Transfer Prices in Mexico, regulations and formal obligations demanded by the SAT
The Mexican Regulations on the Transfer Prices included in the articles 86 fraction XII, 215 and 216 of the Law of Income Tax (called “LISR”), the article 18 fraction III of the Law of Business Tax on Unique Rate (“LIETU”).
The taxpayers who perform operations with related parties resident abroad are obliged, by this Law, to determine their accumulated incomes and authorized deductions, taking into consideration, for those operations, the prices and amounts used with or between independent parties in comparable operations.
It is considered that two or more people are related parties when one participates, in a direct or indirect way, in the administration, control or capital of the other one, or when a person or group of people takes part directly or indirectly in the administration, control or capital of those people. Talking about associations in participation, their members are considered as related parties, as well as the people, who according to this paragraph, are considered related parties of this member.
It is considered related parties of a permanent establishment, the head quarter or other permanent establishments of it, as well as the people mentioned in the previous paragraph and their permanent establishments.
Technical Study of Transfer Prices
In the article 76 fractions IX and XII of the Law of Income Tax (“LISR”) it is established the obligation of getting and keeping the evidentiary documentation (study of transfer prices) referring to taxpayers who perform operations with related parties resident abroad and in the national territory, showing that their income or deduction operations are at market values.
The article 76 fraction X forces the taxpayers, who perform operations with related parties abroad, to present together with the year statement, an informative statement for those operations.
Infractions and penalties:
As a result of the verification faculties and in case the taxpayer does not fulfill with the obligations in matters of transfer prices, he will be submitted to:(I) infraction for each operation performed with related parties abroad that was not identified in the accounting, (ii) a fine from 55% to 75% of the omitted contributions plus surcharges and updating, (iii) a fine that ranges from $68,000 to $140,000 pesos for not presenting, presenting with mistakes or incomplete the informative statement of operations with related parties abroad, (iv) a fine from 30% to 40% over fiscal losses higher than the really suffered for operations between related parties, (v) no deductibility of payments to related parties abroad, among others. A reduction of 50% of the imposed penalty in matters of transfer prices can be accessible in case of having evidentiary documentation.
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