Mexico: SAT Accepting Submissions of New Transfer Pricing Documentation

Saturday, November 18, 2017

Mexico: SAT accepting submissions of newly required transfer pricing documentation

To align with the recommendations of Action 31 of the OECD’s BEPS project, the Mexican tax authority (Servico de Administracion Tributaria or SAT) new transfer pricing documentation requirements were outlined in November 2015 in a new Article 76-A of the Income Tax Act.

ACTION– Mexico: Ensure required transfer pricing documentation is filed in Mexico by 31 December 2017

The new requirements apply as of 1 January 2016 and comprise:

  • Local file – applies to companies with annual revenue in the preceding year in excess of MXN 645 million
  • Master file – applies to companies with annual revenue in the preceding year in excess of MXN 645 million
  • Country-by-Country Report – applies to companies with annual revenue in the preceding year in excess of MXN 12 billion in the preceding year

The specifics to be included in each of the reports largely follows the OECD recommended format, with some additions in the country-by-country report (royalties paid and received, interest paid and received, management services paid and received).

As of 1 November 2017, SAT has been accepting the filing of taxpayer’s transfer pricing documentation – country-by-country report, master file, and local file – through its online platform.

Country-by-country reports are explicitly due to be filed by 31 December 2017 in relation to the 2016 tax year.

Failure to file transfer pricing documentation will disqualify Mexican taxpayers from entering into contracts with the Mexican public sector, and subject taxpayers to fines ranging from MXN 140,540 to MXN 200,090.

by aspect advisory in: Central and South America