Chile’s new transfer pricing local file and master file obligations for multinationals

By Francisco Sepúlveda, RGS Abogados, Santiago de Chile

On August 31, Chile’s Internal Revenue Service published Resolution No. 101, which are transfer pricing rules that require Chilean resident entities to deliver a local file and a master file.

New Form 1950 (master file) and Form 1951 (local file) must be lodged through the IRS’ digital platform along with Form 1907 on corresponding to transfer pricing operations, by the last business day of June each year, for operations of the previous commercial year.

A three-month extension will be applicable once upon request by the taxpayer.

Chile master file

The obligation to deliver a master file applies to Chilean resident companies at the top of an international group (holding companies), provided that the group obtains income in Chile and abroad of at least € 750,000,000 (approximately USD 890,000,000).

This obligation applies to a Chilean entity that forms part of such an international group, despite not being the controlling entity, if the respective controlling entity has designated the Chilean subsidiary as the entity responsible to file the country-by-country report on its behalf.

Chile local file

On the other hand, the obligation to deliver a local file applies to Chilean resident companies that meet a series of conditions.

First, the Chilean resident company must be qualified as a large company, according to the criteria set out in IRS’ Resolution No.76 dated August 23, 2017, which is based upon total sales.

Second, the obligation to deliver a local file only applies if the Chilean entity’s head office has lodged the country-by-country report in a jurisdiction other than Chile.

Finally, the Chilean entity will only be subject to the obligation to deliver a local file if, in the relevant period, the entity conducting business with non-resident related parties subject to transfer pricing rules for an amount not lower than CLP 200,000, 000 (approximately USD 260,000).