with that jurisdiction, there has been a systematic failure to exchange information, according to SUNAT.

This Return must contain, among others, information regarding how the income, taxes paid and business activities of each entity belonging to the multinational group are distributed on a global level.

The legal provisions, complementary rules and regulations established by SUNAT are closely aligned with the provisions of the OECD Guidelines, which are an interpretative source in Peru. However, there are some differences in the local application related to valuation methods and formal transfer pricing obligations, which are as follows.

In the case of valuation methods, the Guidelines consider the RPSM as part of the PSM while the ITL considers them as different methods; therefore, the Guidelines develop five methods and the ITL develops six methods.

It is essential to highlight that, in the absence of specific regulations for these scenarios, the ITL introduces the flexibility to adopt alternative valuation methods not outlined in the OECD Guidelines. This provision applies when assessing controlled transactions that are challenging to value due to their unique facts and circumstances, which hinder direct comparison with market benchmarks. Such transactions might include, for example, the buying and selling of fixed assets or the sale or transfer of intangible assets. This approach ensures a more nuanced and effective valuation process for complex transactions.

In terms of formal obligations, the main differences with respect to the OECD Guidelines are the following.

• Local File Informative Return – the taxpayer must present a functional and economic analysis of the operations that exceed a materiality amount (2.5 tax units). Likewise, they report on the amounts and dates effectively collected and/or paid of the intercompany operations. They must include a Benefit Test analysis for the service operations received.
• Master File Informative Return – this must include a chart illustrating the legal structure, legal corporate structure of each subsidiary, as well as a detailed table of such structure, ie, including name or corporate name, tax identification number, country or jurisdiction and percentage of shareholders capital participation.
• CbCR Informative Return – there are no differences related to the information required; however, SUNAT requests that the information follows a certain order, prior to its declaration. Therefore, the taxpayer responsible for ensuring that the declaration is in an XML file or it will not be accepted by the Administration’s system.

The transfer pricing regime in Peru is aligned with the arm’s length principle established in the OECD TP Guidelines.

In order to prevent and avoid tax avoidance between related companies, SUNAT has implemented in the legislation some actions of the BEPS Project on transfer pricing, as set out below.

• In light of Actions 6 and 14 related to avoiding the abuse of double taxation agreements (DTAs), the IPL incorporates in its negotiation models those indicated in these Actions in order to be more effective and to have a procedure for solving controversies arising from their application. Regarding this last point, the Tax Administration issued a guide for the taxpayer and other interested parties on MAPs that establishes the rules, guidelines and procedures according to the minimum standard required in Action 14.
• In light of Action 10 related to the treatment of intra-group services, the Tax Administration has incorporated some proposals in its regulations for the purposes of testing the deductibility of the expense. These can be found in Legislative Decree 1312.
• Lastly, in light of Action 13 regarding formal obligations on transfer pricing, the ITL follows the three levels of documentation suggested by the OECD’s BEPS Project. This can also be found in the aforementioned Decree.

Currently in Peru, Pillars 1 and 2 have not yet been considered as priority state policies by the Executive Branch or by the Legislative Branch. Therefore, at the present time there are no initiatives linked to them. However, in the next few years, these Pillars will be developed, with greater emphasis on Pillar 2.

ITL legislation has not implemented a restriction regarding taxpayers assuming the operational risks of other entities to ensure a guaranteed return. In general, any transaction subject to transfer pricing rules must comply with the correct allocation of market value, the application of the most appropriate method, the profit test (if applicable), among other established obligations. Assessing the variance in risk assumption is crucial for determining the level of comparability between controlled and uncontrolled transactions.

The UN Practical Manual on Transfer Pricing for Developing Countries does impact transfer pricing matters in Peru. However, it is crucial to note that this impact is not exerted in a rigid manner but rather through training sessions in which SUNAT participates. An example of this is Peru’s engagement in the “Tax Inspectors Without Borders” (TIWB) initiative through SUNAT. This initiative is a collaboration between the OECD and the United Nations Development Programme (UNDP).

Peruvian regulations do not contain specific provisions on transfer pricing safe harbours.

There are no specific rules governing savings that arise from operating in Peru.

Peruvian transfer pricing rules consider specific provisions for the deduction of costs and expenses derived from operations with related parties for services. Subsection i) of Article 32-A of the ITL, as well as Article 118-A of the ITLR, indicate that the services provided to the taxpayer by its related parties must meet the benefit test and provide the requested documentation and information, in order to be able to deduct said costs and expenses for the determination of the tax. The documentation and information provided must demonstrate:

• the effective provision of the service;
• the nature of the service;
• the real need for the service;
• the costs and expenses incurred by the service provider; and
• the reasonable criteria for assigning the costs and expenses.

