Tax Court emphasizes tax authorities' faculty to determine deemed interest in non-interest-bearing loan between related parties

The Tax Court Resolution No. 8044-1-2022, published November 4th, 2022, addresses a case where the transfer pricing adjustment applied by SUNAT was dismissed. The precedent analyzes a case of non-interest-bearing loan between a Peruvian company and non-resident related parties, subject to the calculation of deemed interest due to an evident fiscal loss, as stipulated by Peruvian Transfer Pricing regulations. Therefore, it was appropriate to determine the corresponding adjustment using the Comparable Uncontrolled Price method (CUP). However, due to the tax Authorities failure to conduct a proper comparability analysis for the interest calculation in accoradance with the provisions of section d) of article 32-A of the Income Tax Act and section a) of numeral 1 of article 110 of its Regulation, the Tax Court resolution revoked the Tax Authority’s resolutions assessing unreported withholding of non-resident Income Tax