BEPS Action 13 in Latin America

The BEPS Action 13 Report (Transfer Pricing Documentation and Country-by-Country Reporting) offers multinational enterprises (MNEs) a template to yearly transfer all relevant information that are mandatory in their tax jurisdiction. This report is called Country-by-Country (CbC) Report. In order to enable the implementation of CbC-reporting standards the BEPS Action 12 Report includes a SbC Reporting implementation package consisting of two components:

  • A model legislative that can be used by countries in order to oblige parent companies to issues a CbC report including backup file requirements
  • Three model Competent Authorities Agreements that can be used to exchange CbC reports. Those in turn are based on multilateral conventions for administrative tax assistance, bilateral tax conventions and tax information exchange agreements (TIEAs)

Since the Action 13 Report has been published the respective tax jurisdictions have invested a lot of energy into creating the necessary domestic and international judicial and administrative infrastructures to create global minimal standards. Since the process is still within the development phase it is currently tough for governments, tax authorities and companies to be compliant. Therefore, a pragmatic approach when implementing the new rules is needed until all relevant actors have collected more experience and know-how regarding the new reporting requirements

In the following tables we have assembled the status quo of all relevant countries in Latin America including the reporting requirements as well as deadlines and possible penalties in case of non-compliance.

Country

Reporting

Requirements

Published Details
  C by C Master File Local File Filing Requirements
Notifications & Deadlines Penalties
Argentina + CbyC:

Applies to MNEs with annual consolidated group revenue equal to or exceeding €750 million in the previous year.

Regulations extend to subsidiary entities.

The report needs to be filed in local language and it has not been determined whether the OECD’s XML Schema standardized electronic format will be adopted.

Argentinean entities are allowed to act as a surrogate.

 

Applies for fiscal years beginning on or after 1 January 2017.

Must be filed by the last business day of the twelfth month after the parent’s fiscal year end.

Notification must be submitted by the last business day of the third month after fiscal year end. The data needs to be uploaded through a website of the Argentine Tax Administration. In addition, a second notification is due by the last business day of the second month after the CbC deadline to inform if the CbC report was filed in the jurisdiction of the parent.

Penalties for failure to notify range from AR$ 80,000 to 200,000.

Failure to file the report will result in penalties ranging from AR$ 600,000 to 900,000. Other penalties include (i) categorization as high risk of being audited, (ii) suspension/exclusion in special tax regimes, and (iii) suspension in the applications to obtain non withholding certificates.

 

 

Country Reporting Requirements
Published Details
  C by C Master File Local File Filing Requirements
Notifications & Deadlines Penalties
Brazil + CbyC:

Applies to MNEs with annual consolidated group revenue equal to or exceeding BRL 2,260,000,000 in the previous year. Regulations extend to subsidiary entities.

CbCR will need to be provided in either Portuguese, Spanish or English. The OECD’s XML Schema standardized electronic format has been adopted.

Notification should be provided in the same electronic file released by Federal Revenue which will contain the CbCR information and at the same date as the CbC report.

Applies for fiscal years beginning on or after 1 January 2016. CbCR for FY 2016 only applies if the ultimate parent’s FY begins and ends in 2016.

Must be filed with the corporate tax return (July 31st after calendar year closing).

 

Two categories of penalties will apply: (i) BRL 500-1500 per month for failing to file or for not answering tax authority ́s request/clarification; and (ii) 3% on value of transaction for providing incorrect information/data.

 

 

Country Reporting Requirements
Published Details
  C by C Master File Local File Filing Requirements
Notifications & Deadlines Penalties
Chile + planned CbyC:

Applies to MNEs headquartered in Chile with annual consolidated group revenue equal to or exceeding €750 million in the previous year.

CbCR must be filed in Spanish and it has not been determined whether the OECD’s XML Schema standardized electronic format will be adopted.

Chilean entities are allowed to act as a surrogate.

Local File:

Intention to require LF through the filling of a questionnaire (e.g. as an appendix to the current transfer pricing sworn return)

Applies for fiscal years beginning on or after 1 January 2016.

Must be filed no later than 6 months after the last day of the reporting fiscal year of the MNE group.

Notifications need to be submitted 30 days before filing deadline of the CbCR. Notifications are only required by Chilean headquartered companies and need to be submitted in Spanish in a template defined by the tax authorities.

A maximum penalty of CLP 27,500,000 and criminal penalties may apply for noncompliance with CbCR and notification.

 

Country Reporting Requirements
Published Details
  C by C Master File Local File Filing Requirements Notifications & Deadlines Penalties
Colombia + + + CbyC:

Applies to MNEs with an annual consolidated group revenue equal to or exceeding UVT 81,000,000 in the previous year. Regulations extend to subsidiary entities.

Local language is required and Colombia has adopted the OECD’s XML Schema standardized electronic format.

Colombian entities are allowed to act as a surrogate.

Master File:

Applies for fiscal years beginning on or after 1 January 2017.

Applies to companies that develop operations with related parties which have gross equity that exceeds UVT 100,000 or gross income that exceeds UVT 61,000.

English will be accepted but the tax administration might require an official translation.

Local File:

New or modified existing local documentation now includes elements of OECD Action 13 LF content.

Applies for tax year 2017 and must be submitted within the deadline for the transfer pricing documentation.

Companies that develop operations with related parties which have gross equity that exceeds 100,000 UVT or gross income that exceeds 61,000 UVT, per transaction exceeding 45,000 UVT. In the case of transactions with tax havens, no thresholds of gross equity or gross income apply, and each transaction exceeding 10,000 UVT shall be documented within the LF.

LF needs to be filed in Spanish.

