Latin America is entering a new phase of transfer pricing (TP) enforcement characterised by heightened tax controversy, stronger institutional capabilities, and a clear alignment with OECD standards. Country-specific dynamics illustrate both convergence and divergence in this trend.
Mexico stands out for its increasingly centralised and rigorous audit approach, with significant growth in TP-related collections and high-value audit adjustments driven by stricter interpretations of materiality and substance, as well as broader institutional involvement beyond specialised TP units.
Colombia and Peru, while advancing OECD-aligned frameworks, face practical challenges in implementation, including limited treaty networks and scarce experience in dispute prevention tools such as advance pricing agreements (APAs) and mutual agreement procedures (MAPs), which constrains their effectiveness despite legislative progress.
Brazil represents a structural inflection point, as its transition from a formulaic system to a principles-based regime significantly increases interpretive complexity and, consequently, litigation risk.
Meanwhile, Chile consolidates a mature and technically robust TP environment, with enhanced audit sophistication and an expanding use of cooperative mechanisms, positioning APAs and MAPs at the core of its controversy management strategy.
TP landscape under intensified scrutiny: emerging trends and strategic implications in Mexico
In recent years, the Tax Administration Service (SAT) in Mexico has undergone significant transformations derived from administrative adjustments, increases in audit processes, and reinterpretations in TP issues. These changes lead to a complex landscape that requires companies, advisers, and specialists to have a thorough understanding of the criteria applied by the tax authority in terms of TP, as well as the potential risks arising from new fiscal, administrative, and operational trends.
Increased collection and TP control processes
Considering the 2025 Audit Master Plan, published on January 8 of that year, and in contrast to the one published for 2026, a substantial increase in collection was projected without modifying tax rates. The increase derives not from regulatory changes but from the strengthening of audit processes and a strategic focus on the review of large taxpayers and cross-border operations.
In terms of TP, a press release of May 26 2025 reported an increase of 367% in the collection of tax resulting from TP audits, rising from MXN 28,966 million in the 2013–18 period to MXN 106,178 million in the 2019–24 period. This trend indicates that by the end of 2025 significant increases were already being observed, which confirms the shift towards more activity and focus in this area.
This increase in oversight has been characterised as an assertive review approach by the authority, due to the level of detail of assessments and the SAT’s specialisation. The processes are no longer focused exclusively on the Central Administration for Transfer Pricing Audits; other areas – local, central, and even sector-specific bodies such as the National Banking and Securities Commission – have begun to review elements of TP.
Non-binding criteria and materiality challenges
The Mexican tax authority has increased the application of non-binding criteria, especially No. 44/ISR issued by the SAT, which is related to the deduction of expenses for the provision of services. Hence, the concept of the materiality of intercompany transactions (with domestic and foreign related parties) has acquired a central role in auditing, understood as the real economic purpose that supports the operation (business reason).
In transactions with Mexican related parties, a greater emphasis on tax symmetry stands out; that is, verifying that what is deductible for an entity is a taxable income for the counterparty. The materiality analysis becomes more complex in cross-border operations, where the authority requires additional evidence of economic substance and documentary evidence, relying on additional elements of verification such as the provisions of articles 69-B and 69-B Bis of Mexico’s Federal Tax Code.
Pro rata expenses with residents abroad
A recurring point in TP audit reviews is the attribution and allocation of expenses with related parties residing abroad through pro rata mechanisms. Rule 3.3.1.27 of Mexico’s Omnibus Tax Regulations has become increasingly relevant due to its link with the potential risk of a permanent establishment (PE).
Accordingly, the cost-sharing analysis should consider whether the transaction, viewed as a whole, could be interpreted as self-conducted – i.e., without independent economic substance – which could lead to a reclassification of activities and possible determination of PEs. This situation generates significant risks for companies operating under global structures, especially when performing administrative or support functions to/from Mexico.
The Mexican tax landscape in terms of TP is in a process of transformation characterised by intensive auditing, stricter interpretative criteria, and a growing focus on the economic substance of intercompany operations. For multinational and domestic companies, these changes require more rigorous preparation, robust documentation, and constant evaluation of their operational and corporate structures.
In this context, the proper interpretation of TP provisions, the identification of PE risks, and the effective management of corporate restructurings become critical to ensuring TP compliance in Mexico. Taxpayers are increasingly focused on preventing domestic disputes through the use of APAs or, where already under audit, on resolving controversies and avoiding double taxation by relying on MAPs, leveraging the SAT’s extensive experience in bilateral procedures and Mexico’s broad tax treaty network.
