Tax Alert - December 2025
SUPREME DECREE NO. 302-2025-EF: AMENDMENT TO THE REGULATIONS OF THE INCOME TAX LAW
The transfer pricing regulations, contained in Article 32-A of the Income Tax Law, establish that the prices of transactions subject to this regime must be determined using the method most appropriate to reflect the economic reality of the transaction. To this end, subsection (e) recognizes the following internationally accepted methods: (i) comparable uncontrolled price, (ii) resale price, (iii) cost plus, (iv) profit split, (v) residual profit split, and (vi) transactional net margin.
Paragraph 7 of Article 32-A of the Income Tax Law (LIR) allows the application of “other methods” when, due to the nature of the transaction or the lack of reliable comparables, traditional methods are not applicable; however, their application was subject to regulation by Supreme Decree.
SUPREME DECREE NO. 302-2025-EF
Purpose: To regulate the application of the “other methods” of transfer pricing provided for in paragraph 7) of subsection e) of Article 32-A of the Income Tax Law, establishing technical standards and documentary requirements. These methods may be applied, among others, to transactions involving the transfer of shares, trademarks, intangible assets, and fixed assets.
- Discounted Cash Flow Method
- Multiples Method
- Equity Value Method
- Valuation
- Multiperiod Excess Earnings Method (MPEEM)
VALIDITY OF “OTHER METHODS”
- Until December 31, 2024: “Other methods” were not applicable due to the lack of regulatory authorization.
- From January 1, 2025, to December 17, 2025: Decree Law 1663 incorporates “other methods,” but their application is subject to the issuance of the Regulations, in accordance with the Second Final Supplementary Provision of the Decree Law.
- From December 18, 2025, onwards: With the entry into force of Supreme Decree 302-2025-EF, "other methods" are applicable.
NO PRECEDENCE EXISTS AMONG "OTHER METHODS
No preferred method is established; the most appropriate method prevails. Decree Law 1663 establishes the use of the method that best reflects the economic reality of the transactions.
REFERENCE TO INTERNATIONAL STANDARDS AND NEW FORMAL "BURDEN"
- For the application of "other methods," best practices are considered, such as the International Valuation Standards (IVS) issued by the IVS Council. There are no specific guidelines in the Regulations.
- There is a formal burden for the taxpayer: To have a technical report that contains, at a minimum, the information required by the IVS in effect as of January 31, 2025.