New TP developments create extra work for taxpayers across the region

Argentina

Bolivia

Colombia

Costa Rica

Ecuador

El Salvador

Guatemala

Honduras

Panama

Paraguay

Peru

Uruguay

Venezuela

The Argentine tax authority (AFIP) has introduced new rules to record related parties (local and foreign) and compliance requirements that provide information on a monthly basis on transactions carried out by local parties. This move could be the beginning of TP rules applicable to local related parties, similar to other mature practices in the region including Ecuador, Mexico and Peru.

In January 2014, AFIP created the Record of Related Parties for taxpayers and/or responsible persons residing in the country, who are related to any person created, domiciled, based or located in Argentina or abroad.

Related party is defined in line with local transfer pricing regulations currently in force.

It should be noted that transactions carried out with unrelated parties in zero or low tax jurisdictions are not included in this reporting obligation.

Persons covered by this ruling shall provide the following information to apply for their inclusion in the Record:

• For local related parties: Tax ID of the reporting person, indicating whether such person is or is not eligible under a local tax promotion scheme;

• For foreign related parties: Tax ID from place of residence; and

• For local and foreign related parties:

• First and last names, corporate name or denomination, and address of the reported person; and

• Type of relationship.

The application for registration should be made by means of electronic data transfer through the AFIP's institutional website.

The obligation to report the registration and any modification should be complied within ten business days.

Also in January 2014, and considering this reporting scheme, persons who are required to register with the Record of Related Parties described above, are also required to act as reporting agents for transactions conducted in the domestic market with any person domiciled, organised, located or based in Argentina, insofar as there is a presumed relation between them.

The reporting agents shall provide, on a monthly basis, the following data:

• Tax ID of the reporting person;

• Tax ID of the reported person;

• First and last name, corporate name or denomination of the reported person;

• Any transaction carried out during the reporting period (month), including but not limited to purchases, sales, leases, contracts for services including transactions without valuable consideration (gratuitous), regardless of their nature; and

• Description of the source documentation that supports the transactions indicated above, such as type and number of receipt/invoice - if applicable - issue date, total amount of transaction, amounts that do not form part of taxable net prices, the VAT rate applicable, the assessed tax, amount of exempt transactions and type of transactions, whatever their nature.

Filing of the information detailed above should be made via electronic data transfer through Form F 968 up to the last business day of the calendar month immediately after the reported period.

These provisions described in A and B are applicable to transactions as from the beginning of 2014.

Horacio Dinice
		Lead partner Transfer Pricing LATCO & Argentina Deloitte Florida 234 Piso 5 CABA, C1038AAN Tel: +54 11 4321-3002 Fax: +54 11 4320 4066 Email: hdinice@deloitte.com Horacio Dinice is a tax partner in Deloitte Argentina. He has engaged mainly in international iax consulting and transfer pricing matters. His experience covers a wide range of industries, but has been centred on the pharmaceutical sector for many years. He is in charge of the transfer pricing practice in Argentina & LATCO. His experience encompasses advising multinational corporations on the tax implications of cross-border acquisitions / transactions and the establishment of foreign operations in countries within the Latin American region (mainly Argentina, Bolivia, Paraguay & Uruguay) He also provides advice for the international or regional reorganisation of various clients. He specialises in cross-border structuring for Argentinean and Latin American companies. He has participated in various mergers and acquisitions in Argentina and various regional and global transfer pricing projects. He has been a professor of Tax at the University of Buenos Aires from 1986 to 1992, and has been teaching at the University of CEMA since 2006. Horacio is a frequent speaker at conferences focusing on tax and transfer pricing issues. He is an active member of the AAEF (IFA branch member). He participated in technical meetings of improvement and professional development in Argentina and other countries. He dictated advanced training courses for professional personnel. He is a Certified Public Accountant and graduated from the School of Economic Sciences at the University of Buenos Aires in 1986. He has been named as one of the world's leading transfer pricing advisers by the prestigious Legal Media/Euromoney Magazine.

In July 2014, tax changes were enacted by which transfer pricing standards were added. They follow OECD guidelines and their enforcement will be subordinated to a future standard clarifying in more detail the manner in which the methods provided will be applied.

