In a panel with tax authorities on transfer pricing, multinational tax evasion is estimated at around 100 billion pesos
On July 18, the conference series on transfer pricing and international taxation took place at Universidad Panamericana in Mexico City. The event featured distinguished speakers with extensive expertise in the field, representing various professional firms. The final presentation was a panel discussion with Carlos Pérez Gómez Serrano, Central Administrator of Transfer Pricing Audits; José Luis Velasco Verdugo, Central Administrator of Transfer Pricing Strategy Development; and Jesús Aldrin Rojas, partner at QCG Transfer Pricing Practice, who served as moderator.
During the panel, the importance of the OECD’s action plan to combat tax evasion and profit shifting (BEPS – Base Erosion and Profit Shifting) in Mexico was emphasized, given the number of multinational groups operating in the country and the volume of their intercompany transactions, both domestic and foreign. The panel, in line with OECD considerations, estimated that tax avoidance within this regime amounts to approximately 100 billion pesos, which represents around 10% of the payments made to related parties residing abroad.
As a result, the SAT has decided to significantly increase its focus on this matter by expanding its installed capacity within existing central administrations or even incorporating new areas. Currently, the SAT has a Central Administration of Transfer Pricing Audits, primarily responsible for monitoring compliance by taxpayers subject to this regime (as well as negotiating advance pricing agreements). Additionally, it has a Central Administration for Transfer Pricing Strategy Development, tasked with developing risk models to identify tax avoidance schemes by taxpayers and assisting non-specialized areas within the SAT on transfer pricing matters. These administrations are led by Pérez Gómez Serrano and Velasco Verdugo, respectively.
During the panel, the SAT pointed out significant deficiencies in how taxpayers have documented their transactions. It emphasized the need for a transactional analysis of operations and a proper assessment of transfer pricing methods, particularly the profit split method in cases where taxpayers perform complex functions that add value to multinational enterprises. Furthermore, tax authorities highlighted their intent to initiate audits targeting specific transactions, allowing them to optimize resources and enhance tax collection efficiency through a more focused approach.
Additionally, the SAT outlined other mechanisms to ensure proper compliance with the regime, including the issuance of invitation letters for taxpayers with inconsistencies in their tax obligations. For taxpayers looking to avoid tax contingencies, the SAT clarified the existence of advance pricing agreements (APAs), which provide legal certainty for transactions where value attribution might otherwise be challenging.
The panel also highlighted the crucial role played by PRODECON in implementing the BEPS plan in Mexico, particularly regarding Action 13 (country-by-country reporting and transfer pricing documentation). Finally, tax authorities concluded the panel by encouraging taxpayers to ensure proper compliance with their obligations under the regime.
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