The Servicio de Rentas Internas, Ecuador’s tax authority, recently published a new transfer pricing guidance.
Carlos Subero of BasaFirma, Colombia, summarized key provisions in MNE Tax on August 10, including: “The government also published guidance that establishes transfer pricing rules to comply with the arm’s length principle in transactions involving the exportation of bananas … This new resolution includes procedures for the calculation of the monthly comparable price for banana boxes type 22XU, depending only on the country of destination, and calculated as of March 15 of the tax year following the year under analysis.”
“Banana box type 22XU refers to premium Cavendish variety bananas packed in boxes or cases known as 22XU. The export destinations of these products are the Russian Federation; European Union countries; and other countries … This value may be adjusted only by freight and insurance costs associated with that invoice in the case of comparable CIF prices, provided that the taxpayer proves with documentation that these values were established at arm’s length.”
Bananas and plantains represented almost 15 percent of Ecuador’s exports, about ECS 22.3 billion (USD 3.4 billion) in 2019. Many of these exports were to customers in the European Union. Ecuador’s bananas compete with bananas from growers in the Caribbean and Pacific region.