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Stricter Penalties for Non-Compliance
Failure to submit adequate documentation leads to strict penalties, including loss of deductibility for related-party expenses and fines per Article 82 of the Federal Fiscal Code. Timely and compliant Master and Local Files are critical for penalty protection.
Enhanced Focus on Intangibles and DEMPE
SAT is increasing scrutiny on intangibles, especially for correct identification and documentation of DEMPE functions (Development, Enhancement, Maintenance, Protection, Exploitation), consistent with OECD guidance.
Mexican Comparable Search Preferences and Local Data
SAT prefers use of Mexican comparables in benchmarking studies, accepting foreign comparables only if suitable local data is lacking. Documentation must justify the inclusion/exclusion of loss-makers and method selections per OECD standards.
Advance Pricing Agreement (APA) Program Updates
Taxpayers can request unilateral, bilateral, or multilateral APAs. SAT's APA program meets BEPS minimum standards and offers future certainty for related-party pricing.
BEPS Pillar Two/GloBE Developments
Mexico is preparing for OECD's BEPS Pillar 2 (15% global minimum tax) for large MNEs, though local implementing legislation is still pending. Cross-border data sharing and compliance preparations are advancing.
Exchange of Information & Disclosure Transparency
Mexico participates in the OECD Inclusive Framework and CbC reporting exchange agreements. The SAT exchanges and receives information on MNE groups for risk assessment and audit targeting.
Direct Application of OECD Guidelines & Arm's Length Principle
UK transfer pricing, rooted in Part 4 TIOPA 2010, closely follows the 2022 OECD Guidelines. All cross-border transactions with connected parties must reflect prices negotiated as if between independent entities.
Court Decisions and Recent HMRC Practice
Recent UK tribunal and High Court cases reinforce OECD methodology and arm's length results as the UK standard. Courts and HMRC are increasingly penalizing undocumented or inconsistent transfer pricing, especially in high-value disputes.
Mandatory Master File and Local File
Since April 2023, UK entities in multinational groups with global revenues ≥€750 million must prepare Master and Local Files aligned with OECD standards and hold them contemporaneously with their tax returns. Applies to accounting periods from April 1, 2023.
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Tightened Documentation Deadlines & New Penalties
Documentation must be ready by the tax return filing deadline (12 months after period end). Penalties now apply for non-compliance or for lacking required documentation, regardless of correctness of transfer pricing position.
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