Transfer pricing audits pose a substantial challenge to tax law, especially with regard to the imposition of specific time limits. Unlike the general rule that grants the Tax Administration one year to complete the audit once all the information initially requested has been received, the Tax Code establishes exceptions for transfer pricing audits, whether partial or definitive.
This exemption from specific time limits in transfer pricing audits raises significant concerns in terms of legal certainty and the right to due process. Tax debtors are uncertain as to the duration of these procedures, which is aggravated if the statute of limitations is suspended, leaving them in legal limbo.
The situation becomes more complex when the Tax Administration requests documentation without considering basic principles of reasonableness and proportionality. For example, detailed information on costs and expenses related to a transaction between related companies could be requested, when this information implies a validation of the accounting of the non-domiciled company providing the service.
In order to address these challenges, it is imperative to consider significant judicial precedents that provide clarity to the definition of deadlines in transfer pricing audits. In this context, Cassation No. 17824-2023-LIMA emerges as a unique case that deserves a careful analysis from the perspective of the time limits of any audit procedure. Although the cassation resolves the statute of limitations of a specific case related to the tax audit of a Peruvian company in the context of a transfer of shares through a purchase and sale, it also highlights the complexity involved in the application of transfer pricing rules, which is what we are dealing with here.
Cassation 17824-2023-LIMA recognizes the importance of the principle or guarantee of reasonable time in the context of tax audits. This thorough analysis addresses the request for prescription of the tax debt filed by the defendant company, considering several crucial aspects.
It examines the suspension of the statute of limitations, the provision of information by the taxpayer, the conduct of the tax administration and the taxpayer itself. In addition, the notion of "reasonable time" in the context of administrative proceedings is explored in detail, evaluating factors such as the complexity of the case, the conduct of the parties involved and the consequences derived from the delay in the proceedings.
In the particular case of Case 17824-2023-LIMA, it is noted that the defendant company did not fully comply with the delivery of the documentation requested in several requirements. However, the ruling also states that the assumptions of suspension of the audit period were applied, as established in numeral 6 of article 62-A of the Tax Code.
In conclusion, beyond the final results of Cassation 17824-2023-LIMA, which are not the subject of this analysis, it provides us with specific rules to determine the violation of the reasonable term in administrative procedures of partial or definitive audit related to transfer pricing. The evaluation of the complexity of the case, the conduct of the parties and the proper application of the regulations are crucial elements to determine whether the guarantee of reasonable time has been violated in this particular context.
The establishment of jurisprudential principles derived from this case contributes to the search for clarity and predictability in transfer pricing audits. The consideration of factors such as the complexity of the information, the conduct of the parties and the respect for reasonable time limits stands as an essential approach to ensure the balance between the State's auditing power and the fundamental rights of taxpayers.
The analysis of cases such as Cassation 17824-2023-LIMA highlights the need to review and adjust the current legislation on transfer pricing audits. It is essential to seek a balance that allows the Tax Administration to comply with its duty without compromising legal certainty and taxpayers' rights.
The establishment of clear deadlines, considering the inherent complexity of transfer pricing audits, and the consistent application of principles such as the reasonable time frame, are essential steps towards a clearer and more equitable legal framework. This approach will contribute not only to legal certainty but also to efficiency and transparency in the tax audit process.
Transfer pricing remains a complex and challenging area of taxation. However, through the careful analysis of cases such as Cassation 17824-2023-LIMA, the possibility of building a legal framework that balances the needs of the State with the fundamental rights of taxpayers opens up.
Clarity in deadlines, consideration of principles such as reasonable time and consistent application of legislation are essential to move towards a tax system that encourages voluntary compliance, ensures fairness and strengthens trust between the Tax Administration and taxpayers. The evolution of legislation in this critical area is essential to maintain a robust and fair tax system.
By Martín Ramos
