Peru: Sticking to the Transfer Pricing Guidelines as a means to become an OECD member.

Since Peru is aspiring to join the OECD until 2021, it has been trying to follow OECD directives on Transfer Pricing very closely. All this boils down to the conclusion that scrutiny for TP compliance in Peru is gaining ground continuously. Expertise in the realm is absolutely indispensable.

Legal overview

Peru has its own TP legal framework since 2001. However, over the years these rules have undergone profound changes. Amongst them, on 31.12.2016, in line with BEPS Action 13, Peruvian authorities issued the 1312 Legislative Decree. This Decree amended the Peruvian Income Tax Law (ITL) by expanding TP reporting requirements with the Master File, Local File and Country-by-Country Reporting (CbCR). Furthermore, on 24.8.2018, the 1381 Legislative Decree became public, amending the applicability of the Peruvian TP rules.

Determination of related parties

The aforementioned rules apply to cross-border and domestic transactions between related parties including residents in offshore jurisdictions. They also apply to transactions with residents whose revenue or income is subject to a preferential tax regime.

Article 32A of the ITL establishes that two or more persons, companies or entities are related parties when:

  • One of them participates directly or indirectly in the management, control or capital of the other or
  • The same person or group of persons participates directly or indirectly in the management, control or capital of several entities.

Additionally, this relation is affirmed when the transaction involves “independent” interposed persons. Article 24 of the Supreme Decree N° 122-94-EF provides the situations that determine associated parties.

Compliance procedure by PERU COMPANIES

If an entity is subject to TP legislation, the next step is to make certain that complies with the rules. Peruvian TP legal framework, adopts the following documentation structure:

i) Α Country-by-Country (CbC) Report (consistent with Annex III to Chapter V of the OECD Transfer Pricing Guidelines – TPG). In this report, Multi-National Enterprises (MNEs) report annually (for each tax jurisdiction in which they do business) some crucial information. Their global allocation of profit, taxes paid, borrowings, employees as well as certain indicators of economic activity among the countries in which they operate, are some relevant information. Moreover, a CbC Report is indispensable by resident parent companies with annual revenue greater than USD 830 million.

Attention: Resident entities that are members of a foreign-based MNE group whose consolidated annual revenue exceeds the said threshold shall file the CbCR if the ultimate parent of the group is not required to file the CbCR in its country of residence or if this Country has not established an Information Exchange Mechanism with Peru or if the resident constituent entity is nominated as the “reporting entity” by the Group.

ii) Transfer Pricing Documentation, which includes the completion of:

A Master File consistent with Annex I to Chapter V of the OECD Transfer Pricing Guidelines – TPG. This file provides an overall description of the MNE’s global business. The thresholds are met when associated taxpayers have annual revenue of more than 20,000 tax units (approximately USD 25 million).

A Local File consistent with Annex II to Chapter V of the OECD Transfer Pricing Guidelines – TPG. This document contains disclosures of the corporate organization structure, management team and information on main competitors and, intra-group transactions. The annual revenue threshold for a company is 2.300 tax units (approximately USD 2.9 million) for a fiscal year

Adding a Transfer Pricing method

As is the case globally, Arm’s Length Principle (ALP) serves as the cornerstone for TP purposes. However, Peru has adopted a 6th method which determines the market value of commodities. In fact it is a 7th method, since the Peruvian tax legislation treats profit and residual split method separately. The said method stipulates that the market value of commodities should be determined using the comparable uncontrolled price (CUP). Nonetheless, the quotation period will be fixed on the date of loading for exports and unloading for imports.

This goes beyond the way the CUP method is usually applied. Consequently, tax adjustments could be levied even if the parties are performing their commodity transaction at arm’s-length. The taxpayer needs to notify the SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria – Peruvian Tax Authority) about the actual pricing date or period of pricing dates available to determine the price for the transaction. The taxpayer shall submit this notification to SUNAT within 15 working days of the shipment date or the date of disembarkation.

Apart from that, two transactions have to be comparable to move on to the stage of the transfer pricing method. Finding comparable transactions can be a very delicate task as they do govern the procedure until the end. Our multi-faceted experience can be of aid here.

The deadline for filing the TP Documentation is in June of the following fiscal year. In general, the exact filing date for each taxpayer in Peru depends on the taxpayer’s identification number.


If a company fails to submit the Local / Master File/CbCR within the deadline each year, fines for not complying are:

  • 6% of a company’s sales with
  • a ceiling of US$32 thousand by report.

The adjustments to the annual taxable income will be subject to additional penalties. These penalties amount up to 50% of the resulting tax deficiency (income misstatement penalties).

However, there is a 100% penalty reduction if the taxpayer files the TP informative return after the due date. This submission shall take place before the tax deficiency being detected and compelled to do so by SUNAT. What is more, paying the fine within the timeframe established by SUNAT and rectifying the infraction with a TP study, can lead to an 80% reduction of the penalty. It is never too late for TP services from a competent TP analyst.

What about Advance Pricing Agreements (APAs)?

Unilateral, bilateral as well as multilateral APAs, are available in Peru. Unilateral and multilateral APAs are available for all transactions (cross-border and domestic intra-group transactions and with tax haven residents). Multilateral APAs are available only for countries that have entered into double tax avoidance treaties with the Peruvian fiscal administration. Note that there is no filing fee for an APA.

We can advise you on preparing and applying for APAs, during and after negotiation and agreement with the tax authorities. For example, we can help you select appropriate TP methodologies, critical assumptions and prepare supporting documentation. In addition, we can deliver annual reports during the APA’s implementation period.

Provision of Transfer Pricing Services

Complying with TP regulation in Peru could emerge with the preparation of a preliminary study. This study attempts to assess the intragroup margins in the provision of products or services. To this extent, preliminary studies can be performed by for decision making around the margins upon request. For this purpose, we use benchmarking data from well-known databases (such as Thompson Reuters, Amadeus, Compustat, Orbis).

Management fees, interest, technical consulting and royalties are globally very possible to trigger tax inspections and adjustments. Therefore, a full TP on these issues is highly recommended. Another industry that is very likely to be scrutinized by tax audits is that of mining and metals.


The Peruvian tax authorities have regulated Transfer Pricing obligations in more detail than ever before. As a result, TP compliance constitutes a realm which necessitates full attention by CFOs or business owners. This could mean that intra-group operations will enter to even greater scrutiny by the Peruvian tax authorities. Industry experts deem that tax audits regarding TP law will be in the increase in 2019 and 2020. Against this backdrop, early advice and TP planning are the most effective approach for timely problem recognition and resolution.

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