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Alignment with OECD Transfer Pricing Guidelines
Mexico's transfer pricing regime is based on OECD Guidance and Articles 179--180 of the Mexican Income Tax Law (Ley del ISR). The arm's length principle applies to cross-border and some domestic transactions, referencing the 2022 OECD Guidelines for method selection and compliance.
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Latest Litigation and Audit Trends
Recent SAT enforcement focuses on restructurings, hard-to-value intangibles, and intercompany financing. Courts require robust evidence and full documentation, frequently citing the OECD and Mexican law in rulings.
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Mandatory Master File, Local File, and Informative Return
Multinational groups and domestic taxpayers must file the annual Informative Return on Related Parties (Annex 9 of DIEMSE), with Master and Local File documentation due by the tax return deadline (generally March 31 of the following year). These must meet the extensive SAT and OECD content requirements.
Country-by-Country Reporting Obligations
MNEs with consolidated revenues of at least MXN$12 billion must file a Country-by-Country (CbC) report within 12 months of fiscal year end. Mexico has adopted the OECD CbC framework, with enforcement led by SAT.
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.
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