Worldwide transfer pricing reference guide 2014

Chile (continued)
Priorities/pricing methods
The transfer pricing methods accepted are the same as those established by the OECD Guidelines. Additionally, a sixth, or “other”
method is acceptable when applied in any reasonable economic analysis for a case where none of the other methodologies are viable.
Chilean legislation considers the “best method rule” which means that the taxpayers must choose the method that best reflects the
transaction’s economic reality to determine its market value. The taxpayer should be able to demonstrate or sustain the applicability of
such a method over the others.
Transfer pricing penalties
Additionally, taxpayers that do not comply with filing the transfer pricing return are subject to fines according to Article 97 of the
tax code (a fine of 20% to 100% of one Annual Tax Unit (ATU)) or Article 41-E of the ITL (10 to 50 ATUs, up to 15% of equity capital or
5% of real capital). 1
On the other hand, price, value or profit differences that result from applying these rules are subject to a sole tax of 35%, applied on the
transfer pricing adjustment determined. This tax is to be paid by the Chilean taxpayer who is subject to the adjustment, regardless of the
type of company. If the adjustment is made by the SII by means of an assessment, an additional 5% will be applied, unless the taxpayer
had furnished the information/documentation required during the inspection or audit process by the SII as determined by the former in a
notification. It could also be subjected to additional penalties and interests.
Penalty relief
There is currently no penalty relief available. However, maintaining contemporary transfer pricing documentation would be accepted by
the tax authority as proof of the taxpayer’s “good faith.” In these cases, the transfer pricing penalty may not be imposed.
Documentation requirements
Taxpayers must keep all the relevant information, supporting the methods used to determine whether their transactions are in
accordance with the arm’s length principle or not, ready and available to be furnished upon the SII’s request. The SII may also request
foreign authorities to furnish information related to intercompany transactions.
Documentation deadlines
There are no deadlines to present a transfer pricing study.
The due date to file the transfer pricing return is on the last business day of June.
Statute of limitations on transfer pricing assessments
The general statute of limitations is three years. It could be extended to six years if no return is filed, or if the authorities consider that
the returns are false. Based on Circular 49, there are distinct limits to conducting audits, depending on the size, complexity and other
characteristics that may arise. In this sense, in the case of a certain set of transfer pricing audits, the applicable statute of limitations will
be 12 months. During this period, the tax authority will test the proper application of the arm’s length principle. These special cases are:
• The determination of the taxpayer’s net income, where there are taxable sales or revenues in excess of 5,000 monthly tax units (UTM)
• A review of the tax effects of corporate reorganization or
• A review of the accounting of transactions between related companies
Return disclosures/related party disclosures
From 2013 onwards, it is mandatory for taxpayers to file a transfer pricing sworn statement every year. It comprises of all intercompany
transactions held in the prior year and it must also disclose all transactions held with related parties, transfer pricing method applied,
organization structure of the economic group, and other data derived from the transfer pricing economic analysis.
1 One ATU is approximately US$900.
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