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Court upholds transfer pricing adjustment

The Administrative Tax Court of Panama (TAT), through Resolution No. TAT-RF-019 of March 2023, confirmed a transfer pricing adjustment to a multinational machinery and spare parts distribution company in the amount of US$1,690,875.90, resulting in an Income Tax payable of US $ 520,789.75.

Precios de transferencia en Panama

During the periods 2012 and 2013, the taxpayer carried out transactions with related parties abroad for the purchase of inventory for distribution, sale of inventories not produced, administrative services received, technical services received, commissions in favor, purchase of fixed assets, royalties and administrative services rendered.

An important aspect that the Court addressed in its decision is the burden of proof at the moment of excluding elements of the financial results for the calculation of the indicator. In this regard, the Court points out that it is the taxpayer who had the obligation to carry out the detailed analysis of its reasons for considering the expenses as extraordinary, concluding that the burden of proof in this type of process corresponds to the taxpayer and not to the DGI.

With this ruling of the Administrative Tax Court, another milestone in the transfer pricing jurisprudence in Panama is marked.


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