The Philippines is not a member of the OECD or the OECD/G20 Inclusive Framework, and it lacks formal transfer pricing documentation requirements. While preparing transfer pricing documents is recommended, it’s not obligatory. Taxpayers must, however, submit BIR Form 1709 for all related party transactions.
Laws & Regulations
Identifying value drivers within the relevant industry provides insights into profitability.
This section involves describing the local entity’s management structure, business strategy, and involvement in business restructurings or intangibles transfers.
An assessment is made of significant activities, responsibilities, tangible/intangible assets, and risks related to intercompany transactions.
Choice of Transfer Pricing Method
The Philippines follows the 2010 OECD Transfer Pricing Guidelines and accepts various methods, depending on the circumstances.
Economic Analysis – Benchmark Study
Local comparables are preferred, but foreign comparables are accepted with scrutiny.
Inter-company (IC) Legal Agreement
Inter-company legal agreements formalize relationships but have a lower ranking compared to the ‘conduct of parties.’
Related party disclosures must be submitted with the annual income tax return.
Production Process for TP Relevant Returns, Documents, Forms, and Financials The chart illustrates the filing requirements and other details.
The Philippines does not have a Country-by-Country notification requirement.
Documentation must be retained for three years after the filing deadline.
Penalties and Interest Charges
Penalties and interest charges apply in cases of transfer pricing adjustments that result in additional income tax.