Audit and Transfer Pricing Policies

Abstract

Fiscal controls are carried out regularly and often cover several tax periods. Before carrying out an audit, tax authorities send the taxpayer a written notice regarding the timing and the specific purpose of the audit. Detailed regulations exist on the penalties to various types of illegal tax, which can range from relatively minor administrative penalties to tax penalties equal to several times the amount of additional consideration. Existing law has established that tax penalties should be prescribed within 5 years. Since the authorities may levy declared and unpaid taxes at any time, the imposition of sanctions and collection of taxes are often conducted arbitrarily. In recent times, though, the tax authorities have increased their control on foreign investment, implementing a more methodical monitoring system.