NewsFlash August 2023

Upcoming transfer pricing deadlines in the Americas

Argentina: September 23 – 25

  • Informative Affidavit F.2668 and Local Report F.4501 for companies with a Fiscal Year End 03/31/23.
  • Master File for companies with a Fiscal Year End 09/30/22.

Argentina: September 29

  • First Notification Country by Country Report for those companies whose Ultimate Parent Entity has a Fiscal Year End 06/23.
  • Country by Country Report for those companies whose Ultimate Parent Entity has Fiscal Year End 09/29/22. 

Chile: July 1 – September 30

Extension period to comply with the obligation to file the following returns:

  • No. 1907 – Sworn Statement on Transfer Pricing;
  • No. 1937 – Sworn Statement Country by Country Report;
  • No. 1950 – Annual Sworn Statement Master File; and
  • No. 1951 – Annual Sworn Statement Local File. 

Colombia: September 7 to 20

  • Informative Affidavit F.120 with Notification Country by Country Report, and F.1729 Local Report.

Panama: September 29

  • Informative Affidavit F.930 for companies with Fiscal Year End 03/31/22.

Peru: September 29

  • Country by Country Report Notification for Local Entity designated to file Country by Country Report on behalf of other Peruvian entities of the multinational group.

Uruguay: September 22

  • Informative Sworn Statement F.3001 and Local Report (large taxpayers) for companies with Fiscal Year End 12/31/22.

Uruguay: September 29

  • Notification of Country by Country Report for those companies whose Ultimate Parent Entity has Fiscal Year End 09/22.

United States: September 15

  • S-Corp & Partnership Annual Return 5471/5472 for companies with Fiscal Year End 12/31, and Country by Country Report 8975, along with contemporaneous transfer pricing documentation (to be maintained, not filed).

Venezuela: September 29

  • Informative Affidavit PT99 for companies with Fiscal Year End 03/31/22.

OECD: proposed amendments to the IFRS Standard for SMEs

On August 23, 2023, the International Accounting Standards Board (IASB) approved amendments to the International Financial Reporting Standards (IFRS) for small and medium-sized enterprises (SMEs). This was in response to the Organization for Economic Co-operation and Development (OECD) Pillar Two standards, which address the fiscal challenges of the digital economy.

To view the amendment, click here.

Argentina: tax rate reduction applied to the purchase of foreign currency for certain transactions

On August 14, 2023, through the National Gazette, the Argentinean tax authorities (AFIP) presented General Resolution 5403/2023, amending General Resolution 4815/2023, which established a regime of income tax and personal property tax collection for foreign currency purchase transactions.

The AFIP reduced the percepción [1] payment rate from 25% to 5% on certain transactions covered by the Impuesto PAIS due to de devaluation of the Argentinean currency.

This percepción payment applies to the purchase of goods and services abroad with debit and credit cards exceeding US$300 per month per person.

The measure came after the Central Bank (BCRA) decided to raise the official dollar by 22%, thus devaluing the peso, after the victory of Javier Milei in the primary elections.

Resolution 5403/2023 modifies the following points:

1. Substituted subsection c) of article 5, 25% for 5%.

2. Replaced item 2, paragraph b) of article 6, the expression “The percepción practiced at the rate of 25% will be treated as follows:” with the expression “The percepciónes practiced at the rates of 5% or 25% -as applicable- will be treated as follows:”.

3. Replaced in the text of the column labeled “Description” of the table in the third paragraph of article 14, (except for the one corresponding to the codes of percepción regime 514 and 508), 25% for 5%.

To see Resolution 5403/2023, click here.

Mexico: amendment to the Agreement for the Avoidance of Double Taxation and Tax Evasion between Mexico and Germany

On August 4, 2023, the Official Gazette of the Federation (DOF) published the approval of the Amending Protocol to the Agreement of July 9, 2008, between Mexico and Germany to avoid double taxation and tax evasion on Income Tax (ISR) and Wealth Tax.

The main changes are as follows:

1. It is established that in order not to be considered as a “permanent establishment”, the activities listed in article 5 of the agreement must be of a preparatory or auxiliary nature.

2. In order to be able to apply the reduced rate of 5% on dividends, if the beneficial owner is a company (excluding partnerships) that directly owns 10% of the capital, the requirement of shareholding within the previous 365 days is incorporated.

3. Gains obtained by a resident of a Contracting State from the alienation of shares or other comparable participation rights, such as shares in a partnership or trust, may be taxed in the other Contracting State, if, at any time within 365 days preceding the disposal, such shares or comparable participation rights derive more than 50 percent of their value, directly or indirectly, from immovable property, situated in that other State.

4. In the application of the agreement to special cases, the anti-abuse measures of treaties are implemented in the case of income attributable to permanent establishments in third jurisdictions.

To consult the Amending Protocol, click here.

To read: “Unpacking Pillar One, Amount B from a Transfer Pricing Perspective” by BaseFirma

In this new article, BaseFirma’s Ricardo Rosero and Chad Martin shine a light on the OECD’s two-pillar approach to modernizing global taxation. This approach, introduced in late 2021, has seen uneven progress. Pillar Two, focused on minimum tax rules to deter income shifting by multinational enterprises (MNEs), has gained traction globally, while Pillar One, which addresses the allocation of taxation rights, has faced delays due to negotiations and complexities. Pillar One comprises two components: Amount A reallocates taxable income of large MNEs to prevent double taxation, and Amount B simplifies profit allocation for routine sales and marketing activities. Amount B relies on a pricing matrix with return on sales (ROS) margins based on industry and distributor functionality. The OECD proposed adjustments and exceptions to address concerns from tax authorities and stakeholders.

To read the BaseFirma article, click here.

[1] Refers to a payment to the Tax Administration on account for another tax.

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