Starting the new millennium, most countries in South America have been gradually adopting transfer pricing documentation requirements.  In this sense, Colombia in the year 2002 introduces through law 788 its transfer pricing regulations. They establish in article 260-4 of Tax Statute that with respect to the proof of transfer pricing documents, the taxpayers must prepare and maintain for a period of five years the documentary proof documentation relating to each type of operation with related parties. These must demonstrate that their ordinary and extraordinary income and their costs and deductions are in accordance with the prices or profit margins that independent parties would have used in a transaction. The evidentiary documentation mentioned above is defined in detail in the Regulatory Decree number 4349 of 2004 and updated with the Regulatory Decree 3030 of 2013. They state that the transfer pricing study must be prepared in Spanish and must include the following content to the extent that it is compatible with the type of operation object of analysis and the method of transfer pricing used: i) Executive summary, II) Functional Analysis, III) Market Analysis, IV)Economic Analysis.

In the case of Peru, the documentation and detailed information for each transaction was established in the literal G of article 32-A of the Income Tax Law (Ley de Impuesto sobre la Renta or LISR in Spanish). Where appropriate, it supports the calculation of transfer prices, the methodology used and the criteria considered by taxpayers to show that the income, expenses, costs or losses have been obtained in accordance with the prices or profit margins that would have been used by independent parties in the transaction. They must be conserved by the taxpayers, duly translated into Spanish, if applicable, during the limitation period and the taxpayers must include a technical study supporting the calculation of the transfer prices.

For its part, Chile established in article 41-E of its income tax law (Ley de Impuesto sobre la Renta or LISR in Spanish) that taxpayers may accompany a transfer pricing study that will account for the determination of the prices, values or profitability of their operations with related parties. The application of the methods or presentation of studies is without prejudice to the obligation of the taxpayer to keep available all the antecedents by virtue of which such methods have been applied or these studies have been elaborated.

In Ecuador, the transfer pricing obligations are contained in the Internal Taxation Law (Ley de Régimen Tributario Interno or LRTI in Spanish) and in its regulations the obligation to present information.  This regulation is directed to the taxable persons of Income Tax (Impuesto sobre la Renta or ISR in Spanish), who carry out operations with related parties, and are not exempt from the regime on transfer pricing. In addition to their annual income tax return, these must submit to the Internal Revenue Service (Servicio de Rentas Internas or SRI in Spanish) a comprehensive transfer pricing report and the annexes relating to the transactions with these parties, following the guidelines established by a SRI General Resolution, within a period of no more than two months from the date of enforcing the income tax return.

In the case of Uruguay, the obligations of transfer pricing documentation begin to be considered with the decree 56/009, which in its article 15 mentions that the Directorate General of Taxation (Dirección General Impositiva or DGI in Spanish) may require the submission of transfer pricing justifications, as well as the comparison criteria used. This is for analyzing the correct application of prices, the amounts of compensations or profit margins in transactions with related entities.  It also mentions that for the submission of the required documentation, the taxpayers and managers will have a period of not less than eight months, counted from the date of closure of the fiscal year considered.

Following the BEPS (Base Erosion and Profit shifting) initiative, some of these countries have already amended their documentation obligations and would have received, for the first time at the end of 2017, the country-by-country reports of taxpayers, initiating a new phase to the use of the transfer pricing documentation by the tax administrations.

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