Colombia, as it is publicly known, is interested in joining the OECD and there have been some missions seeking to achieve it in a not-yet-defined term. We believe that in the interest of this purpose, some internal regulations have been aligning with the international regulation and/or approach, so much so that in December 2013 a new transfer pricing regulation was introduced which, in many cases, added some technical criteria referencing OECD Guidelines. It should be noted that with such regulation, some of these matters that generated uncertainty in the sector were clarified, specified and adjusted although there still are many vacuums and inaccuracies in the local regulation of such matter.

Below are presented the main considerations:

As from 2013, there was an increase in the number of transactions generating formal obligations for taxpayers:

• Who carried out transactions with foreign affiliates that, according to the type of transaction exceed 32,000 of tax value units (TVU), equivalent to about $425,000, provided total operations carried out during the year exceed 61,000 TVU, equivalent to about $850,000.

• Regarding transactions with tax havens (irrespective of whether they are affiliates or not), taxpayers carrying out transactions in these jurisdictions and exceeding 10,000 TVU (about $140,000) should file an informative form.

For the purposes of calculating the previously mentioned caps even when they are financing transactions, the principal and not the effect on the income statement for the transaction will be taken into account.

An appraisal carried out by an independent third party could be used provided any of the following situations take place:

• The respective asset would have been divested in a condition other than it had upon acquisition;

• The third party's invoice cannot be found; or

• It is an asset built or assembled based on several components and with that, several invoices.

It is mentioned that foreign affiliates may be used as tested parties. For such purpose, certain formal requirements should be complied with to apply:

• It is clearly defined that the information that should be certified is that of the tested party;

• When the tested party is a foreign third party, the certification shall be signed by whoever acts as a tax reviewer, accountant or external auditor;

• In all cases, the certification should be attached to the supporting documentary.

On the other hand, as regards the financial information that should be taken into account for the analysis, it is noted that generally the information for the tax period related to the analysis should be used, and exceptionally the information from previous years could be used. In this case, the exception will surely be taken as a rule because with income due dates in April, it is impossible to have contemporary information from comparables.

As from 2014, to deduct the transaction carried out with a tax haven, functions carried out, assets used and risks assumed and all costs and expenses incurred for the entity located in the tax haven should be documented and proved in detail, if the third party with which the transaction is carried out is a related party.

On the other hand, when the transaction is carried out with an independent third party, the taxpayer should produce evidence showing that it is not related. These tests should be part of a transfer pricing study.

Finally, it should be noted that in the case the amounts mentioned in (A) are reached, irrespective of whether the related parties are or are not related, they should be included in the transfer pricing study. The difference is that in the case of transactions with foreign third parties, it is not mandatory to provide information thereof.

Among other issues, the following should be documented and proved:

• The economic profit that the service generates to the recipient thereof;

• If such service were not received from an affiliate, it should be possible to obtain it from a third party or carry it out by itself;

• What the arm's-length compensation agreed upon between third parties for that same service received should be; and

• Identify the form to calculate the service amount to be billed.

In this sense, while this list is not necessary (because these aspects were provided in our laws in any case), it is also clear that including them reiterates that proving the substance of the service is actually paramount, while formal matters such as agreements and their registration, withholding at source and the very transfer pricing study should not be left aside.

José Erney Guarin Alvarado
		TP partner Deloitte Colombia Bogotá, Colombia Tel: +57 1 426 2315 Email: jguarin@deloitte.com José Erney Guarin is partner of the transfer pricing division of Deloitte Asesores y Consultores Ltda. in Colombia. He has more than 10 years of experience in the sectors of manufacturing, public utilities, services and clubs, and oil and0 gas. His professional experience has included participating in, and supervising various engagements such as tax planning, tax diagnosis, due diligence, tax outsourcing, review and preparation of tax returns of individuals and corporations. Education Public Accountant, Universidad del Valle Courses and Seminars: International course for seniors at the training centre in Chicago; Course in Miami section 404 Survey Oxley; Training on the different types of taxes (income, VAT, withholdings, industry and commerce), Bogota; Training for development of administrative abilities (time management, team work, efficient writing), Bogota; Integral inflation adjustments, Bogota; Analysis of processes and procedures, Cali.

In September 2013 the Costa Rican tax administration published transfer pricing rules. The Costa Rican rules are based on the OECD guidelines and consider the arm's-length principle as the main objective at the time of evaluating the transactions between related parties.

Taxpayers should use the most appropriate method in each type of transaction (best method rule).

Transfer pricing evaluation must be done for local and foreign transactions between related parties.

