On January 9 of this year, through a publication in the Official Gazette of the Federation, Annexes 3, 5, 7, 8, and 11 of the Miscellaneous Tax Resolution for 2020 were modified. Among the modifications, the repeal of various rules from the aforementioned annexes stands out.
Regarding transfer pricing matters, no modifications were found in the regime that could alter the obligations of taxpayers conducting transactions with related parties. The regulatory and non-binding criteria related to the regime are as follows:
ANNEX 3 OF THE MISCELLANEOUS TAX RESOLUTION 2020
Non-binding Income Tax Law (LISR) Criteria
- 4/ISR/NV – Royalties for intangible assets originated in Mexico, paid to related parties residing abroad.
- 39/ISR/NV – Recognition of unique and valuable contributions. These must be acknowledged in transfer pricing analyses to demonstrate that, in transactions carried out with related parties, the taxable income and authorized deductions were determined considering the prices and amounts of consideration 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.
ANNEX 7 OF THE MISCELLANEOUS TAX RESOLUTION FOR 2020
Compilation of Regulatory Criteria
- 9/CFF/N – Resolution of consultations regarding the methodology used in determining the prices or amounts of consideration in transactions with related parties. Subjects that may submit inquiries.
- 26/ISR/N – Thin capitalization. The exchange loss accrued due to foreign currency fluctuation, which arises from debt amounts exceeding three times the capital of the taxpayers and originates from debts contracted with related parties abroad, is not deductible.
- 32/ISR/N – Legal entities conducting transactions with related parties residing in Mexico. Documentation and supporting information that must be retained.
- 33/ISR/N – Legal entities. Concept of related parties.
- 34/ISR/N – Legal entities conducting transactions with related parties regardless of their tax residence. Compliance with obligations.
- 35/ISR/N – Legal entities conducting transactions with related parties. Application of OECD Guidelines.
- 57/ISR/N – Simulation of legal acts in transactions between related parties. It can be determined for income derived from a source of wealth in the country by any person liable for tax payment.
- 60/ISR/N – Maquiladora operation for the purposes of the IMMEX Decree. Percentage of machinery and equipment used.
The original publication can be consulted here: Official Gazette of the Federation.
We remain at your service for any clarification regarding this matter.
