The resolution No. NAC-DGERCGC17-00000617 (published on December 28, 2017) establishes new technical guidelines for the application of the transfer pricing regime.
The main changes are:
- The research of comparable companies must be made until April 10th of the year following the one analyzed, considering that most of the companies listed on international stock markets have already reported the information to this date.
- Analysis by business segment must be identified in each item to which business division affects and only when it can not be identified can proportionality be applied.
- Companies that are domiciled in tax havens, lower tax jurisdictions and / or preferential tax regimes defined in accordance with Ecuadorian legislation cannot be considered as comparable companies.
- Justification of the capital adjustments of the assets and liabilities accounts should be made once the need for their application and the technical reasonableness of both their formulation and their effect on improving the qualitative and quantitative aspects have been established.
The changes mentioned in the local legislation respond to the trend of recent regulations issued by the Organization for Economic Cooperation and Development (OECD) in its applicable guidelines on transfer pricing to multinational companies and tax administrations, which was updated in July-2017.
Taxpayers who have carried out transactions with local and / or foreign related parties during 2017 in excess of US $ 3 million must present the following information to the Internal Revenue Service in June:
- The OPR Annex, for taxpayers with transactions between US $ 3 million and US $ 15 million.
- The OPR Annex and Transfer Pricing Report for taxpayers with transactions greater than US $ 15 million.
Regardless of the amount of transactions with related parties, made during 2017, taxpayers who meet the following conditions will be exempt from submitting the Schedule and / or Transfer Price Report:
- Have a tax caused exceeding three percent of their taxable income;
- Do not carry out transactions with residents of tax havens or preferential tax regimes;
- Do not maintain a contract with the State for the exploration and exploitation of non-renewable resources.