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TP takes precedence across Latin America

International Tax Review editor Joe Stanley-Smith introduces the 15th edition of the Latin America guide.

It will be no surprise to tax practitioners that four of the six articles in this year's edition of Latin America, concern transfer pricing (TP).

The OECD's BEPS actions have reverberated around the world and with implementation of several action points now underway, the ground under companies' feet is shifting. Without even mentioning country-by-country reporting, the BEPS project has thrown up issues enough issues to keep TP professionals very busy indeed.

These issues manifest themselves in different ways in different countries, with governments and tax authorities in different jurisdictions often taking wildly disparate approaches. This patchwork of implementation is a common theme around the world, not just in Latin America. Nonetheless, careful analysis of the LatAm landscape, which is a common theme of our articles, will put taxpayers in a stronger position moving forward.

Beyond BEPS, we see a South American perspective on one of the world's hottest tax-related talking points: the taxation of the digital economy. Chile, an OECD member, is one of a growing number of countries looking to take action to extract more revenue from large technology companies, which many people around the world feel are not paying their 'fair share'.

A trend more specific to Latin America is currency devaluation and volatility, from which most of the region's major economies have suffered during the past 12 months. Compared with last year, a dollar buys you one extra Brazilian real, an extra Mexican peso (in June it was as much as three extra pesos), an extra 21 Argentine pesos, an extra 128 Colombian pesos and an extra 62 Chilean pesos. The currency is performing better in the region's sixth-largest economy, Peru, but disastrously in the seventh-largest, Venezuela, where the bolivar is experiencing hyperinflation.

It's pertinent, therefore, that one of our articles explores the best methods for dealing with currency volatility, and the political instability which often leads to it.

I hope you enjoy the 15th edition of the Latin America guide.

Joe Stanley-Smith
International Tax Review

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