Peru’s transfer pricing rules on financial transactions are designed to ensure that these transactions reflect arm’s length pricing and are generally aligned with the OECD’s Chapter X, which provides guidance on intercompany financial arrangements. However, while Peru adheres to the principles outlined in Chapter X, there are no specific and detailed standalone rules governing financial transactions such as loans, guarantees or other financing arrangements between related parties.

While the CUPM includes rules applicable to the export or import of certain goods with recognised market quotations internationally, locally or in the destination market, or those that determine their prices based on market quotations and may be associated with customs regulations, as of now, there is no Peruvian legislation or official guidance that connects transfer pricing with customs valuation. Therefore, the market value determined through transfer pricing methods is independent from the customs value, and vice versa.

Transfer pricing audits in Peru are conducted by SUNAT through a tax audit procedure. After this procedure is completed, if a taxpayer disagrees with the outcome, they have the right to file a claim with SUNAT against the results of the audit. If the taxpayer remains dissatisfied with the resolution of their claim, they may escalate the matter by filing an appeal with the Tax Court. The Tax Court then issues a decision to resolve the dispute, marking the end of the contentious tax procedure.

Should either party disagree with the Tax Court’s decision, they can initiate an administrative litigation process by filing a lawsuit against the decision. This process may include an appeal and potentially culminate in a cassation appeal to the Supreme Court, assuming the case meets the criteria for admissibility.

This highlights that disputes over transfer pricing rules can involve multiple stages of legal challenge. It is also important to note that the payment of the disputed tax debt is not required during the contentious tax procedure if the appeals are submitted within the prescribed timeframe. If the appeals are not submitted within the prescribed timeframe, the taxpayer must make the necessary payment or provide a bank guarantee.

Transfer pricing audits have significantly increased since 2016, leading to very few cases progressing from the Tax Court to the Judicial branch. As a result, there are limited judicial precedents concerning transfer pricing rules.

Currently, there are three notable cassation decisions in the transfer pricing field.

• Cassation No 26524-2023, related to the nullity of a resolution issued by SUNAT: during an audit in which the market value of a financing was analysed, SUNAT did not make a correct comparison, since it did not take into account the debtor's solvency and risk rating, which could have an impact on the setting of the interest rate to be charged. The Supreme Court indicated that by not considering these elements, the market value analysis determined by SUNAT was not correct, so the resolution was revoked.
• Cassation No 17824-2023, concerning the audit period for transfer pricing regulations: while the causes for suspension of the audit period refer only to the auditing of internal taxes, the Supreme Court indicated that this suspension also applies to transfer pricing regulations.
• Cassation No 19941-2023, related to the adjustment to market value concerning the application of the functional currency: the Supreme Court noted that the currency used in the Transfer Pricing Reports of the analysed company must be the same as that used to express the financial statements for determining margins and ratios applying the TNMM, which in this case is US dollars (functional currency).

Regarding the nature of the transaction, there is no restriction on the payment made; however, certain formalities must be complied with for its execution. Indeed, Article 3 of Law No 28194 (Law Against Evasion and for the Formalisation of the Economy) stipulates that obligations fulfilled through the payment of sums exceeding PEN2,000 or USD500 must be paid using payment methods (deposits into accounts, drafts and fund transfers, among others).

There is no restriction on payments abroad additional to that indicated in 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions.

Article 32-A of the ITL mandates the application of transfer pricing rules:

• to transactions conducted by taxpayers with their related parties;
• to transactions carried out from, to or through non-co-operative countries or territories or those with low or no taxation; or
• to transactions conducted with entities whose income, earnings or profits arising from such transactions are subject to a preferential tax regime.

For the purposes of applying these rules, Annex 1 of the ITLR establishes a list of countries or territories deemed as non-co-operative or with low or no taxation.

The information that is published pertains to that contained in the resolutions issued by the Tax Court when resolving a dispute arising from audits conducted by SUNAT on taxpayers. These resolutions include the background, the subject matter of the dispute, and the position established by the Tax Court.

Peruvian transfer pricing rules does not provide specific regulation on the use of “secret comparables”. However, it is important to highlight that subsection h) of Article 32-A of the ITL indicates that for the interpretation of transfer pricing rules, the OECD are applicable. These Guidelines do not advocate the use of such information for transfer pricing comparability purposes (“secret comparables”), unless the required information can be disclosed to taxpayers within the confines of national confidentiality laws.