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Transfer pricing in Chile: the arm's length rule, methods, interquartile range, 40 percent penalty tax on adjustments, filings and advance pricing agreements

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Last verified: 2026-10-26 · Status: Stable

Cross border transactions and business restructurings with related parties abroad must be priced at arm's length under art. 41 E of the income tax law, using one of six methods and an interquartile range. An SII adjustment is taxed with the 40 percent single tax of art. 21, plus a 5 percent fine unless the taxpayer supplied the required information, and the SII has 12 months to audit transfer pricing. Taxpayers file an annual transfer pricing return (DJ 1907) when they are medium or large companies or exceed CLP 500 million of related party transactions, and can seek advance pricing agreements covering up to five years plus three past years.

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial of 23 October 2026 (Ley Nº 18.840 art. 44). Tax units use the SII values of UTM CLP 72,151 and UTA CLP 865,812 for October 2026 and UF CLP 41,221.08 for 26 October 2026. Conversions are for orientation only.

Key facts

Arm's length principle for cross border related party transactions	Yes, including business restructurings textDL Nº 824, art. 41 E, as of 2026-10-26 · in force
Single tax on transfer pricing adjustments	40 %DL Nº 824, art. 41 E Nº 4 and art. 21, as of 2026-10-26 · in force
Additional fine on SII assessed adjustments where information was not supplied	5 % of adjustmentDL Nº 824, art. 41 E Nº 4, as of 2026-10-26 · in force
Fine for failing to file the transfer pricing return	10 to 50 UTADL Nº 824, art. 41 E Nº 6, as of 2026-10-26 · in force
Related party transaction threshold for DJ 1907 outside the medium and large segments	500000000 CLPSII Res. Ex. Nº 104 of 2025, annex 14, as of 2026-10-26 · in force
Country by country report consolidated revenue threshold	750000000 EURSII DJ 1937 instructions; Res. Ex. Nº 126 of 2016, as of 2026-10-26 · in force
Advance pricing agreement term (year of signature plus following years)	5 yearsDL Nº 824, art. 41 E Nº 7, as of 2026-10-26 · in force
Advance pricing agreement rollback	3 yearsDL Nº 824, art. 41 E Nº 7, as of 2026-10-26 · in force
SII audit term for transfer pricing reviews	12 monthsCódigo Tributario, art. 59, as of 2026-10-26 · in force

The rule

1. The SII may challenge, or set where none was set, the prices, values or returns of cross border transactions and business restructurings that Chilean taxpayers carry out with related parties abroad when they are not at arm's length, meaning the prices, values or returns that independent parties would have agreed in comparable transactions and circumstances. Restructurings are covered when functions, assets, risks or activities able to generate Chilean taxable income move abroad or vice versa, or contracts are ended or substantially changed.
Cost to do it: Documentation and benchmarking costs; no filing fee.Decreto Ley Nº 824, as amended by Ley Nº 21.713, Art. 41 E first to third paragraphs, 2024-10-24 official text · verified 2026-10-26 · changed: Ley Nº 21.713 (Diario Oficial 24 October 2024) extended the rule to restructurings and the transfer of activities, added comparability factors and the interquartile range, and introduced the 5 percent fine and self adjustments.

2. Parties are related when one participates directly or indirectly in the management, control, capital, profits or income of the other, or the same persons participate in both. A branch or other permanent establishment is related to its head office, other establishments of the same head office and their related parties. Transactions with parties in jurisdictions covered by art. 41 H (preferential tax regimes) are treated as related whether or not they belong to the group, as are back to back transactions through an intermediary.
Cost to do it: Determines the scope of documentation.Decreto Ley Nº 824, Art. 41 E Nº 1, 2024-10-24 official text · verified 2026-10-26

3. The methods are comparable uncontrolled price, resale price, cost plus, profit split, transactional net margin and, where none can apply and the taxpayer justifies it, other residual methods. The taxpayer must use the most appropriate method. Where two or more comparable values exist an interquartile range applies, and a result outside the first to third quartile is not at arm's length. When the SII issues an assessment the adjustment is made to the single figure or to the median of the range.
Cost to do it: A benchmarking study is optional under Nº 3 but the supporting records must be kept and produced.Decreto Ley Nº 824, Art. 41 E Nº 2 and Nº 4, 2024-10-24 official text · verified 2026-10-26

4. Any difference resulting from a transfer pricing adjustment is taxed in the relevant year only with the 40 percent single tax of art. 21 first paragraph, whether the taxpayer amends its return or the SII assesses. When the SII assesses this tax, a fine of 5 percent of the adjustment also applies unless the taxpayer properly and timely delivered the information requested during the audit. Adjustments affect only income taxes, not VAT or customs.
Cost to do it: 40 percent of the adjustment, plus a 5 percent fine on SII assessment where information was not supplied.
Example: An SII adjustment of CLP 986,580,000 costs CLP 394,632,000 of single tax and, if the fine applies, CLP 49,329,000 more. / On a US$1,000,000 adjustment: US$400,000 of tax plus a US$50,000 fine.Decreto Ley Nº 824, Art. 41 E Nº 4; art. 21 first paragraph, 2024-10-24 official text · verified 2026-10-26

5. Taxpayers may self adjust their related party prices before any SII request, to a single figure or any point in the interquartile range, but only upward: the adjustment is added to the first category tax base and cannot reduce taxable income or increase a loss. With SII authorisation, a taxpayer may also make a corresponding adjustment following a final transfer pricing adjustment by another state that has a tax treaty in force with Chile, applying within one year from when that adjustment becomes final.
Cost to do it: Tax at the first category rate on a self adjustment instead of the 40 percent single tax and fine.Decreto Ley Nº 824, Art. 41 E Nº 8 and Nº 9, 2024-10-24 official text · verified 2026-10-26

