TRANSFER PRICING ADVISORY
ADVISORY AGENDA
- Transfer Pricing?
- What does it involve to have intercompany transactions?
- What are my obligations?
- When do I need to fulfill my obligations?
- What happens if I don't comply?
- How can they assist me?
- Who advises me?
- Shall we talk?"
TRANSFER PRICING?
Transfer pricing refers to the prices at which a company transfers tangible goods, intangible assets, or provides services to associated enterprises or related parties.
RELATED PARTIES?
Related parties are individuals or legal entities that participate directly or indirectly in the management, capital, and control of a company.
WHAT DOES HAVING INTERCOMPANY TRANSACTIONS INVOLVE?
In accordance with Article 76 (Sections IX and XII), Article 179 (first paragraph), and Article 90 (penultimate paragraph) of the Mexican Income Tax Law (LISR), taxpayers engaging in transactions with related parties are required to determine their taxable income and authorized deductions at prices, consideration amounts, or profit margins that would have been used or obtained with or between independent parties in comparable transactions. In other words, they must demonstrate that these transactions were conducted at market value.
To do this, they must obtain and maintain supporting documentation (Transfer Pricing Study) that demonstrates that intercompany transactions were conducted at market value using the analytical methodology established in Article 180 of the LISR.
If a taxpayer conducts intercompany transactions with related parties residing in both Mexico and abroad, they may be subject to the following obligations:
1. Transfer Pricing Study
2. Information Return on Transactions with Related Parties (Annex 9 – DIM)
3. Local, Master, and Country-by-Country Information Annual Returns
4. Annexes 15 and 16 – ISSIF
5. Annexes 16, 17, and Transfer Pricing Questionnaire – Tax Opinion
What am I obligated to do?
Taxpayers should fulfill certain transfer pricing obligations if they engage in intercompany transactions and fall into any of the following situations:
TRANSFER PRICING STUDY
LISR – Article 76 Section IX Paragraph II
– Engages in business activities, and their taxable income from the immediate previous fiscal year (FY2021) exceeded $13,000,000 MXN.
– Provides professional services, and their taxable income from the immediate previous fiscal year (FY2021) exceeded $3,000,000 MXN.
– Is a contractor or assignee under the Hydrocarbons Revenue Law.
– Did not exceed the income thresholds established in the previous sections but conducts transactions with companies or entities subject to preferential tax regimes.
ANNEX 9 - MULTIPLE INFORMATIVE DECLARATION
LISR – Article 76 Section X
– Conducted transactions with both Mexican and foreign related parties during the fiscal year under analysis (FY2022).
ANNEXES 15 and 16 – DISSIF
CFF – Article 32-H
– Their taxable income from the immediate previous fiscal year (FY2021) was equal to or greater than $904,215,560.00 MXN.
– At the close of the immediate previous fiscal year (FY2021), they had shares placed among the general investing public on a stock exchange.
ANNEXES 16, 17, AND TRANSFER PRICING QUESTIONNAIRE IN THE TAX OPINION
CFF – Article 32-A
– Their taxable income from the immediate previous fiscal year (FY2021) was equal to or greater than $1,650,490,600.00 MXN.
– At the close of the immediate previous fiscal year (FY2021), they had shares placed among the general investing public on a stock exchange.
LOCAL AND MASTER INFORMATIVE RETURN
LISR – Article 76-A / CFF – Article 32-H / CFF – Article 32-A
Their taxable income from the immediate previous fiscal year (FY2021) was equal to or greater than $904,215,560.00 MXN.
At the close of the immediate previous fiscal year (FY2021), they had shares placed among the general investing public on a stock exchange.
Be a commercial entity belonging to the optional tax regime for groups of companies as defined in Chapter VI, Title II of the LISR.
– Being a para-statal entity of the federal public administration.
– Being a foreign resident legal entity with a permanent establishment in the country.
– Being a related party of those subject to fiscal auditing.
COUNTRY-BY-COUNTRY INFORMATION RETURN
LISR – Article 76-A / CFF – Article 32-H / CFF – Article 32-A
Being a taxpayer required to submit local and master information returns and falling into one of the following situations:
WHEN SHOULD I FULFILL MY OBLIGATIONS?
WITHOUT A SPECIFIC DATE
Transfer Pricing Study
It is not submitted, but the documentation must be prepared and retained until the date of compliance with transfer pricing obligations.
On March 31, 2024
Information on Tax Status (Annexes 15 and 16 – ISSIF)
On May 15, 2024
– Information Return on Transactions with Related Parties (Annex 9 – DIM)
– Local Annual Information Return of Related Parties
– Tax Opinion (Annexes 16, 17, and Transfer Pricing Questionnaire – SIPRED)
On December 31, 2024:
– Master Annual Information Return of Related Parties.
– Country-by-Country Annual Information Return of the multinational business group.
WHAT HAPPENS IF I DON'T COMPLY?
ANNEX 9 – DIM
Non-submission, incomplete submission, or submission with errors.
PENALTIES
From $77,230.00 MXN to $154,460.00 MXN
INCORRECT ACCOUNTING RECORDS
Failure to identify related party transactions in the accounting records, as defined by Article 76 of the LISR.
PENALTIES
From $1,750.00 MXN to $5,260.00 MXN for each unidentified transaction.
ANNEXES 15 AND 16 – DISSIF
Non-submission, incomplete submission, or submission with errors.
PENALTIES
From $13,490.00 MXN to $134,840.00 MXN for each unidentified operation.
LOCAL, MASTER, AND COUNTRY-BY-COUNTRY DECLARATIONS
Non-submission.
PENALTIES
From $154,800.00 MXN to $220,400.00 MXN.
¿COMO PODEMOS AJUDAR VOCÊ?
HOW CAN WE HELP YOU?
TRANSFER PRICING STRATEGY
– Transfer Pricing Consultancy.
– Implementation of transfer pricing policies within the Group.
– Preparation of benchmark analyses for the establishment of intercompany transactions at market values.
TRANSFER PRICING DOCUMENTATION
– Preparation of Transfer Pricing Studies in accordance with the LISR and OECD Guidelines.
– Review of Transfer Pricing Studies for compliance with the LISR and OECD Guidelines.
ANNUAL INFORMATION RETURNS
Preparation of Annual Local, Master, and Country-by-Country Information Returns.
Review of Annual Local, Master, and Country-by-Country Information Returns for compliance with LISR and OECD Guidelines.
SUPPORT IN FILLING OUT ANNEXES
Filling out and reviewing:
a) Annexes 15 and 16 of the DISSIF.
b) Annexes 16, 17, and Transfer Pricing Questionnaire in the Tax Opinion.
Filling out, reviewing, and submitting the Information Return on Transactions with Related Parties (Annex 9 – DIM).