Transfer pricing refers to the rules and methods for pricing transactions between related entities within a multinational group, such as the transfer of goods, services, or intellectual property. These transactions occur between companies that are part of the same corporate group but located in different jurisdictions.
Because such related-party transactions may not be priced as if they were between independent parties, tax authorities around the world adopt transfer pricing regulations to prevent artificial shifting of profits to low-tax jurisdictions. This protects the tax base of each country and ensures that multinational companies pay a fair share of tax where economic activity occurs.
Chile’s transfer pricing rules, aligned with the OECD Transfer Pricing Guidelines, require that related-party transactions be priced according to the arm’s length principle — meaning prices should be similar to those that would have been agreed upon between independent enterprises in the open market.
This includes documentation obligations and specific forms that companies must file annually with tax authorities to demonstrate compliance. Failure to comply can result in adjustments, penalties, or additional tax assessment.
Ultimately, transfer pricing ensures transparency across international transactions and balances tax burdens among jurisdictions where multinational enterprises operate.
Contact us to know more: +56 9 8139 3599 cvaldes@bbsc.cl