CbyC:

Applies for fiscal years beginning on or after 1 January 2016.

The law states that it should be presented within 12 months after the closure of the reportable fiscal year. 2017’s report will be due in December 2018 (between the 11-24 of December, depending on the tax ID).

From 2017 on, taxpayers subject to the transfer pricing regime should include the notification within the transfer pricing return (Form 120), which is due in September of 2018 for FY17. Taxpayers that are not subject to the transfer pricing regime should have submitted the notification to the tax authority via email (which was also due in September of 2018 for FY17).

Master File:

These submission dates depend on the last digit of the taxpayers ID (between September 11 and 24 of 2018 for the FY17 year). TP documentation has been submitted in the past through the webpage of the Fiscal Authorities and the format used for this purpose is PDF.

Local File:

Filing dates are the same as MF.

 

CbyC:

A maximum penalty of approx. COP 478 million applies for taxable units of 2017 for CbC filing and notification requirements.

Master File:

Penalties for late filing, failure to file, inconsistencies or omissions will apply.

Local File:

See Master File

 

Country Reporting Requirements
Published Details
  C by C Master File Local File Filing Requirements
Notifications & Deadlines Penalties
Mexico + + + CbyC:

Applies to MNEs with annual consolidated group revenue equal to or exceeding MXN 12,000 million in the previous year. Regulations extend to subsidiary entities.

CbCR can be provided in Spanish or English and Mexico has not adopted the OECD’s XML Schema standardized electronic format yet.

Mexican entities are allowed to act as a surrogate.

Notification to the SAT only takes place if a Mexican subsidiary has been appointed to file CbCR.

Master File:

MF first fiscal year, filing requirements, language and penalties are the same as for CbCR.

MF applies to taxpayer with revenues equal to or exceeding MXN 686 million (to be annually updated) in the previous year, Corporate taxpayers whose shares are listed and quoted on public stock exchanges, Taxpayers subject to the “Optional regime for groups of corporate taxpayers that are subject to certain provisions“, Government entities, and foreign taxpayers with PE in Mexico, but only with respect to the activities conducted by that PE.

Local File:

LF is based on the OECD Action 13 LF but requires additional information.

The LF must be prepared in Spanish, however requested intercompany agreements can be submitted in Spanish or English.

Mexican transfer pricing documentation must be contemporaneous with the 2016 income tax return.

There are some formal documentation requirements included in the documentation report that are not part of the LF and vice versa.

 

CbyC:

Applies for fiscal year beginning on or after 2016.

Must be filed annually by December 31 of the following year of the fiscal year under analysis. There are different due dates to file the CbCR for Mexican subsidiaries of foreign multinational groups whose fiscal year is not a calendar year end.

Local File:

LF must be submitted by December 31 of the fiscal year following the one for which the report has been prepared.

 

CbyC:

Penalties ranging between MXN 140,540 to MXN 200,090 will apply for noncompliance. The extended statute of limitations for tax audits may be extended to 10 years. Other penalties include a ban to be a supplier of the public sector and withdrawal of the importer permit.

Local File:

LF first fiscal year, threshold and penalties are the same as for MF.

 

 

Country Reporting Requirements
Published Details
  C by C Master File Local File Einreichungspflicht & allgemeine Informationen Benachrichtigungen & Deadlines Strafen
Peru + + + CbyC:

Applies to MNEs with annual consolidated group revenue equal to or exceeding PEN 2,700 million in the previous year. Regulations extend to subsidiary entities.

Must be filed in local language. While the OECD’s XML Schema standardized electronic format has been adopted, some additional information, also in XML format, must be submitted to comply with local regulations.

Entities are allowed to act as a surrogate.

Master File:

The formal obligation is a “MF Informative Return”, which includes submitting the full MF Report in Spanish.

Applies to companies with individual revenues higher than 20,000 Tax Units (approx. USD 20 million).

The first fiscal year and language are the same as for the CbCR. There are some deviations from the OECD report.

Local File:

LF is based on the OECD Action 13 LF but requires additional information.

The first fiscal year requiring LF Informative Return preparation is FY 2016.

The threshold to file a LF is if the company has revenues greater than USD 2.3 MM (approx.) and whether the sum of all of its intercompany and tax have operations are greater than USD 120 K (which triggers the obligation to file Appendix I of the LF Informative Return) or greater than USD 470,000 (which triggers the obligation to present Appendixes II, III and IV). All transactions greater than USD 3,000 must be included in the Return.

CbyC:

Applies for fiscal years beginning on or after 1 January 2017.

The filing date for FY 2017 was originally set to be November 2018, but an extension was granted until March 2019. The deadline for future years will be in October.

The deadline for submitting this notification is the last day of the month previous to the deadline for filing the CbCR. For 2017, the deadline for filing the notification is October 31 (however an extension granted by the Tax Authority until February 28, 2019). The notification is applicable only if (i) a Peruvian company has been designated as the surrogate parent, or (ii) the MNE has more than one constituent entity in Peru. The notification must be performed using a template provided by the Tax Authority. The notification must be filed in Spanish. If the entity fails to notify, all of the local entities will become responsible for submitting the CbCR.

Master File:

Must be presented in November 2018 (exact deadlines depend on the tax ID number of the company).

 

CbyC:

Penalty of PEN 100,000 applies. The penalty applies for failing to report the CbC Informative Return “as requested by law”. So, it applies for failing to present a CbCR at all, but it could also apply if the CbCR is presented with important omissions or significant mistakes.

Master File:

The penalty for failing to submit the MF informative return is around USD 25,000.

 

(+) = implemented

(-) = not required

 

 

 

 

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