The term transfer pricing refers to the accorded price between companies to transfer, among them, goods or services mostly. In tax terms transfer pricing are relevant when companies that have carried out a business operation are related, either through ownership or administration.
In El Salvador, on December 29 , 2009, tax reform came into effect, approved by Congress, modifying the Tax Law, through decree No: 233; among the most relevant modifications was the introduction of a section regarding pricing among related parties.
Currently, according to article 62-A, subsection one of the Tax Law for tax-related matters, taxpayers who carry out operations or transactions with related parties, are bound to determining prices and the amounts of compensations, taking into account for these operations market prices used in the transfer of goods or the rendering of services of the same kind, between independent parties. Likewise, taxpayers shall determine, according to market prices, operations or transactions carried out with parties domiciled, incorporated or placed in countries, states or territories with low or null tax tributes or tax haven.
Tax Law disposition regarding transfer pricing are:
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