All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Chile: Chilean tax authority increases transfer pricing audits


Gabriel Bernal

Over the last couple of years, Chile has been experiencing significant changes with regards to transfer pricing, which have been changing the way local taxpayers view their inter-company transactions. Even though Chilean transfer pricing legislation was introduced in 1997, being amongst the first in the region, Article 38 of the Chilean Income Tax Law (ITL) seemed to be insufficient, since it did not include relevant technical matters such as a detailed description of the TP methods, nor did it incorporate internationally accepted practices on this matter.

However, ever since Chile became an active member of the OECD in 2010, the Chilean IRS has been very active with regards to transfer pricing and has incorporated qualified personnel with wide experience in this area. This circumstance led to a series of selective reviews by the Chilean IRS, where it was clearly perceived that a highly trained team was behind the TP audits, since the information requests (notifications and summons) and tax assessments issued by the local tax authority, demonstrated a clear understanding of the internationally accepted practices and concepts, regarding transfer pricing.

In the context of the tax reform of September 27 2012, significant changes that modernised Chilean TP legislation were introduced by means of Article 41E of the Chilean ITL. Among other aspects the new Chilean TP legislation introduced the following: i) OECD aligned transfer pricing methods; ii) requirement to file an annual informative return (affidavit); iii) introduction of an APA programme; and iv) possibility to request corresponding adjustments), this new TP legislation incorporated the formal requirement to file by electronic means, on a yearly basis, a transfer pricing informative return (affidavit) on June 28 2013, for the intercompany transactions performed on the previous calendar year (starting on CY 2012).

This new source of information will allow the Chilean IRS to build a database with very detailed data about the taxpayer's intercompany transactions, because of the fact that this transfer pricing return was strategically and technically developed by the Chilean tax authority, with the purpose of requesting very detailed information per type of transaction (tangible goods, financing transactions, intangible assets, services and current mercantile accounts). Therefore, it is expected that the Chilean IRS will use this database to perform even more specific and focused TP audits.

On the other hand, the Chilean IRS has been very open to Chilean taxpayers requesting advanced pricing agreements (APAs), since new TP legislation also introduced this possibility, which has led to a series of APAs already requested by local taxpayers to the Chilean IRS, to have certainty of the fulfillment of the arm's-length principle, from a Chilean transfer pricing perspective.

Chile has entered a path of no return with regards to transfer pricing, which will imply that Chilean taxpayers will have to be more careful when performing intercompany transaction, to avoid possible risks on this relevant tax area.

Gabriel Bernal (


Tel: (+56 2) 2940 0405


more across site & bottom lb ros

More from across our site

The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.
Tax consultants say companies must not ignore financial transactions in their TP policies as authorities, particularly in the UK, become more demanding.