Noticeable Transfer Pricing Changes in the Income Tax Law 2022

February 17, 2022

In Mexico, the Income Tax Law 2022, which incorporates notable changes in transfer pricing, has entered into force. We will review these relevant points in the country’s tax legislation.

  1. Transactions with domestic-related companies will be included in the transfer pricing information statement. Prior to the reform, only transactions with related parties resident abroad had to be declared in this medium.
  2. Functional analyses within the transfer pricing studies must contemplate the functions, assets, and risks of both the taxpayer and all related parties with which transactions have been carried out.
  3. Taxpayers may have access to this information on transactions between independent third parties solely to correct the tax situation and challenge the resolutions that determine a tax credit.
  4. Article 180 of the Law was updated to include the word “interquartile” as the name of the only statistical method allowed to determine the arm’s length range in transfer pricing analyses.
  5. New taxpayers must comply with the Local Report and the Master File. Previously, only taxpayers that exceeded the income threshold determined by the tax authority were subject to file the local report. Now, they will also be required to file it regardless of the amount of their accruable income.
  6. Penalties for non-compliance with transfer pricing obligations will be increased. Taxpayers who do not file the information statement (Annex 9) will face a fine of MXN 86,050 to MXN 172,000, those who do not file (or file with errors or omissions) the local reports, master files, or country by country reports will be sanctioned with a fine of MXN 172,480 up to MXN 245,570.
Source: Mne Tax 17/02/22