Colombia’s APA and MAP overview
There are multiple options in Colombia to avoid lengthy and costly discussions, as well as a mechanism to make a reciprocal adjustment to eliminate double taxation when the foreign related party’s income tax return is subject to an adjustment.
APAs have been available in Colombia since 2004, when TP regulations were first introduced. In a tax bill of 2016, with applicability from 2017, significant modifications and clarifications were introduced. APAs can have a maximum term of five years, including the year in which they were entered, the previous one, and up to three of the following years. There are unilateral, bilateral, and multilateral APAs, the key consideration being that unilateral APAs may only be requested if there is no double taxation treaty with the other jurisdiction. This means that if there is a double taxation treaty in place, the APA must be bilateral.
The key difference is the time in which it may be requested and approved. For unilateral APAs, there is a nine-month period for the Colombian tax authority (Dirección de Impuestos y Aduanas Nacionales, or DIAN) to accept or deny the APA request, and after this, there is a two-year maximum negotiation time. For bilateral or multilateral APAs, the timeframe will be as long as the involved jurisdictions take to reach an agreement. The APA mechanism is a useful tool to avoid discussions, and even though there has only been one unilateral APA signed, it is a tool worth considering for complex or material transactions in which a challenge to the method or the comparables may result in a significant adjustment.
MAPs were introduced with applicability from 2017. In this regard, Colombia does not have a significant treaty network, so their applicability is somewhat limited. While there have been discussions around potential MAPs, no actual procedure has been concluded.
In a reciprocal adjustment, when another state (that has a double taxation treaty with Colombia) makes an adjustment to a taxpayer’s income tax return, its related party in Colombia may request it as defined in Section 260-6 of the Colombian Tax Code. There is no specific guidance on how the request should be filed and approved by DIAN, or the process to amend the related income tax return, with the additional consideration of the statute of limitations and that several years might have passed.
As stated above, there are multiple TP controversy mechanisms in place in Colombia; however, their effective applicability has been limited.
Peru’s evolving framework for APAs and MAPs: progress beyond legislation
As tax authorities across Latin America intensify their scrutiny of cross-border transactions, multinational enterprises are increasingly seeking mechanisms that provide certainty and help prevent or eliminate double taxation. In this context, APAs and MAPs have become key components of the international tax controversy landscape.
Peru has taken important steps to strengthen both mechanisms. Recent legislative changes introduced by Legislative Decree No. 1666 incorporated rollback provisions for bilateral APAs, allowing agreed TP methodologies to be applied to prior fiscal years under certain conditions. This aligns Peru more closely with international best practices and enhances the preventive value of bilateral APAs by addressing one of the traditional concerns of taxpayers: the treatment of years preceding the execution of the agreement.
At the same time, Peru’s tax administration (Superintendencia Nacional de Aduanas y de Administración Tributaria, or SUNAT) recently released its MAP Guidance 2.0, providing additional clarity regarding the operation of the MAP under the country’s tax treaties. The guidance reflects Peru’s ongoing efforts to align with the OECD’s BEPS Action 14 minimum standard, which seeks to improve the effectiveness, accessibility, and transparency of dispute resolution mechanisms.
Taken together, these developments demonstrate Peru’s commitment to strengthening its tax certainty framework. However, the principal challenge is no longer legislative.
Despite the existence of APA regulations, MAP provisions under tax treaties, a designated competent authority, and updated administrative guidance, Peru has yet to build a demonstrable track record in either area. No APA has been publicly concluded to date, and there is limited practical experience regarding MAP cases.
Furthermore, the impact of recent reforms may remain constrained in the short term. Rollback provisions currently apply only to bilateral APAs, not unilateral agreements. In addition, Peru continues to operate under a relatively limited tax treaty network compared with several other jurisdictions in the region. As a result, the universe of taxpayers that can realistically benefit from bilateral APAs and MAPs remains relatively narrow.
Nevertheless, these limitations should not overshadow the significance of the reforms. The introduction of rollback provisions and the publication of MAP Guidance 2.0 signal a broader policy direction towards greater cooperation, dispute prevention, and international tax certainty.
The next phase for Peru will not be defined by further regulatory changes but by practical implementation. The real measure of success will be whether taxpayers and the tax administration can develop the experience, confidence, and collaborative approach necessary for APAs and MAPs to become effective tools for managing cross-border tax risk.
From litigation to consensus: APAs and MAPs in Brazil’s new TP regime
Current landscape
The enactment of Law No. 14,596/2023, regulated by Federal Revenue of Brazil (RFB) Normative Instruction No. 2,161/2023 and supplemented by RFB Normative Resolution No. 2,246/2024, represents the most profound shift in national TP since the Brazilian regime was instituted in 1996. By expressly incorporating the arm’s-length principle and considering the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as a subsidiary source of interpretation, the country has abandoned the predictable fixed-margin model and migrated to a system grounded in functional analysis, the delineation of transactions, and comparability analysis.
