Under-development of financial markets causing problems
April 26, 2010
Hernán Katz of Deloitte in Mexico describes how many transfer pricing difficulties faced by taxpayers in Latin America are linked to the lack of development in the regions’ financial markets.
A transfer pricing analysis derived of an inter-company loan implies to contrast the agreed interest rates between the related parties against those that were determined between third parties under comparable conditions. For these purposes, the elements considered as relevant for the price determination of a transaction (the interest rate, in this case) that are usually taken into account are: amount of the loan, term, currency, debt´s solvency level and existence of guarantees or special clauses in the contract.
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