In ECOVIS Guatemala we can help you develop an effective global strategy to handle within the framework of the Law the transfer prices of your goods, services and intangibles in operations with related parties in Guatemala and abroad.
The transfer pricing studies have been underutilized by most organizations, because these studies are only acquired for the formalism required by the tax authorities in each country, and these contain valuable benchmarking information from similar businesses and should be an example for strategic planning, for the determination of prices and margins between related companies within the same country although in Guatemala for example the law only requires for transactions with related companies abroad.
What do we mean by Transfer Pricing Services?
Approximately two-thirds of cross-border transactions take place between associated enterprises part of the same multinational group, keeping the pricing of intercompany transactions at arm’ s length is an unavoidable need for multinationals as well as medium-sized enterprises. Pressure from international and regional organizations as well as local tax administrations require full compliance with the arm’s length principle. The importance of such element is reflected in the circumstance that increasingly MNE (Multinational Enterprises) groups rank transfer pricing as one of the highest risks to be managed, from a reputational as well as from a tax standpoint.
Thanks to our significant expertise in both design of transfer pricing policies as well as assistance in litigation proceeding, we are constantly able to tackle the most challenging issues associated with the commercial and financial relations existing in transactions between associated enterprises. In alliance with ECOVIS Mexico, we have at our disposal access to the commercial and financial databases needed to perform a thorough comparability analysis to determine the most accurate economic results consistent with application of domestic transfer pricing provisions.
What do we offer?
Transfer Pricing Compliance: TP Documentation
In a post-BEPS (Base Erosion and Profit Shifting) world, where tax administrations around the world are implementing the recommendations focused on transfer pricing ECOVIS GUATEMALA and MEXICO’ transfer pricing professionals assist taxpayers with home country and foreign documentation requirements by preparing transfer pricing documentation reports that analyze the arm’s length nature of their intercompany transactions. This includes supply of goods, provision of services, as well as intercompany financial transactions. We can also assist multinationals with multiple foreign affiliates to prepare global documentation, including Country-by-Country reporting, meeting all of their documentation requirements in an effective manner.
Transfer Pricing Regulations in Guatemala
According to the Guatemalan fiscal regulation on transfer pricing applicable to fiscal year 2020, Special Valuations Rules among Related Parties in Chapter VI, Title II, of the Tax Update Law, published in Decree 10-2012.
The companies subject to this study must determine their income, costs and deductions, considering for those operations the prices and amounts of consideration which would be greed between independent persons or entities in comparable transactions.
It is advisable to have supporting documentation showing that the transactions with its related parties were agreed at market value, complying with the Arm’s Lengt principle of dictated by the Organization for Economic Cooperation and Development (OECD). It mentions that transfer prices between related parties, for tax purposes, must be established as if these prices had been agreed between independent parties, in the same or similar transactions and circumstances. The transfer price should be the same as if the two companies involved were indeed two independents, not part of the same corporate structure.
According to Article 56, Decree 10-2012, two or more parties are considered related parties when these participate directly or indirectly in the management, control or capital of the taxpayer, or when the same people participate directly or indirectly in the management, control or capital of both taxpayers, or when for any objective reason may exert a systematic influence on their price decisions.
Likewise, as indicated in Article 9, Decree 10-2012, it provides general documentation guidelines. Taxpayers must have information, documents and analysis to assess their transactions with related parties, as defined by the Tax Administration, through a general resolution.
Our service provides the business sector with the Technical Study of Transfer Pricing, using for databases according to the business that allow having appropriate comparable for their operations.