PERU Law and Practice Contributed by: Tania Quispe, Raquel Cabrera, Ramzi Benzaquen and Jadhira Unda, +Value
• transactions carried out from, to or through non- co-operative countries or territories with low or no taxation; or • transactions carried out with subjects whose income/gains from such transactions are subject to a preferential tax regime. Consequently, it is necessary to have the relevant information, documentation and/or analysis that sup - ports that, for tax purposes, the value assigned to goods, services and other benefits reflects the market value, in accordance with the arm’s length principle. Under Article 32-A of the ITL, two or more individu - als, companies or entities are considered related par - ties when one of them participates directly or indi - rectly in the administration, control or capital of the other; or when the same person or group of persons participate/s directly or indirectly in the management, control or capital of several individuals, companies or entities. Related-party status also applies when a transaction involves intermediary parties aimed at concealing a transaction between related parties. Additionally, Article 24 of the ITL regulates the assumptions and criteria for establishing related-party relationships. For example, here are some situations in which two or more individuals, companies or entities are considered related parties. • When a natural or legal person owns more than 30% of the capital of another legal entity, directly or through a third party. • When more than 30% of the capital of two or more legal entities belongs to the same natural or legal person, directly or through a third party. • When more than 30% of the capital of two or more legal entities belongs to common partners of them. • When there is a business collaboration contract with independent accounting, in which case the contract will be considered linked to those con - tracting parties that participate, directly or through a third party, in more than 30% of the contract assets. • When there is a joint venture contract, in which one of the partners, directly or indirectly, participates in more than 30% in the results or profits of one or more businesses of the partner, in which case it
will be considered that there is a link between the partner and each of their associates. • When there is the existence of permanent estab - lishments, applicable to non-resident companies with establishments in the country or resident companies with establishments abroad. • When the exercise of dominant influence over management decisions, indicating control over other entities’ management bodies. • When there is a significant proportion of transac - tions between the parties – this is the case when 80% or more of a party’s transactions involve related parties, constituting at least 30% of the counterparty’s transactions. 3. Methods and Method Selection and Application 3.1 Transfer Pricing Methods The ITL establishes that transaction prices agreed upon in transactions – subject to transfer pricing rules – will be determined in accordance with any of the fol - lowing accepted international methods, considering the most appropriate method to reflect the economic reality of the operation: • comparable uncontrolled price method (CUPM);
• resale price method (RPM); • cost plus method (CPM); • profit split method (PSM);
• residual profit split method (RPSM); and • transactional net margin method (TNMM).
It should be noted that, unlike the OECD Guidelines, which consider residual profit split analysis as part of the profit split method, the ITL treats them as inde - pendent transfer pricing methods. 3.2 Unspecified Methods The ITL considers the application of “other methods” when, due to the nature and characteristics of the activities and transactions, it is not appropriate to apply any of the methods mentioned at 3.1 Transfer Pricing Methods . In this regard, it should be added that the ITL also indicated that the application of the “other methods” would be carried out in accordance with what is outlined in the ITL Regulations, which
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