Mexico: Transfer pricing measures in tax legislation

Mexico: Transfer pricing measures in tax legislation

The “Third Resolution on Amendments to the 2016 Omnibus Tax Bill” (Tercera Resolución de Modificaciones a la Resolución Miscelánea Fiscal para 2016) published on 14 July 2016 in the official journal, amends or revises various tax law measures including provisions concerning transfer pricing reviews.

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Functional analysis, taxpayer queries

Provisions added by the tax legislation concern the submission of taxpayer queries to the tax administration regarding to transfer pricing matters. Under these measures, the tax administration will perform a functional analysis as part of its process and will evaluate information, data, and documents provided in order to identify and clarify the functions carried out, assets used, and risks assumed in the operations or transactions that are the subject of the formal query. This functional analysis is to be physically performed at the taxpayer's offices or at any of the taxpayer's branches, agencies, facilities or factories and for purposes of obtaining the corresponding information. 

The taxpayer will be notified of the functional analysis to be conducted by a notification made via the taxpayer's “tax mailbox,” and the tax administration's notification will set forth information about the functional analysis including the location and the date and time for the meetings or sessions.

Following each meeting or session, the tax administration must issue a memorandum or minutes of the meeting, setting forth certain information including:

  • General information about the company
  • Names and official identifications (IDs) of the legal representatives and personnel of the company that attended the session
  • Names and official IDs of the State Administration of Taxation officers that were present at the session
  • A summary of the facts and statements provided by the taxpayer
  • The arrangements and commitments identified and contracted for purposes of the functional analysis

The tax administration will be limited to review only the query items subject to this functional analysis, and the tax administration's actions may include actions such as: visual inspections, interviews, and reviews of tables listing the company personnel and linking the related transactions, including specific technical and substantive matters.

 

Read a July 2016 report (Spanish) and (English) [PDF 98 KB] prepared by the KPMG member firm in Mexico: Tercera Resolución de Modificaciones a la Resolución Miscelánea Fiscal para 2016

 

For more information, contact a tax professional with KPMG's Global Transfer Pricing Services group in Mexico:

M. Teresa Quiñones | + 52 (55) 5246 8347 | teresaquinones@kpmg.com.mx

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