Rules do not mention any level of materiality, so all transactions, regardless of their value, must be evaluated.

There is not a due date to file the study, but the adjustment (if any) that increases the taxable base for income tax purposes, must be included in the 2014 return.

Regulation also includes compliance requirements. Nevertheless, the detail and content of that return has not yet been revealed by the tax authority, and it is probable that the implementation of this return will be effective as of 2015.

German Morales Martínez
		Tax and legal partner Deloitte Costa Rica San José, Costa Rica Tel. +(506) 2257-9109 Email. gemorales@deloitte.com German is partner in the tax and legal department at Deloitte Costa Rica, with more than 15 years of experience in tax consultancy, including local and international tax planing, tax complience, due dilligence, restructuring proposals, transfer pricing studies and leading tax litigation proceses. Before joining Deloitte, German worked as an auditor, supervisor and administrator of the Costa Rica Tax Administration. German has been a professor of taxation at the Costa Rica Tecnological Institute for 10 years. German is also a regular contributing tax writer for the most important newspapers in Costa Rica. German is a certified public accountant (CPA) and holds a degree in business administration.

Alonso Erak Vargas

Tax services manager Deloitte Costa Rica San José, Costa Rica Tel. +(506) 2257-9109 Email. aerak@deloitte.com Alonso is a manager in the tax services department at Deloitte Costa Rica, with more than 10 years of experience in tax consultancy, including local and international tax planing, tax complience, due dilligence, restructuring proposals, tax litigation, intangibles valuation and transfer pricing studies. Before joining Deloitte, Alonso worked as a manager of other international tax consultancy fims, and was a leader in local and interntational tax and audit projects. Alonso has been a tax professor of the Costa Rica Certified Public Accountants Institute for the past four years. He is a certified public accountant (CPA) and holds a master's degree in tax advisory.

The essential foundation of the transfer pricing system is applying the arm's-length principle, which is based on verifying that the income originated from transactions carried out between related parties is determined in the same conditions as those transactions between independent third parties would be carried out; otherwise, tax authorities may tax income that was not determined considering arm's-length prices.

One of the main difficulties to prove that the arm's-length principle has been applied appears when local regulations presume third parties as related parties when they are not, and that are not located under lower taxation systems. Thus, for example: Ecuadorian regulations determine that foreign or local third parties with which a concentration of transactions is maintained (over 50%) should be considered to have been carried out on an arm's-length basis.

When local regulations exceed the scope of OECD Guidelines, there is a risk of double taxation, documentation and analysis equally excessive are required and tarnish the main purpose of transfer pricing which is to prove that taxable income on which income tax is calculated is the real and just income; that is to say, that which would be obtained if transaction would have been made with third parties, when actually that indeed is.

Martha Cerda Albuja
		Senior managerTransfer pricing services Deloitte Ecuador Quito, Ecuador Tel: +59 32 3815 100 Email: mcerda@deloitte.com Martha has more than 20 years of experience in the application of tax, economic and financial criteria in transfer pricing, double tax treaty issues, planning, business model optimisation, structuring and economic consulting. Martha has provided consulting services on a variety of tax and transfer pricing matters, including preparation of documentation, planning and handling of controversies. Her clients include companies in the financial, industrial and commercial sectors, as well as pharmaceutical, petroleum and service companies in general. From the beginning of the application of transfer pricing standards in Ecuador, Martha has participated actively with the tax administration's officers. Martha has been nominated as a transfer pricing leader for Ecuador by Expert Guides in its Transfer Pricing Advisers 2011 and 2013 edition and is included among the World's Leading Women in Tax in the second edition of the Guide to the World's Leading Women in Business Law, journals published by Euromoney. Martha also participated in the Round Table: Transfer Pricing, organised by Euromoney together with Corporate Live Wire. She holds a PhD in accounting from the Central University of Ecuador, is a graduate in accounting and audit and is a certified public accountant (CPA).

Tax authorities started transfer pricing audits in 2012, two years after the system had been put in place in El Salvador and went back to review from the first period that the regulation was in place (2010). To carry out their tax audit powers, the transfer pricing unit was created which works in coordination with the rest of the tax audit bodies.

The tax audit focus constitutes the group of large taxpayers irrespective of the industry they belong to. To date, there are supplementary tax calculations in place, which has given rise to transfer pricing litigation that is currently at the administrative stage.

