Do you know the Current Normative Criteria about Related Parties Resident in Mexico?

Last July 23rd, Tax Administration Service (SAT) published 16 Normative Criteria about different fiscal matters and 5 of them were related to Transfer Pricing.

Last July 23rd, Tax Administration Service (SAT) published 16 Normative Criteria about different fiscal matters and 5 of them were related to Transfer Pricing.

SAT’s position regarding these Criteria was to clarify certain issues about transactions among foreign and Mexican related parties. Thus, Fiscal Authorities are confirming their position that in the past was possible to understand only by interpretation of the laws in the matter.

1. Federal Fiscal Code sets forth the possibility to ask for consultation to Fiscal Authorities about prices or amount determining of the consideration involved in an operation carried out with related parties.

SAT considers that this taxpayer’s faculty is not confined to consultation involving transactions with foreign related parties, whereas Mexican related parties can also carry it out.

2. Corporate entities carrying out transactions with Mexican related parties are obliged to comply with, among other obligations, the following:

•  To determine income and deductions according to the consideration prices and amounts that have been used with or among independent parties in comparable operations.
•  To apply the methods indicated in the Income Tax Law (MITL).

3. The concept of Related Parties (mentioned in paragraph fifth from article 215) is generic; therefore it applies to the entire Income Tax Law including the transactions carried out by Mexican related parties.
4.  Corporate entities carrying out transactions with residents in Mexico can apply the Guides from the Organization for Economic Co-operation and Development, provided that they don’t contravene the MITL.
5. Corporate entities carrying out transactions with Mexican related parties shall maintain and keep supporting documents to demonstrate that:

•  Their income and deductions were carried out taking into account the consideration prices and amount that would had been made by third parties in similar situations.
• A transfer price method indicated in the MITL was carried out.

Should you require further information on this publication, do not hesitate to contact Roberto de Haro Ramírez, PA- Transfer Pricing Manager: [email protected],or + 52 (55) 3687 2700 ext. 2733.