Fines and penalties in Transfer Pricing: the cost of being late or unsupported.

By MAF. Gabriela Páez

Tax Manager – EAS LATAM

In transfer pricing, the risk doesn't end with filing a return . The Tax Authority can review both the formal reporting obligation and the supporting evidence for transactions between related parties . Therefore, it's important to distinguish between three scenarios: failing to file an information return, not responding to a request for documentation, and facing a tax adjustment due to discrepancies with the arm's length principle.

Failure to submit —or submitting incorrectly— the Informative Declaration

Resolution MH-DGT-RES-0026-2025 refers to the penalty regime of the Tax Code. In case of total or partial non-compliance in the provision of information , Article 83 establishes a fine equivalent to 2% of the gross income of the income tax period prior to the infraction, with a minimum of 3 base salaries and a maximum of 100 base salaries.

If the information is submitted within three days of the deadline, the fine is reduced by 75%. When there are incorrect records, the regulation provides for a penalty of 1% of the base salary for each record, without exceeding the maximum that would correspond under the first paragraph of Article 83.

Local study and requirements: the risk is resistance to control

It is important to clarify here: there is no specific penalty of one base salary for "not having a Local File." However, transfer pricing documentation must be kept available for the Tax Administration. If the Tax Administration requests this information and the taxpayer fails to provide it, provides it only partially, or disregards a duly notified request, the general penalties stipulated in the Tax Code may apply, depending on the nature of the non-compliance, including those regulated in Articles 82 and 83.

The information provided and the technical support must tell the same story.

For information requests under subsection b), the deadline cannot be less than 10 business days and may be extended at the request of the taxpayer, subject to prior approval by the Tax Administration.

Tax adjustments: the cost may be higher than the formal fine

If the DGT (General Directorate of Taxation) concludes that a transaction between related parties does not reflect arm's length conditions, it may adjust income, costs, or deductions and recalculate the taxable base for income tax. The additional tax is calculated at the rate applicable to the taxpayer; a universal 30% rate is not always accurate.

If the adjustment results in unpaid tax, the inaccuracy may be subject to Article 81 of the CNPT, whose ordinary penalty starts at 50% of the corresponding penalty base, without prejudice to the legal classification of the case and any applicable reductions. Furthermore, interest accrues; and if a tax determined by the Administration is paid after the legal deadline, Article 80 provides for a late payment penalty of 1% per month or fraction thereof, up to a maximum of 20%.

Correcting things in time can make a difference.

Article 88 of the CNPT provides for reductions for certain penalties, including those in articles 81 and 83. The reduction depends on when the taxpayer corrects the error and, in some cases, on self-assessment and payment of the penalty.

These reductions do not make non-compliance a strategy; they are a mechanism to incentivize compliance. The best defense remains ensuring that the declaration, the study, and the accounting are consistent before a formal request is received.

What should a company review today?

• Confirm if you are among the entities required to submit the Informative Declaration.

• Reconcile the reported amounts with accounting, income tax, electronic invoicing, and intragroup contracts.

• Maintain available technical support for the methods, comparables, and adjustments used.

• Document with special care intragroup services, loans, guarantees, royalties and other sensitive transactions.

• Review notifications in TRIBU-CR and establish internal responsibilities to address requirements within the deadline.

In conclusion, in transfer pricing, a contingency can begin as a formal non-compliance and end in a substantive dispute over the tax base. Having the correct declaration, available technical support, and clear traceability of related-party transactions reduces the risk of penalties and strengthens the taxpayer's position in the event of an audit .

References

• Tax Code of Standards and Procedures: Articles 80, 81, 82, 83 and 88. Source

· Law No. 9416, reform of the CNPT, text of articles 82 and 83. Source

• Resolution MH-DGT-RES-0026-2025, Informative Declaration on Transfer Pricing. Source

• Amendments to Resolution MH-DGT-RES-0026-2025. Source