Don’t miss this: Transfer pricing compliance guide

Saying goodbye to the year that has passed and welcoming a new one often means taking a moment to look back and decide which habits, tasks, and priorities we should leave behind and which ones we must carry forward.

- TRISHA AMOR M. GATDULA

For taxpayers, the close of a year and the start of another also signal the beginning of numerous statutory responsibilities, such as the submission of various information returns, the start of external audit season, the filing and payment of income tax returns, the renewal of business permits, and many more compliance activities.

With so many requirements occurring simultaneously, it is easy for some obligations to slip through the cracks. Transfer pricing (TP) compliance is frequently overlooked. To ensure a smooth start to the year, here are the essential TP compliance requirements that taxpayers must not leave behind.

RELATED PARTY TRANSACTIONS FORM (RPT FORM)

The RPT Form is an information return that discloses all domestic and foreign related-party transactions during the taxable year. Under BIR RR 34-2020, taxpayers must file the RPT Form if:

· The taxpayer is required to file an annual income tax return;

· The taxpayer has transactions with domestic and foreign related parties in the covered taxable year; and,

· The taxpayer is either (1) a large taxpayer, (2) enjoying tax incentives, (3) reporting net operating losses for the current and two immediately preceding taxable years, or (4) a related party that has transactions with a taxpayer classified in the aforementioned three sub-criteria.

As there are different transactions occurring in each taxable year, annual verification is necessary to determine whether a taxpayer qualifies to file an RPT form for the taxable year.

The RPT Form must be submitted as an attachment to the annual income tax return within 15 days from the deadline of filing or date of electronic filing of the return, whichever comes later. For the calendar year 2025, it should be submitted on or before April 30, 2026.

A compromise penalty amounting to P1,000 will be imposed for late or nonsubmission of such an RPT Form.