Transfer pricing in Mexico at a glance
|Regulation Type||National regulations|
|Are there specific transfer pricing regulations?||Yes|
|Submission deadline||March 31 of following fiscal year|
|Submission deadline upon request||15 business days|
|Annual update required||Yes|
|Official language requirements||Spanish|
|Potential impact of penalties||N/A|
Mexican tax law
Rules for transfer pricing in Mexico are based upon:
- Federal Fiscal Code Articles 86-XII, XIII and XV, 106, 215, 216, and 217
- Regulations of The Income Tax Law Article 18 — III
Rules for transfer pricing in Mexico are generally in line with the OECD Transfer Pricing Guidelines. However, if the Guidelines contradict with the national regulations, national regulations prevail.
Accepted methods are:
- The comparable uncontrolled price (CUP) method
- The resale price method
- The cost-plus method
- The profit split method
- The transactional operating profit margin method (TOPMM)
Priority of methods
Rules for transfer pricing in Mexico show the CUP method as the preferred method, followed by the cost plus and resale price methods. Profit-based methods are to be applied if the CUP, cost-plus, and resale price methods are not applicable. The profit split and the residual profit split methods, and TOPMM, are not applicable in specific circumstances.
Information that should be included in the documentation:
- Name, address and tax residency of the non-resident related persons with whom transactions are carried out
- Information regarding functions performed, assets used and risks borne by the taxpayer involved in each transaction
- Information that shows that prices with each domestic and foreign related party set on a transaction-by-transaction basis are at arm’s length
Rules for transfer pricing in Mexico prescribe that all documentation should be submitted in Spanish.
Requirements to prepare documentation annually
In Mexico the documentation should be updated annually. This means that a complete new transfer pricing study is required each year.
Submission deadline upon request by tax authorities
Upon request of the tax authorities a taxpayer has 15 business days to submit it’s documentation. This period can be extended with an additional 10 business days.
Advance Pricing Agreements
In Mexico it is possible to obtain unilateral and bilateral Advance Pricing Agreements (APA).
Generally an APA can be agreed upon for a period of three years forward and one year back. However, these terms are negotiable.
Rules for transfer pricing in Mexico do not include specific transfer pricing penalties, meaning that ordinary tax penalties apply.