Transfer pricing rules apply the arm’s length principle to related party transactions and business reorganizations that imply the transfer abroad of assets or activities that could have generated taxable income in Chile under arm’s length conditions. The tax administration is empowered to make transfer pricing adjustments. The increase of the taxable base is subject to a 35% tax.

Related parties rules:

  • One person participates directly or indirectly in the management, control, capital or profits of another person;

  • The same person participate directly or indirectly in the management, control, capital, or profits of both parties;

  • A PE, with respect to its head office and related parties, as well as other PEs of the same head office or related parties;

  • Parties resident in a jurisdiction with a preferential tax regime, unless such jurisdiction has a tax information exchange agreement with Chile;

  • A Party concluding transactions with a third person, where such person concludes similar transactions with another person related to the first party.

  • Close relatives.

Transfer pricing methods follow OECD guidelines:

  • Comparable uncontrolled price;

  • Resale price;

  • Cost plus;

  • Profit split;

  • Transactional net margin method;

  • Residual methods.

Transfer pricing rules also cover a definition of related parties, studies, report obligations, advanced price agreements (APAs) and corresponding adjustments.