The transfer pricing regime in Mexico is one of the pillars of the intragroup transaction control system. Mexican regulations, aligned with international standards promoted by the Organization for Economic Cooperation and Development (OECD) and particularly with the recommendations of the BEPS project, establish a set of documentation and reporting obligations that taxpayers who carry out transactions with related parties must comply with.
During the 2026 fiscal year, companies resident in Mexico or permanent establishments of foreign entities that enter into transactions with related parties must comply with various requirements related to the 2025 fiscal year. These obligations derive mainly from Articles 76, 76-A, 179, and 180 of the Income Tax Law (LISR), as well as from complementary provisions of the Federal Tax Code and the current Miscellaneous Tax Resolution.
Proper planning and compliance with these obligations is essential not only to avoid penalties, but also to mitigate risks arising from tax adjustments in audits by the tax authority.
Regulatory framework for transfer pricing in Mexico
The Mexican transfer pricing system is based on the arm’s length principle, according to which transactions between related parties must be agreed upon under conditions equivalent to those that would have been agreed upon by independent parties in comparable circumstances.
This principle is set forth in Articles 179 and 180 of the Income Tax Law (LISR), which establish that taxpayers must determine their cumulative income and authorized deductions considering prices, considerations, or profit margins comparable to those of the market.
In operational terms, compliance with this obligation involves the preparation of technical transfer pricing studies, as well as the filing of various information returns that allow the tax authority to assess the tax risk associated with intra-group transactions.
Mexico has also incorporated the three-level documentation approach, derived from Action 13 of the OECD’s BEPS project, which comprises:
This system seeks to improve tax transparency and facilitate the international exchange of information between tax administrations.
Key transfer pricing obligations for the 2025 fiscal year
During 2026, taxpayers must comply with various obligations related to transactions carried out in fiscal year 2025. Among the most relevant are the following.
1. Transfer Pricing Study
Companies that enter into transactions with related parties must have supporting documentation demonstrating that such transactions are valued in accordance with the arm’s length principle.
This study must include, among other elements:
- functional analysis (functions, assets, and risks),
- description of intercompany transactions,
- economic analysis and selection of the transfer pricing method,
- identification of independent comparables.
Mexican law requires that such documentation be prepared no later than May 15 of the year following the corresponding fiscal year, even though it does not necessarily have to be automatically submitted to the authorities.
However, the Tax Administration Service may require it in the exercise of its verification powers.
2. Multiple Information Return – Annex 9 (transactions with related parties)
Additionally, taxpayers who enter into transactions with related parties must report such transactions using the Multiple Information Return (DIM), Annex 9.
This return includes information regarding:
- type of transaction (sales, purchases, services, financing, royalties, among others),
- amount of the transactions,
- tax jurisdiction of the related counterparty.
The filing deadline for fiscal year 2025 is May 15, 2026.
This report allows the tax authority to identify risk patterns and select taxpayers for transfer pricing review.
3. Local File
The Local File is one of the components of the BEPS documentation scheme adopted by Mexico.
This report provides detailed information on the Mexican taxpayer and the transactions carried out with its related parties. Among the elements it must contain are:
- the taxpayer’s organizational structure,
- a detailed description of intercompany transactions,
- a functional analysis,
- financial information used in the comparability analysis,
- and an explanation of the methodology applied to determine market prices.
The obligation to file this return is provided for in Article 76-A of the Income Tax Law (LISR).
The deadline for filing the Local File for the 2025 fiscal year is May 15, 2026.
In practical terms, this report is one of the most relevant instruments for the audit of intra-group transactions, as it provides granular information on the transfer pricing policy applied by the taxpayer.
4. Master File
The purpose of the Master File is to provide an overview of the multinational group to which the taxpayer belongs.
This report includes information on:
- the group’s organizational structure,
- a description of its main lines of business,
- global transfer pricing policies,
- the group’s intangibles,
- and intra-group financing activities.
Unlike the Local File, the Master File focuses on the global context of the business group and not only on the operations of the Mexican taxpayer.
The deadline for filing the Master File for the 2025 fiscal year is December 31, 2026.
5. Country-by-Country Report
The Country-by-Country Report (CbCR) is a tool designed to provide tax authorities with an overview of the distribution of income, profits, and economic activities within a multinational group.
This report includes aggregated information by jurisdiction regarding:
- group income,
- pre-tax profits,
- taxes paid,
- number of employees,
- tangible assets.
The obligation to file this report applies mainly to multinational groups with consolidated revenues above the threshold established by Mexican law.
The deadline for filing the Country-by-Country Report for the 2025 fiscal year is December 31, 2026.
Consequences of non-compliance
Failure to comply with transfer pricing obligations can lead to various tax and administrative consequences.
Among the main ones are:
- fines for failure to file or incorrect filing of information returns,
- adjustments to income, deductions, or tax losses resulting from audits,
- increased likelihood of electronic reviews,
- restrictions on entering into contracts with public sector entities.
Penalties for failing to file information returns can be significant, in addition to generating a higher level of scrutiny by the tax authority.
Strategic importance of timely compliance
In the current context of international tax cooperation, tax authorities have increasingly sophisticated tools to detect aggressive tax planning schemes.
In Mexico, the SAT uses risk analysis models, automatic information exchange, and electronic audit tools to identify inconsistencies in intra-group transactions.
Therefore, timely compliance with transfer pricing obligations should be considered not only a formal requirement but also an essential component of corporate tax risk management.
Advance preparation of documentation, periodic review of intercompany policies, and proper alignment between economic substance and profit allocation are key elements in ensuring the defense of the taxpayer’s tax positions in the event of possible audits.
Strategic transfer pricing compliance: key to proper tax management
Timely compliance with transfer pricing obligations in Mexico is a fundamental element in the tax risk management of companies that carry out transactions with related parties. Proper preparation of documentation, monitoring of the deadlines established by the regulations, and correct application of the arm’s length principle make it possible to substantiate the reasonableness of intra-group transactions in the event of possible audits by the tax authority. In this context, having the support of a company specializing in transfer pricing is key to ensuring that technical analyses and informative reports are aligned with Mexican legislation and OECD international standards.
If your organization has related-party transactions in Mexico and requires assistance in preparing technical studies, filing information returns, or reviewing its intercompany policies, the TPC Group team can provide you with the support you need to strengthen your tax compliance strategy, anticipate risks, and ensure an adequate technical defense before the tax authorities.
Sources: