Recently Ecuador’s Internal Revenue Service (IRS) has issued regulations giving outlines to new transfer pricing documentation requirements.
The new regulations require taxpayers to include substantial information on the economic substance of their related-party transactions and the functions, assets and risks analysis of each related party and each transaction. According to the new regulations taxpayers are obliged to use only information from the fiscal year being analyzed to demonstrate the reasonableness of their transfer prices.
Taxpayers need to file their TP annexes using software provided by the Tax Administration. While submitting TP Reports, taxpayers must also include all the working papers used in the transfer pricing analysis. TP report and working papers are needed to be saved in a PDF format, on a non-rewritable CD.
Taxpayers managing related-party transactions that exceed US$3 million, in the aggregate for a fiscal year, must file the TP Annex. For aggregated transactions exceeding US$15 million, taxpayers must submit both the TP Annex and the TP Report. Taxpayers may submit their TP Reports and TP Annexes for 2014 transactions from 10 through 28 September 2015, depending on their Tax ID.
