Strategizing International Tax Best Practices – by Keith Brockman

http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxnewsflash/pages/peru-changes-to-transfer-pricing-obligations.aspx

The Peruvian tax authority (SUNAT) has implemented new rules for submission of a transfer pricing study annually by corporate taxpayers with transactions or revenue exceeding prescribed amounts.  This change will be effective for the 2012 year, to be submitted in October 2013.  Previously, as in many other countries, this report was required to be available upon request.

The transfer pricing report is in addition to an information return disclosing intercompany transactions.

This new rule highlights several important governance questions for new guidance on transfer pricing documentation, including the following:

  • How are members of the transfer pricing team (local/regional/global) informed of new disclosures timely for planning and process changes?
  • Are there gaps that could occur, resulting in last minute actions or untimely disclosures?  If so, controls are necessary to mitigate such gaps.
  • Is there an internal or external process documented, and used, to review new transfer pricing disclosure rules on a regular basis?
  • Is there timely engagement with the relevant Business Units to ensure alignment and execution?
  • What procedures are in place to implement new transfer pricing disclosures into the transfer pricing documentation and review process?
  • Is the information readily available, or are system changes required?
  • Have the new disclosures been discussed with the local auditors to ensure alignment?

This topic is increasing in importance, as countries initiate or expand contemporaneous information and transfer pricing documentation requirements.  Such disclosures include identification of transfer pricing methods used for intercompany transactions, assertion that relevant documentation exists and is readily available, amounts of intercompany transactions for goods and services, etc.

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