The Tax Administration Service (SAT) confirmed, in an official statement dated May 26, 2025, that its Transfer Pricing procedures generated 106,178 million pesos in revenue between 2019 and 2024 — a 367% increase compared to the 2013–2018 period — and that in the last year alone, large taxpayers corrected their tax positions by more than 19,000 million pesos. The SAT itself identified the mining sector, along with the automotive, electronics, and telecommunications sectors, as one of the areas where these corrections are concentrated. The technical reason behind this concentration of risk is no coincidence: few industries demand such a high level of rigor in comparability analysis under the Comparable Uncontrolled Price (CUP) method as mining.
Why the CUP is both the generally most appropriate and the most demanding method for minerals
Unlike other sectors where the lack of external comparables often rules out the use of the CUP, in the sale of minerals—particularly copper, silver, gold, and other metal concentrates—the OECD Guidelines (Chapter II, paragraph 2.18) state that the CUP will generally be the most appropriate method for transactions involving commodities, supported by reference prices from international exchanges such as the LME or COMEX, or by specialized price reporting agencies. The challenge lies not in the availability of a reference price, but in the precision with which that market price must be adjusted to reflect the specific conditions of each transaction between related parties—a level of technical detail considerably greater than that required for other, more homogeneous commodities.
The comparability factors that capture the actual risk in minerals
The OECD Guidelines (Chapter I) identify five comparability factors applicable to any Transfer Pricing analysis: contractual terms, functional analysis (functions, assets, and risks), characteristics of the goods or services, economic circumstances, and business strategies. In the specific case of the sale of mineral concentrates, three of these factors require a particularly thorough level of adjustment:
Physical characteristics of the product. The metal content or grade of the concentrate, the impurities present—which typically result in penalties due to higher refining costs—and recoverable byproducts, which can increase the commercial value of the transaction. Ignoring or underestimating any of these elements directly distorts the adjustment that must be applied to the reference price.
Economic circumstances. The supply and demand for the specific mineral, the market structure—which for some metals is highly concentrated among a few buyers—and the country or regulatory risk of the jurisdiction where the mine operates; these are factors that an independent comparator would also consider when negotiating commercial terms.
Contractual terms. The agreed-upon Incoterms (primarily FOB or CIF), committed volumes, payment terms, the pricing periods used, and processing and refining charges—the latter being a technical element frequently underestimated in the sector’s Transfer Pricing documentation.
The other two factors—functional analysis and business strategies—remain relevant, but in practice they result in fewer direct quantitative adjustments to the reference price than the previous three.
What Changes with the January 2026 Regulatory Update
On January 9, 2026, the Official Gazette of the Federation published Annex 3 of the 2026 Miscellaneous Tax Resolution, which incorporates specific criteria regarding the Special Mining Tax and the Extraordinary Mining Tax. Among other things, it specifies that revenue from the sale of gold, silver, and platinum must be recognized at the time of sale, regardless of when the consideration is actually received, and that the basis for calculating these taxes corresponds to the total revenue for the period, without any reduction. Although this criterion formally refers to mining royalties and not directly to income tax, it has a significant practical implication for Transfer Pricing: it reinforces the requirement that the timing and value of the recognition of a sale of minerals to a related party be accurately documented, given that the tax authority itself has already established a strict criterion regarding when the sale is considered to have occurred for tax purposes.
The combination that increases the risk for multinational mining groups
A Mexican mining company that is part of a multinational group—the predominant profile in the sector, as acknowledged by the SAT itself—thus faces a dual requirement: on the one hand, a comparability analysis that is technically more complex than that of most industries, given the number of adjustments required to the reference price; on the other hand, a tax authority that has already identified mining as a high-revenue-generating sector and has refined its criteria regarding the timing of revenue recognition. The combination of these two factors means that the technical documentation of concentrate sales to related parties—and not just the Local File in general terms—is, in practice, the first line of defense against a potential tax audit.
At TPC Group, we assist companies in the mining sector with intercompany transactions in Mexico in structuring and documenting the comparability analysis of their mineral sales in accordance with the CUP method and the technical criteria developed by the OECD and the IGF, taking into account the most recent regulatory specifics regarding revenue recognition.
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