During the last time transfer pricing has gain increasing importance in Chile, because the Chilean tax administration has requested different agencies and companies, that are part of multinational enterprises to give a statement on oath about the system used to determine their prices of the intercompany transactions.
The income tax law (DL 824) establishes on article 38, that companies or agencies that are part of multinational enterprises have to use the same prices they use with third parties when they do intercompany transactions. If the Chilean tax administration estimates that the prices don't meet that standard, the companies have to proof that the price has been established given the company a reasonable amount of profit or the price includes the production costs and a reasonable profit margin.
The same rules apply to transactions with companies located in countries with harmful tax practices in accordance to the OECD, exclusive distribution agreements, preferential arrangements, financial or economic dependence and joint action agreements.
These transactions prices not only apply to sale contracts, but also to transfer of technology,...