PERU Law and Practice Contributed by: Tania Quispe, Martín Ramos, Raquel Cabrera and Ramzi Benzaquen, +Value
• profit split method (PSM); • residual profit split method (RPSM); and • transactional net margin method (TNMM). It should be noted that, unlike the OECD Guide - lines, which consider residual profit split analysis as part of the profit split method, the ITL treats them as independent transfer pricing methods. 3.2 Unspecified Methods The ITL considers the application of “other meth- ods” when, due to the nature and characteristics of the activities and transactions, it is not appro - priate 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. However, given that to date the ITLR have not yet established these provi - sions, it is currently not possible to apply meth - ods other than those indicated in 3.1 Transfer Pricing Methods . 3.3 Hierarchy of Methods The IITL states that, in order to establish the most appropriate transfer pricing method, the following must be considered. • The method that is most compatible with the line of business, business or commercial structure of the company or entity. • The method that has the best quality and quantity of information available for its adequate application and justification. • The method that contemplates the most adequate degree of comparability between parties, transactions and functions. • The method that requires the lowest level of adjustments in order to eliminate the existing differences between the comparable facts and situations.
It should be added that, for the purposes of applying the most appropriate transfer pricing method, the concepts of costs of goods and ser - vices, production costs, gross profit, expenses and assets will be determined based on the pro - visions of the International Accounting Stand - ards, if they do not oppose the provisions of the ITL. Therefore, the Peruvian regulations have not established a hierarchy of methods. Notwithstanding the foregoing, the ITL indicates that in export or import operations of goods (listed in Annex 2 of the ITLR) with known quo - tations in the international market, local market or destination market, including those of deriva - tive financial instruments, or with prices that are fixed taking as a reference the quotations of the indicated markets, the market value is deter - mined on the basis of such quotation values. In these cases, the method to be used is the CUPM; however, the ITL adds that, if the tax - payer uses a different method for the analysis of the transactions, the corresponding support - ing documentation must be submitted to the Tax Administration, as well as the economic, finan - cial and technical reasons justifying its use. 3.4 Ranges and Statistical Measures The ITLR establish that, when determining the price, consideration amount or profit margin that would have prevailed among independent parties in comparable transactions and result - ing from the application of any of the previously mentioned methods, a range of prices, consid - eration amounts or profit margins should be obtained when there are two or more compara - ble transactions. It should be noted that if the value agreed upon by the related parties falls within this range, it will be considered as agreed upon at market value. On the contrary, if the agreed value falls outside
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