Legislative decree, approved on July 2014, partially amends a section of the Salvadorian tax code establishing taxpayers' obligations to determine their transactions with related parties considering market values.

The reform considered including technical procedures and methods from OECD Transfer Pricing Guidelines so that taxpayers, as well as tax authorities, use them to determine market prices in controlled transactions and in those cases in which the respective tax adjustments apply. It was also considered to change the heading of such section, in which it is expressly stated as Transfer Pricing Determination.

In spite of past reforms, some specific transfer pricing regulation aspects from El Salvador are still in place, which are related to defining related parties and the criteria to be considered to carry out the comparability analysis, because in the specific case of El Salvador, companies organised or located in territories considered to be of low or nil taxation must not be selected as comparables.

Federico Paz
		Tax director Deloitte El Salvador San Salvador, El Salvador Tel: + (503) 2524-4100 Email: fepaz@deloitte.com Federico is the leader of the Tax & Legal practice in Deloitte's El Salvador office with more than 17 years of experience providing tax advisory services. His main experience includes corporate tax advisory, international tax consulting in the Central American countries, transfer pricing projects, tax defence and due diligence processes. As part of his professional development he has participated in different international courses. He has also participated as speaker in several local and international seminars and conferences about tax and transfer pricing topics. Federico is a member of the Tax Committee of the American Chamber of Commerce in El Salvador. Education Bachelor in Business Administration (BBA). Master degree in Tax Administration and Public Estate

After the inception of transfer pricing rules in January 2013, in late December of the same year Congress passed a waiver on such rules which will again be applicable and effective from January 2015 onwards.

Said waiver provoked uncertainty in the private sector with respect to the applicability of the rules, considering that they were in force for the most part of fiscal year 2013 but waived two weeks before the year-end. It was until few days before 2013 Income Tax return due date (March 2014) that the tax authority made clear pronouncements through paid advertisement in the media that rules under discussion were going to be enforced for 2013 cross-border related parties transactions.

Consequently, most taxpayers to whom the rules are applicable started with the preparation of the study in the second quarter of 2014. Tax audits are still to come, and the following months will reveal how the tax authority proceeds.

Even though the rules are not applicable for 2014, according to the waiver, fiscal authority could require information regarding the transactions with non-resident related parties for the construction of its databases.

Various issues are deriving from the first time application of the sixth method for commodities that requires the comparison of related party import and export prices to the ones prevailing in international transparent markets.

Among them the following are discussed:

• Priority of the sixth method over the five OECD guidelines-based methods;

• Use of high bid versus low bid references published by the transparent markets;

• Determination of TP adjustments on transaction basis opposite to on aggregated basis;

• Use of premium or discount or any other type of adjustment on the price; and

• Legality of the use of the date of shipping made mandatory by the Income Tax rules.

The early stage of the application of these rules does not allow having clarity on how the tax authority is going to face these controversies.

Byron Martinez
		Tax, legal and transfer pricing partner Deloitte Guatemala Tel: + (502) 2384 6500 Email: bymartinez@deloitte.com Byron Martinez joined Andersen in 1989 and began his career at Deloitte in 2002. He has more than 20 years of experience as a tax consultant serving multinational clients. With the first time adoption in 2013 of transfer pricing rules by Guatemala, Byron has been appointed as the leader of Deloitte's transfer pricing practice in this jurisdiction. Byron has developed extensive experience in international tax planning strategies including cross-border transactions, as well as broad experience in providing multinational clients the following services: transfer pricing, tax and transfer pricing consulting, tax compliance, tax and legal assistance in mergers, acquisitions, restructuring and spin-offs, tax controversies, tax planning, outsourcing of the tax function as well as of statutory accounting processes, project finance-related tax planning, and local employee and expatriates planning and compliance. His industry experience also covers taxation applicable to: banking and finance, consumer business (retail, food and beverages, pharmaceuticals and so on) oil and gas, utilities, telecom, services, manufacturing, transportation, real estate, exporting and free trade zones. Byron is a public accountant and auditor, having qualified at Rafael Landivar University in Guatemala City, and also holds a master's degree in finance from Galileo University in the same city.

On January 2014, transfer pricing rules were enforced in Honduras.

However, the rules establish that to have full force and effect, Honduras must have a future standard.

Such standard has not yet been approved. This situation creates confusion in the application of the TP rules.

