The Mexican government included several new transfer pricing provisions in the country’s 2016 federal budget. The changes reflect Mexico’s efforts to align its tax code with principles described by the Base Erosion and Profit Shifting (BEPS) project led by the Organization for Economic Cooperation and Development (OECD).
Under new provisions in the Mexican income tax law, companies engaged in transactions with related parties and other select taxpayers will be required to submit new transfer pricing documentation to the to the Mexican tax authorities (SAT), including:
- Master file reports containing information about global operations of related parties
- Local file reports containing information about Mexican operations of multinational groups
- For certain multinational groups headquartered in Mexico, Country-by-Country (CbC) reports containing a matrix of operational and financial data for individual members
Mexican companies engaged in cross-border related party transactions will now be required to file these reports no later than December 31 of the year following the year of the transaction. For example, transactions that occur in the calendar year ending December 31, 2016 must be reported no later than December 31, 2017. Further guidance is expected from the SAT in the next four to six months. Failure to file these required transfer pricing reports with the Mexican authorities may result in penalties or other sanctions.
Plante Moran’s Global Services consulting team is available to assist you. Please don’t hesitate to contact us if you have any questions or concerns.