Today, the Tax Administration Service (SAT) published in the Official Gazette of the Federation the fourth resolution of amendments to the 2018 Miscellaneous Tax Resolution, which includes non-binding criteria on transfer pricing. These criteria are as follows:
39/ISR/NV “Recognition of Unique and Valuable Transactions”
Taxpayers’ contributions must be recognized in transfer pricing analyses to demonstrate that, in transactions with related parties, taxable income and authorized deductions were determined considering the prices and compensation amounts that would have been used with or between independent parties in comparable transactions.
40/ISR/NV “Modifications to the Value of Transactions with Related Parties Within the Interquartile Range”
The issuance of these non-binding criteria (NBC) aims to limit taxpayers’ opportunities for tax planning. NBC 39 emphasizes the need to properly implement the comparability analysis before applying the transfer pricing method to identify Mexican taxpayers’ contributions to the multinational business and thus avoid distorting the reference benchmark. Otherwise, tax authorities may reject the transactions or companies considered comparable to the intercompany transaction, which could eventually lead to an increase in the taxpayers’ taxable base in such cases.
NBC 40 warns against adjustments within the same interquartile range aimed at reducing the taxpayers’ taxable base. In both cases, experts in the field are advised to refrain from advising, recommending, providing services, participating in, or implementing the cited practices.
The following link provides access to the official publication:
