Transactions between companies of the same group must be agreed and documented as independent parties would in comparable transactions. In 2026, preparing the study after year-end may be too late if contracts, invoices and allocation criteria do not reflect the actual transaction. Control begins when defining intragroup services, financing, royalties, purchases or sales, and continues with evidence of the benefit and of substance. The specific obligations depend on the taxpayer, the amount and the type of transaction.
From the organizational chart to the functional analysis
The Income Tax Law considers parties to be related when one person participates directly or indirectly in the management, control or capital of another, or when there is common participation. Identifying the relationship is only the beginning. The functional analysis must explain what functions each entity performs, what assets it uses and what risks it controls and assumes. The transaction is then characterized: service, distribution, manufacturing, license, loan or another. Contracts must match the actual conduct. If a company invoices management with no staff, deliverables or capacity to provide the service, an apparently reasonable percentage does not solve the lack of substance. The operational evidence is inseparable from the price.
Method, comparables and adjustment
The law provides for methods such as the comparable uncontrolled price, resale price, cost plus, profit split and transactional margins. The choice must be justified according to the availability and quality of information, comparability and the party analyzed. Internal comparables often offer a valuable reference when there are similar transactions with third parties. Differences in market, volume, term, currency, guarantees, intangibles and risks must be documented, as well as any adjustment applied. The study must not merely produce a range: it must explain why the result is at market value. If year-end shows a deviation, the adjustment requires accounting, tax and contractual support and, where applicable, effects on other taxes.
Documentation and reporting calendar
Obligated legal entities must obtain and keep documentation showing that income and deductions with related parties were determined at market values. The annual information return on related-party transactions is filed, as a general rule, no later than May 15 of the following year. Article 76-A of the Income Tax Law reaches the taxpayers indicated in Article 32-A, second paragraph, and in Article 32-H, sections I, II, III, IV and VI, of the Tax Code that carry out transactions with related parties. For them, the local return is generally due on May 15; the master file and, where applicable, the country-by-country report, on December 31 of the following year. Not all companies file all reports, so the calendar must map the subject, obligation, deadline and support.
Key points
- The arm's-length principle applies to domestic and cross-border transactions between related parties.
- Functions, assets and risks explain the remuneration better than an isolated percentage.
- Contracts, invoices, deliverables and actual conduct must support one and the same characterization.
- The annual information and the local return are generally due on May 15; the master file and the country-by-country report, when they apply, on December 31.
What to review
- Map all related parties and classify each intragroup flow by type, amount and jurisdiction.
- Gather during the year the contracts, deliverables, allocation criteria and evidence of benefit.
- Review results before year-end to document comparables and adjustments with enough time.