To whom does the BENEFICIO TEST requirement apply?
The Benefit Test applies to all taxpayers who have received services from their related parties. Failure to comply with the Benefit Test results in the non-deductibility of the expense for the service, which would entail a penalty equal to the amount of tax omitted.
Purpose of Complying with the Benefit Test
The objective of complying with the Benefit Test is to demonstrate that the services the Company has received from its related parties have indeed generated economic or commercial value and that these services could have been performed by the Company itself or through a third party, so that the taxpayer can prove that these services are indeed providing a real benefit.
What Information Must Be Included in the Benefit Test Submission
- A detailed description of the service, information about the recipients of the service, and the justification for receiving this service.
- Classification of the nature of the service—whether it qualifies as a low-value-added service or a high-value-added service. If the service qualifies as a low-value-added service, the maximum profit margin that should be added to the cost and expenses is 5%.
- Regarding the consideration, identify the details of the costs and expenses incurred by the service provider, specify the criteria used to allocate these costs (the cost driver used), and determine the profit margin applied, which should be at market value.