During November, we focused on the preparation and filing of Form 232, the informative declaration for related-party transactions and transactions with non-cooperative jurisdictions. Based on this experience, we want to share some essential professional recommendations.
Related-party transactions must always be valued at market conditions, in accordance with Articles 17 and 18 of the Corporate Income Tax Law, and be properly documented.
For loans and credit lines between related parties, it is crucial to formalize agreements and set a market-based interest rate.
Commercial transactions between related parties should be valued using the most appropriate method depending on the goods or services provided.
To ensure regulatory compliance, we recommend documenting all transactions in the Transfer Pricing Manual, a key tool to demonstrate that the conditions applied are equivalent to those in transactions between independent companies, reducing tax risks.
We remain available to provide specialized advice and assist with any questions regarding Form 232 and related-party transactions.