One of the major concerns among taxpayers is the uncertainty of the law's scope and ruling about its application to local related parties. Given the lack of clarity in the ruling, companies have decided to perform a diagnosis to evaluate their possible liabilities if the tax authority decides to put in place the ruling for local purposes.

Rita Maria Silva
		Tax partner Deloitte Honduras Tel: + (504) 231 3131 Email: ritsilva@deloitte.com Rita Maria Silva is a tax partner at Deloitte's Honduras office. She has more than 18 years of experience in various tax services, including: international M&A restructurings; supply chain optimisation; cross-border planning; effective tax rate planning; and foreign earnings repatriation techniques. She has been an international consultant for tax matters for the Inter-American Development Bank, as Honduras counterpart. Rita holds a law degree from the Universidad Nacional Autonoma de Honduras, a master's degree in international relations from Ohio University in the US, and is a former Fulbright scholar. She also holds a business administration degree from Universidade Federal do Parana Brazil, a tax administration degree from Universidade Castilla La Mancha in Spain, and has attended various seminars including those hosted by the US Internal Revenue Service.

On last June 30, the informative transfer pricing declaration (Form F 930) fell due in Panama for companies whose tax-year end matches the calendar year. This filing is related to the third year since this obligation was in place, after which in August 2012, enforcing local transfer pricing standards extended to encompass all those companies carrying out transactions with foreign related parties.

As with any beginning, developing the local practice has encountered some difficulties, not only for taxpayers, who now should adapt their pricing policies to the arm's-length principle, but also for local tax authorities who have been preparing to carry out the control and review procedure allowing them to comply with the spirit of the law, which is to avoid that income be transferred to lower tax burden jurisdictions.

The second year the regulation was in place surprised many taxpayers who had not complied with the obligation of filing an informative declaration by June 30 and were surprised by a fine from the tax authorities, equivalent to 1% of transactions with related parties included in the income tax return for the same year. Later, tax authorities would change granting an extension to taxpayers until December to file the informative declaration. However, the problem was not altogether resolved as Panama has several special taxation areas where special income tax benefits are granted to companies operating in such areas and which had been fined by tax authorities as there were in our transfer pricing regulations no clear rules about what it should be done by those companies that had reported income, costs or deductions with foreign related parties but operated in an area where they were not required to determine income tax. It was not until March 2013 when the caption in the income declaration box was changed, in which it was specified that only those transactions that were subject to the transfer pricing system should be reported. Thus after several months, and repeated consultations with tax authorities, the situation with special taxation companies managed to be solved, eliminating fines wrongfully imposed.

Regarding companies operating in the so-called "free areas" reporting from different areas subject to determining income tax and consequently subject to transfer pricing rules, we have come across a difficulty upon developing the economic analysis, about how to obtain information segmented in an objective matter (specifically at the operating expense level) that allows reaching results from reliable source.

On the other hand, as regards the performance of tax authorities in audit and control matters, thus far we are not aware of any resolution issued in the cases that have been subject to review. For the 2013 tax period, tax authorities have increased their work, notifying several taxpayers from the financial and manufacturing sectors to produce their documentary support.

Lastly, it may be inferred that tax authorities will continue to take on a more active role as far as audit and control powers are concerned so that the expectation in the medium term is that professional practice continues evolving and develops more in-depth criteria in accordance with the worldwide transfer pricing situation.

Michelle Martinelli
		Tax & Legal partner Deloitte Panama Panama City, Panama Tel: + (507) 303-4100 Email: mmartinelli@deloitte.com Michelle is a tax lawyer and partner in our Tax & Legal department at Deloitte Panama City office, with more than 10 years of experience, specialised in tax consulting and compliance services for local and international companies operating in and from Panama. Before joining Deloitte, Michelle has worked as a tax manager for EY, Cable & Wireless Panama and PricewaterhouseCoopers. She has been involved in several mergers and acquisitions projects, and also has extensive experience in restructuring proposals, consisting in the evaluation and implementation of strategies. While working in Cable & Wireless, Michelle acted as country leader for the Sarbanes-Oxley Act implementation, managing all actions related with the identification of risks and the follow-up of mitigating actions. Education Law Degree from Universidad Santa Maria la Antigua. Master Degree in International Business Law from Southern Methodist University in Dallas, TX.

