Derived from the 2022 tax reform, there are modifications regarding Transfer Pricing in the Mexican Income Tax Law (hereinafter “MITL)” and the Mexican Federal Tax Code (hereinafter “MFTC”) in force as of January 1, 2022.
The most relevant implications and detail are presented as follow:
Domestic Transactions
Article 76 sections IX and X of the MITL are modified, where the reference to residents abroad is eliminated from the wording, and therefore taxpayers in national territory and abroad must obtain and keep the supporting documentation with which they demonstrate that the transactions with related parties carried out during the year complies with Arm´s Length Principle, and for such transactions, the informative declaration of related parties must be presented, that is, Annex 9 of the Multiple Informative Return.
It is important to mention that in the past, the MITL established explicit differences between the documentation requirements for operations with related parties abroad and in Mexico. For the fiscal year 2022, these differences are eliminated, and the requirements, therefore, will apply to all transactions with related parties regardless of the fiscal jurisdiction residence.
Filling deadlines modifications
The filling dates of Annex 9 of the Multiple Informative Return and the Local File are modified, leaving May 15 of the year immediately after the end of the year in question, as the deadline.
The following table shows the applicable dates for each obligation:
Old Deadline 2022 |
New Deadline 2023 |
Type of obligation |
March 31, 2022 or July 15, 2022 |
May 15, 2023 |
Annex 9 - Multiple Informative Return |
December 31, 2022 |
May 15, 2023 |
Local File |
December 31, 2022 |
December 31, 2023 |
Master File. CbC |
March 31, 2022 |
March 31, 2023 |
ISSIF and Transfer Pricing Annex |
July 15, 2022 |
May 15, 2023 |
Tax Opinion and Transfer Pricing Annex |
Taxpayers are required to Local File and Master File
As of 2022, Article 76-A of the MITL established that the taxpayers indicated in article 32-A, second paragraph, and article 32-H, sections I, II, III, IV, and VI of the MFTC, who carry out transactions with related parties, in addition to what is indicated in article 76, sections IX and XII, and in relation to article 179, first and last paragraph of the MITL, it must send to the Tax Authorities the annual informative return of related parties .
The second paragraph of article 32-A of the MFTC is added, which states that taxpayers are required to report their financial statements by a certified public accountant when in the immediately preceding fiscal year, accruable income tax purposes equal to or greater than MXN is declared. $1,650,490,600, as well as those who, in the immediately preceding fiscal year, had shares placed with investors in the stock market.
Likewise, section VI of article 32-H of the MFTC is added, indicating taxpayers’ obligation to present information on their fiscal situation. This subsection indicates the obligation for taxpayers who are related parties to the subjects established in article 32-A, second paragraph of the MFTC.
Therefore, in addition to those taxpayers under the assumptions of Article 32-H of the MFTC subparagraphs I to IV, who already had an obligation to submit the annual informative declarations of related parties, the taxpayers obliged to issue a fiscal opinion in accordance with the second paragraph of article 32-A of the MFTC, as well as the taxpayers who are related parties of the previously mentioned subjects, will now be required to present the Local and Master File.
Modifications in supporting documentation content
Some technical specifications were included in the MITL for the supporting documentation content:
Maquilas
Within the modifications to the MITL for the fiscal year 2022, Maquila companies in Mexico, to avoid permanent establishment, will only have the option of determining their fiscal profit through the application of the Safe Harbor, that is, the option of submitting an Advance Price Agreement (APA).
Secret comparable
When the taxpayer is in an audit process and in accordance with article 49, section IV of the MFTC, it is stipulated that they may have access to confidential information provided or obtained by independent third parties regarding comparable transactions that affect the competitive position of these third parties.
It is clarified that access to said information is intended only for the taxpayer to correct their tax position, distort facts and omissions, or challenge the resolution determining the tax credit.
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