6. Taxpayers with related party transactions, including restructurings, must file one or more annual returns in the form and term set by SII resolution. Not filing, or filing late, incomplete or wrong, is fined 10 to 50 UTA, capped at the higher of 15 percent of tax equity or 5 percent of effective capital; a maliciously false return is punished under Código Tributario art. 97 Nº 4. One extension of up to three months may be requested, which extends the SII audit term by the same period.
Cost to do it: Fine of 10 to 50 UTA, that is CLP 8,658,120 to CLP 43,290,600 at the October 2026 UTA.
Example: CLP 8,658,120 to CLP 43,290,600. / About US$8,775.89 to US$43,879.46.Decreto Ley Nº 824, Art. 41 E Nº 6, 2024-10-24 official text · verified 2026-10-26

7. The annual transfer pricing return, DJ 1907, must be filed by taxpayers in the medium or large company segments at 31 December that had transactions with related parties abroad, and by other taxpayers whose transactions with related parties abroad, including with parties in art. 41 H jurisdictions, together exceed CLP 500,000,000 in the year. Detailed fields can be skipped for transactions under CLP 200,000,000, except loans and financial operations. The current format applies to returns due from tax year 2026 for commercial year 2025.
Cost to do it: Internal or adviser preparation cost; fines under art. 41 E Nº 6 for failure.
Example: The CLP 500,000,000 threshold equals about US$506,801.27. / About US$506,801.27.SII Resolución Exenta Nº 104 of 2025, annex 14 (DJ 1907 instructions), Resolution items 1 and 5; annex 14 obligated taxpayers, 2025-08-26 official text · verified 2026-10-26

8. Taxpayers may propose an advance pricing agreement to the SII, after an optional prior consultation answered within two months, supported by a transfer pricing study. The SII may reject it at its sole discretion without appeal. An agreement signed in an act applies from the commercial year of signature and the following four years, can be renewed, and may be extended to up to three prior years, for which the 40 percent single tax, interest and fines do not apply. Agreements on imports are signed jointly with the National Customs Service.
Cost to do it: No filing fee in the law; cost is the study and negotiation time.Decreto Ley Nº 824, Art. 41 E Nº 7, 2024-10-24 official text · verified 2026-10-26

9. Within the limitation periods, the SII has 12 months, rather than the general nine, from certifying receipt of requested documents to summon, assess or rule in a transfer pricing audit, extendable once by six months by reasoned resolution.
Cost to do it: None.Decreto Ley Nº 830, Código Tributario, Art. 59, 1974-12-31 official text · verified 2026-10-26

Route	Tax on the gap	Fine	Interest	Rule
Self adjustment before any SII request (upward only)	First category rate, 27 percent in 2026: US$270,000	None	None if in the original return	Art. 41 E Nº 9
Taxpayer amends after SII review	40 percent single tax: US$400,000	None	Late payment rules	Art. 41 E Nº 4
SII assessment, information supplied in time	40 percent single tax: US$400,000	None	Yes	Art. 41 E Nº 4
SII assessment, information not supplied	40 percent single tax: US$400,000	5 percent: US$50,000	Yes	Art. 41 E Nº 4
Advance pricing agreement with rollback	No single tax for covered prior years	None	None	Art. 41 E Nº 7

Transfer pricing outcomes compared (DL Nº 824 art. 41 E and art. 21; amounts on a US$1,000,000 pricing gap at CLP 986.58 per US dollar).

Worked example

A Chilean distributor buys goods from its Spanish parent. Its operating margin is 1 percent while the interquartile range of comparable distributors is 2.5 to 5 percent with a median of 3.6 percent. On sales of US$20,000,000 (CLP 19,731,600,000) the margin is outside the range. If the company self adjusts before any SII request to the first quartile, it adds US$300,000 (CLP 295,974,000) to its taxable base and pays first category tax on it. If the SII assesses instead, it adjusts to the median: US$520,000 (CLP 513,021,600), taxed at 40 percent, US$208,000, plus a US$26,000 fine if the company did not deliver the requested information in time.
Transactions between Chilean and Argentine group companies are within art. 41 E like any other related party abroad; the Argentine side of the same transaction follows Argentine transfer pricing rules covered in the Argentine guide.

Step by step

List all transactions and restructurings with related parties abroad and with parties in art. 41 H jurisdictions.
Check your SII segment and the CLP 500,000,000 test to see whether DJ 1907 is due for the year.
Prepare or update a benchmarking study using the most appropriate method and an interquartile range.
Before closing the year, self adjust upward if results fall outside the range, since only upward self adjustments are allowed.
File DJ 1907 in the form and term set by the SII; a Chilean ultimate parent of a group with consolidated revenue of at least EUR 750 million also files the country by country report, DJ 1937, under the SII instructions for that form.
For large recurring flows, consider an advance pricing agreement with up to three years of rollback.
When audited, deliver all requested information on time to avoid the 5 percent fine.

Common traps

The 40 percent single tax on adjustments is higher than the first category rate, so a late fix costs more than pricing correctly or self adjusting.
Transactions with unrelated parties in art. 41 H jurisdictions are treated as related.
Restructurings that move functions or risks abroad can be priced by the SII as if an independent party would have been compensated.
Self adjustments can only increase taxable income; there is no downward self adjustment.
A corresponding adjustment after a foreign audit needs SII approval and must be requested within one year of the foreign adjustment becoming final.
The SII may reject an advance pricing agreement request without appeal.

Sources

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