A transfer pricing regulation has recently been enforced. However, this regulation is not a full implementation of transfer pricing rules in Paraguay, because it only applies to exports of agricultural commodities.

It is required to report contracts of soybean exportation to the tax authorities' registers.

Tax adjustment must be made considering the price of goods on international markets, comparing it to the method chosen by the taxpayer, as of the last shipping date or the agreement date, if the agreement has been reported to tax authorities.

Tax adjustments, if any, must be included into the annual corporate income tax return, in a separate appendix.

Daniel Fariña
		Tax and legal partner Deloitte Paraguay Tel: +595 21 220790 Email: dfarina@deloitte.com Daniel is a tax and legal partner in Deloitte Paraguay, with more than 12 years of experience in accounting and tax matters. As a tax partner, Daniel is leading the tax practice, developing projects related to direct and indirect taxes, tax and legal advisory, international tax matters and outsourcing services, working on a wide range of industries. Daniel has been a speaker at several conferences, most of them related to tax and accounting matters. He is a member of the executive board of the Council of Public Accountants of Paraguay. Daniel gained his public accountancy degree from National University of Asuncion, as well as a master's degree in accounting and audit from the National University of Asuncion and National University of Buenos Aires, and a master's degree in taxation from the National University of Asuncion.

As in other jurisdictions in Latin America, Peruvian tax authorities have been intensifying their audit work for transfer pricing. Indeed, since fiscal 2012, tax authorities have started to request more information about intercompany transactions to be declared by taxpayers, which would have allowed making the process more efficient by which the cases liable to be audited are selected.

Based on the above, tax authorities have been carrying out formal reviews to require transfer pricing studies from all years that are open, to verify compliance with regulations provided in local regulations. In turn, the audit process has become more and more in-depth.

There have been many aspects that tax authorities have paid attention to regarding the recent tax audit procedures, and one of the most remarkable challenges is the set of comparables used, especially as regards financial transactions so that comparability criteria related to transactions such as principal amount, terms, securities, debtor's solvency, risk qualification, debtor's country of residence, loan currency, date, among others are respected.

Characteristics and nature of traded goods have also been evaluated by tax authorities to establish whether comparability analysis carried out is correct, even taking into account such basic aspects as to whether products may be classified as a commodity or whether the impact of intangible in negotiating prices is determining.

In the previous cases, tax authorities have shown their preference for the use of comparables whose information source is of Peruvian origin as interest rates published by the SBS (banking and insurance regulatory agency) can be used for financial transactions and information gathered by customs from the same tax authorities in the case of import of goods.

It should be noted that the common factor that has triggered tax audits has been the identification of profit margins or prices that are outside market ranges or detecting studies in which accuracy adjustments are presented in the transfer pricing analysis carried out.

Another distinctive element in the recent tax audits in Peru has been the review of intercompany services; this is in view of their intangible nature and the relative facility with which they could be used to transfer income from one jurisdiction to another. In these cases, audit processes have focused on requesting more information about the calculation of the service value, adding emphasis not only on determining the profit margins, but also on determining the cost and expense base used. Agreements, documentation showing that the services were actually rendered are generally requested, as well as how to prove their need by the receiving party.

Thus, the possibility of executing advance pricing agreements (APA) is becoming an ever more attractive alternative for Peruvian taxpayers. They would allow them to achieve more certainty as to the methodology presented for more sensitive and relevant intercompany transactions and thus avoid challenges from tax authorities for the years during which the agreement was in place. While this type of instrument has not been much explored yet in Peru, in view that taxpayers still receive risks related to disclosing sensitive information to authorities, some companies have already started to consider this tool as a reasonable alternative and tax authorities have been more forthcoming to the fact that these agreements are executed in view of the benefits that, in matters of transparency and decrease in administrative burden, they may bring.

