In recent years, both national and international tax authorities have significantly intensified audits related to transfer pricing.
According to the Revenue Law for 2025, income tax collection is expected to amount to approximately 3 trillion pesos. Given that the Economic Package for the same year does not foresee significant tax reforms, a large portion of this revenue will likely come from the exercise of verification powers in areas of interest to the tax authorities, particularly in transfer pricing.
It is important to note that being subject to an audit does not necessarily imply tax non-compliance or the adoption of aggressive tax strategies. The high technical complexity of transfer pricing means that even the most compliant taxpayer may be required to pay a tax assessment.
Transfer pricing audits can be triggered by several factors, such as:
- Random selection
- Losses
- Profit levels deemed “below” industry standards
- A decrease in the tax revenue typically reported by a taxpayer, for any reason, including new investments.
The most commonly audited areas include:
- Financing
- Intellectual property licensing
- Corporate restructurings
- Risk and function allocations, among others.
For this reason, it is crucial for taxpayers to be adequately prepared before undergoing a review by tax authorities and to have specialized support throughout the process.
QCG Transfer Pricing and Clark Hill have formed a strategic alliance, bringing together a team of accountants and lawyers who are experts in transfer pricing to provide advisory services.
