The Mexican Government has introduced the obligation to file three new Informative Declarations that must be complied with by taxpayers that carry out transactions with related parties to align with the BEPS Project (measures to prevent the erosion of the tax base) implemented by the Organization for Economic Cooperation and Development (“OECD”).
1. New Information Reports
The new guidelines state that the following 3 declarations must be submitted:
- Master Informative Statement: It must be filed by those companies that carry out operations with Related Parties of a multinational Business Group, which must contain the following:
- Organizational Structure.
- Description of the group’s activity, intangible assets, and financial activities with related parties.
- Financial and tax position.
- Local Informative Declaration: Those carrying out operations with Related Parties must also contain;
- Description of the organizational structure, strategic and business activities, and related party transactions.
- Financial information of the obligated taxpayer and the operations or companies used as comparable transactions in its analysis.
- Country-by-Country Informative Statement: Those that carry out operations with Related Parties must also contain:
- Information at the tax jurisdiction level on the worldwide distribution of income and taxes paid.
- Indicators of the location of economic activities in the tax jurisdictions the multinational corporate group operates and should include:
- Tax jurisdiction.
- Total income.
- Distinguishing amounts of income with related parties and third parties, profit or loss before income tax is effectively paid.
- Income tax.
- Caused in the fiscal year, capital accounts, accumulated profits or losses, number of employees, fixed assets, and merchandise.
- A list of all the entities comprising the multinational corporate group and their permanent establishments, including economic activities of each of the entities comprising the multinational corporate group, the jurisdiction of incorporation of the entity if different from its tax residence.
It is important to note that the Country-by-Country Statement should only be filed by those controlling companies of multinationals meeting the following requirements:
- Residents in Mexico
- Have subsidiaries defined according to Financial Reporting Standards
- Not being subsidiaries of any foreign company.
- The obligation of preparing, filing, and disclosing consolidated financial statements under FRS.
- Report the results of entities residing in one or more countries or jurisdictions in their consolidated financial statements.
- Obtaining consolidated revenue exceeding Ps. 12,000 million in the immediately preceding fiscal year.
- Being legal entities residing in Mexican territory or resident abroad with a permanent establishment in the country, who have been designated by the controlling legal entity of the multinational corporate group resident abroad as responsible for providing the country-by-country informative statement referred to in this section.
2. Statements filing
The Tax Administration Service will establish general rules for the filing of the referred statements through which additional information may be requested, including the corresponding means and formats. In this regard, the deadline for filing these statements will be December 31 of the year immediately following the fiscal year in question.
3. Additional Provisions
It should be noted that the obligation to file these statements is in addition to those already existing under the Transfer Pricing Regime in effect in Mexico since 1997 and related to:
- Perform all transactions with domestic and foreign-related entities under the Arm’s Length Principle.
- Integrate the annual supporting documentation demonstrating compliance with the Arm’s Length principle by applying the Transfer Pricing Methods indicated.
- File the Informative Statement of transactions with related parties resident abroad (Annex 9 of the MID) as well as the Statement of relevant transactions.
Source: PKF 16/08/21