Historically, the first text at the international level that mentions the arm's length principle is the 1933 draft, also called Multilateral Treaty on Assignment of Business Profits, developed in United States. In addition, the first case in which a Court at dispute resolution level made an adjustment of income to reflect the economic reality of a transaction occurred in 1935, in the case of the Asiatic Petroleum Co. vs Commissioner of Internal Revenue, Of US Appeals. Transfer pricing, however, emerges as an internal tool to combat prices manipulation United Kingdom in 1915, through the Finance Act, which states that in case there is any connection between a company resident in  United Kingdom with another non-resident and the business takes the resident to lower profits, the non-resident company must pay taxes in United Kingdom for the benefits diverted towards it.

Subsequent to that stipulated by United Kingdom, in 1917 the United States Congress empowered the Tax Authority to establish the requirement of consolidated returns to related companies on federal taxes by means of supplementary regulation to section 1331 of the War Revenue Act Of 1934 in order to determine the capital invested and taxable income. It is important to note that for such years, the US Tax Administration did not have adequate tools to establish comparable prices and to exchange information with other tax administrations.

Transfer pricing rules began to be applied in Latin America as of 1995, with Mexico being the first country to incorporate them. In general, except in the case of Brazil, transfer pricing rules follow the OECD Guidelines, which since 1979 have given the conceptual framework applied by most Latin American countries.

The Latin American countries that are members of the OECD are Chile and Mexico, and Colombia and Peru are currently applying for membership, which want to be part of this organization. However, the transfer pricing legislation of the Latin American countries incorporates the OECD Guidelines in its main aspects (except for Brazil as explained above) as the the arm's length principle, the methods which are used to prove that a taxpayer has complied with this, the criteria of comparability, adjustments, among others. The degree of incorporation of the OECD Guidelines will depend on the legislative decision of each jurisdiction, which can incorporate them expressly. An example of this may be the case of Peruvian legislation, which states that in everything that does not oppose its Income Tax Law, the provisions of the OECD Guidelines will be mandatory.

However, the first aspect that must be taken into account when somebody analyze a transfer pricing issue is to define the scope of application of the rules, ie, when are transfer pricing rules applied? What are the assumptions provided by the norm of each country in order to apply the figure or institution of transfer prices? In general, as noted above, point 1.6 of the OECD Guidelines states that transfer pricing rules are used to analyze transactions between related or related parties. However, it will be the domestic legislation of each country that establishes those are considered as related parties.