Mandatory since the 2024 tax year, the new regulatory architecture brings Brazil closer to the international consensus but, in turn, transfers to the domestic arena the same interpretive difficulties already faced by jurisdictions with more developed systems.
The intensification of litigation risk
The new regime inherently increases litigation risk. By relying on functional analyses, comparability assessments, and transaction delineation, it opens significant room for disagreement between taxpayers and the RFB. These divergences heighten the possibility of double taxation, particularly where different jurisdictions apply inconsistent interpretations to the same transaction.
Against this backdrop, MAPs assume a critical reactive role, functioning as a mechanism to eliminate double taxation through negotiations between competent authorities under tax treaties.
MAPs and an overview of the current status
A notable advance is Brazil’s formal recognition of MAP outcomes within domestic law, addressing a long-standing limitation that previously undermined their effectiveness. However, practical challenges remain. Brazil’s experience with MAPs is still developing, with no reported cases of full bilateral agreement eliminating double taxation and a continued reliance on unilateral or domestic remedies. Structural constraints – such as a limited tax treaty network, absence of arbitration clauses, and limited administrative experience – restrict the efficiency and predictability of MAP outcomes. As a result, although MAPs provide a formal dispute resolution channel, their current effectiveness in Brazil remains below international benchmarks.
MAP outcomes and Brazil’s position
Possible MAP outcome | Meaning | Brazil's position | OECD benchmark |
Agreement fully eliminating double taxation | Both authorities converge and the adjustment is mirrored in both jurisdictions | No concluded case reported | 76% of closed cases |
Agreement partially eliminating | Convergence on part of the adjustment only | No case reported | Minority share |
Unilateral relief | One jurisdiction adjusts on its own to avoid double taxation | Tends to occur via domestic adjustment (spontaneous/compensatory) | Minority of cases |
Resolved via domestic remedy | Solution through administrative or judicial litigation, outside the MAP | Predominant route in Brazil | Minority of cases |
Access denied/objection not justified | The authority refuses to accept the MAP request | Material risk, given administrative inexperience | Small fraction |
Withdrawn by the taxpayer | Withdrawal before conclusion | Frequent in nascent-programme jurisdictions | Small fraction |
Closed without agreement | ‘Agreement to disagree’; double taxation persists | No arbitration network as a final safeguard | 4% of cases |
Average processing time | Time between opening and closure (TP cases) | Not disclosed on a consolidated basis | 30.9 months |
The “Brazil’s position” column reflects a qualitative assessment based on OECD aggregates and specialist analyses; the RFB does not disclose, by jurisdiction, the breakdown of outcomes of its MAP cases. Global parameters: OECD MAP statistics (2024).
Three factors explain this table. First, Brazil’s treaty network is narrow at approximately 30 treaties, which limits the situations in which a MAP is available. Second, the near-total absence of arbitration clauses deprives the taxpayer of a final safeguard where the authorities fail to converge. Third, administrative inexperience in conducting bilateral negotiations lengthens timeframes and lowers the rate of full resolutions.
The practical result is that, in Brazil, the elimination of double taxation still depends mostly on unilateral mechanisms provided for in the legislation itself rather than on a negotiated bilateral outcome.
APAs: prevention and regulatory stage
Faced with the limitations of reactive mechanisms, APAs emerge as a strategic alternative of a preventive nature. Introduced by Article 38 of Law No. 14,596/2023 under the designation “specific consultation procedure on transfer pricing matters”, they allow the taxpayer and the tax authority to fix in advance the methodology applicable to controlled transactions, conferring predictability and mitigating litigation at source. The Brazilian stage, however, is developing, as the table below illustrates.
APA parameters: Brazil and international benchmarks
APA parameter | Brazil | OECD benchmark |
Available type | Unilateral only(no bilateral/multilateral) | Bilateral APA admitted in 80 jurisdictions; 49 with active cases |
Legal basis and regulatory stage | Article 38 of Law 14,596/2023; normative resolution under public consultation | Consolidated and mature instrument in most advanced economies |
Agreements concluded | None concluded to date | About 25% of inventory closed per year |
Term of validity | Four years, renewable for a further two | Commonly five to seven years (e.g., the US) |
Eligibility | Prior membership of the Confia programme (pilot, about 20 companies) | Access, as a rule, open to any taxpayer |
Cap and review time | RFB may cap proposals per year; no statutory deadline for conclusion | Average time to grant: 39.6 months |
Prepared by the author based on Law No. 14,596/2023, the draft normative instruction submitted to public consultation, and the OECD APA statistics (2024).
