According to the Economic Commission for Latin America and the Caribbean (ECLAC), Mexico and Brazil have been leading the manufactured industries in recent years, especially in the automotive sector.
Indeed, since 2022, Brazil has adhered to the OECD and, therefore, it must implement the OECD Transfer Pricing Guidelines, as well as the application of the Arm’s Length Principle since 2023, which will be optional for taxpayers this year, while by 2024 its application will be mandatory.
Benefits for the Automotive Sector
According to the ECLAC, Mexico and Brazil have directed the manufactured industries in recent years, especially in the automotive sector, among the top 10 vehicle production countries worldwide, having Mexico a certain advantage over Brazil in production, according to the Mexican Association of the Automotive Industry.
Thus, the new implementation of OECD Transfer Pricing in Brazil could benefit Mexico since Brazil, by replacing its transfer pricing policy that was based on establishing fixed margins in intercompany operations with one that determines considerations as independent third parties do, can intervene in the value chain of several multinational company groups operating in Brazil and industries in Mexico, whose direct competitor is Brazil, generating greater industrial production for Mexico and, in turn, economic growth.
Source: El Universal 10/07/23
