Mexico: Moving forward along a different path
01 September 2010
In Mexico, the transfer pricing rules have been in force since 1997, a relatively long time in Latin America. Moisés Curiel, Carlos Linares and Emilio Angeles talk taxpayers through staying on the right side of the notoriously strict
The arm's-length principle was included in article 215 of the Mexican Income Tax Law (MITL) since 1997. Under article 86, section XII of the MITL, each year, taxpayers have the obligation to prepare and maintain contemporaneous documentation proving that transactions carried out with related parties abroad or with companies in tax havens, comply with the arm's-length principle.
There are no penalties for not having a transfer pricing report; however, the possibility of reducing a penalty derived from an adjustment imposed by the tax administration service (SAT for its initials in Spanish) exists in case taxpayers have it. However, in practice, authorities had tried to reject deductions associated with payments performed to related parties abroad.
In addition, section XV of article 86 of the MITL establishes that companies conducting domestic related party transactions, must comply with the arm's-length principle by applying the corresponding transfer pricing method stated in article 216 of...
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