A combined reading of the two tables reveals a still asymmetric system: the reactive instrument (MAP) lacks a track record of full resolutions, while the preventive instrument (APA) exists only in its unilateral form, with restricted access and no concluded agreements. For multinational groups, this means that neither mechanism currently offers the degree of certainty that the complexity of the new regime would require. Nevertheless, even in its initial phase, the APA programme signals a clear policy direction towards cooperative compliance and dispute prevention.
The interplay between APAs and MAPs highlights their complementary roles. APAs serve as an ex ante solution, reducing uncertainty and avoiding disputes, while MAPs function ex post to resolve conflicts when they materialise. Together, they represent a shift away from Brazil’s traditionally litigation-heavy approach towards a more consensus-driven model. However, the current asymmetry – where neither mechanism is yet fully mature – means taxpayers cannot rely entirely on either tool for comprehensive certainty.
In sum, APAs and MAPs are central pillars of Brazil’s evolving TP regime, providing alternative pathways to manage controversy. While still developing, their expansion and effective implementation will be crucial to achieving the regime’s objectives of legal certainty, reduced litigation, and alignment with global standards.
Chile: why APAs and MAPs now sit at the heart of TP strategy
More than a decade after Article 41E was introduced into the Income Tax Law (LIR), TP has consolidated as a high-priority workstream for the Chilean tax administration. The Servicio de Impuestos Internos (SII) has progressively sharpened its review of intra-group services, intangible-related transactions, post-restructuring outcomes, intercompany funding, and cross-border commodity sales, leveraging country-by-country reporting, master and local file data, and increasingly sophisticated risk-scoring tools. Within that environment, two instruments deserve a far more prominent place in any controversy playbook than they currently occupy: APAs and MAPs.
The reshaped APA regime
Chile’s APA regime was redesigned during 2024 and 2025. Law No. 21,713 rewrote paragraph 7 of Article 41E of the LIR, and the procedural rulebook is now contained in SII Resolution Ex. No. 28, issued on March 6 2025, which formally replaces resolutions Ex. No. 68/2013 and No. 114/2022. Eligible taxpayers may file for unilateral, bilateral, or multilateral arrangements addressing arm's-length pricing, valuations, or normal market returns on covered cross-border related-party flows.
Approved APAs apply to the year of signature and the four subsequent fiscal years, with a constrained rollback option for previously open periods. Based on practical experience, unilateral cases in Chile generally close within a 12-to-24-month window, while bilateral APAs naturally run longer. The economic case is straightforward: APAs replace several years of unresolved exposure with forward-looking certainty, while cutting compliance friction and the likelihood of audit-driven adjustments.
How the MAP fits in
The Chilean MAP infrastructure is built on the Article 25 (OECD Model Tax Convention on Income and on Capital) clauses embedded across a treaty network that continues to expand and is reinforced by the country's adherence to the Multilateral Instrument. A notable inflection point was the entry into force of the US–Chile Income Tax Treaty on December 19 2023, which has opened a bilateral remedy that simply did not exist before for US-parented groups. The competent authority function is housed within the SII’s international tax area.
As a global reference, OECD’s 2024 MAP Statistics report an average resolution time of 27.4 months for TP cases – a useful benchmark when calibrating expectations on Chilean files. In its role as competent authority, the SII maintains active engagement with the tax administrations of Chile’s treaty partners to advance both bilateral APA negotiations and MAP cases.
What multinationals should be doing now
Three priorities should be on the agenda of any group with meaningful operations in Chile:
Bring APAs into the conversation early – particularly when redesigning operating models, executing value chain transformations, or integrating acquired businesses – before SII enquiries reduce the available negotiation space;
Do not treat a MAP as a last resort; preparing a bilateral file alongside the domestic defence strengthens both fronts and shortens overall resolution times; and
Align Chilean positions with those defended in other jurisdictions: divergences between jurisdictions are now routinely surfaced through country-by-country report exchanges and coordinated audit activity.
Final remarks
Collectively, these country-specific developments signal a regional move towards a more assertive, controversy-driven TP landscape. While regulatory frameworks are increasingly harmonised, practical enforcement, administrative capacity, and access to dispute prevention and resolution mechanisms remain uneven. In this environment, multinational enterprises must adopt a proactive and integrated approach – combining robust documentation, alignment of global policies, and strategic use of instruments such as APAs and MAPs – to navigate the growing risk of double taxation and sustained scrutiny across Latin America.
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