Gloria Guevara
		Transfer pricing partner Deloitte Peru Lima, Peru Tel: +51 (1) 211 8585 Email: glguevara@deloitte.com Gloria Guevara is a partner in the firm's transfer pricing department. Gloria has more than 12 years of transfer pricing experience with Deloitte, during which time she has advised multinational companies and local groups operating in diverse industries such as: mining, oil and gas, energy, manufacturing, pharmaceuticals, consumer business, and telecommunications, among others. Gloria counts with wide experience advising her clients on strategic planning design and transfer pricing policies. She has actively participated in high level complexity transfer pricing issues (valuation of intangibles, mining properties, damages valuation and residual profit share application methods), as well as diverse cases of audits regarding this field and recently she has participated in advising for the signing of transfer pricing advance pricing agreements (APAs) before the National Tax Administration. Her experience includes advising Grupo Telefonica on signing an APA with the tax administration, advising Barrick Gold on transfer pricing diagnostics and studies, and advising Grupo America TV on strategic transfer pricing planning and valuation for high level, complex operations related to business restructuring in the TMT sector. She was also part of the team responsible for advising on the first cases of transfer pricing audits before the National Tax Administration. Gloria holds a graduate degree in economics from the Pontifica Universidad Catolica del Peru, a diploma in economic management of businesses, focused on finance, economics and administration from Universidad de Lima and has produced specialised studies on transfer pricing organised by Deloitte US, Canada, Netherlands and several Latin American countries. She has been a speaker on transfer pricing courses at various universities, as well as speaking at diverse international seminars on tax and transfer pricing issues organised by Deloitte in Latin America.

Companies included in the large taxpayers division currently are subject to full audit every four or five years. In recent tax audits, a team belonging to the international tax division from the tax department was added. Based on the above, TP audits have not focused on any specific sector but on the large taxpayers in general.

Tax audits take six months on average. The company receives extensive information requirements such as: Itemised list of sales and purchases, price lists, agreements, corporate books, financial information of foreign affiliates, and so on. Tax auditors shall also hold interviews with managerial and operating personnel and visits to facilities. When the information related to foreign affiliates is not made available, it is recorded in the minutes. While it does not generate any immediate consequence, in some cases, it negatively predisposes auditors or leads them to make their own assumptions in such connection.

Once the information has been gathered, they carry out an analysis independent from the one made by the company in its transfer pricing report and report their conclusions and possible recalculations. As from that time, a discussion and supplementary information filing stage starts after which the tax authorities' claim could be reduced. Rarely has it been possible to eliminate it. Once this stage is completed, the company should decide whether it accepts the challenges from the tax authorities and acquiesces to a recalculation or whether litigation is commenced.

Alejandra Barrancos
		Senior manager Deloitte Uruguay Tel: + 59 8 2916 0756 Email: abarrancos@deloitte.com Alejandra is a senior manager in the transfer pricing practice of Deloitte Uruguay. She has been working in different areas of our tax department since 1997, and also worked for the transfer pricing practice of Deloitte Argentina for a few months. During this period she has accumulated significant experience in various advisory services to foreign companies, including: tax compliance, local and international tax planning and transfer pricing. Her experience in transfer pricing projects includes planning projects, documentation projects and also defence in tax audits. She has completed numerous training courses locally in the tax area, and has participated in several transfer pricing courses in Uruguay and abroad. Alejandra is a certified public accountant (CPA), having qualified from the Universidad de la Republica in Uruguay, and also holds a degree in taxation from the Universidad Catolica del Uruguay.

Fines for non-compliance with formal obligations for transfer pricing are considered very low, but their review represents the first step before beginning a thorough audit by SENIAT (tax authority from this country). SENIAT is actively participating in TP audits.

Findings notified by SENIAT and under evaluation over the past few years are:

• Review of the selected methodology: Venezuela prioritises applying the comparable uncontrolled price (CUP) method, by which it is noted that tax authorities review in depth the reasons to rule it out in the event it is applied;

• Review of segmented financial statements and assignment criteria;

• Review of periods to be considered for the analysis. Venezuelan income tax does not expressly provide the periods to be used for the transfer pricing analysis;

• Review of adjustments to increase comparability;

• Verification of actually receiving or providing services: registration and support; and

• Translation issues (business description of comparable companies).

Biography
		Iliana Salcedo TP partner Lara Marambio & Asociados (Member of Deloitte) Caracas, Venezuela Tel: +58 212 206 8701 Email: isalcedo@deloitte.com Iliana has more than 12 years of experience providing tax technical advisory in transfer pricing matters. She contributes to the development of the Deloitte's Andean region transfer pricing practices. As a partner of the transfer pricing unit, she offers her experience gained through training at the regional level and in the United States. She has been actively involved in the development of projects for documenting and designing transfer pricing policies, strategies and structures for multinational groups. Iliana is frequently a speaker in different transfer pricing regime-related conferences in the Andean Region. Education Public Accountant. Master in Tax Management.