Mexico Transfer Pricing Policy

Mexico Transfer Pricing Policy

Email: mex4ww@evershinecpa.com
Manager Cindy Victoria Speaks in Bahasa, English, and Chinese.
Whats App +886-989-808-249
wechatid: victoria141193

TP-Q-10
Why kinds of scenarios will be adopted TP policy? What is the relevance between DTA and TP policy?

TP-A-10
When Mexico Tax entity would like to pay out whatever Business profits, Royalty, Technical Services fees, Interests, Trading amount etc., it will adopt DTA tax rate. Its judge criteria, please see the Mexico Treaty Page.
But if want to verify the above-mentioned amount if reasonable, will adopt Mexico TP Policy.

TP-Q-20:   
What are the scenarios in Mexico, that a Wholly Foreign-Owned Entity (WFOE) is exempted from compliance of Transfer Pricing (TP) declaration and TP documentation?

TP-A-20:
WFOE is exempted from TP declaration – Form T106 if the total non-residents transactions value does not exceeding CAN 1 million.
WFOE is exempted from TP documentation – CbC Report – Form RC4649 – If total consolidated group revenue is less than Euro 750 million in the immediately preceding fiscal year.

TP-Q-30:   
What are the scenarios in Mexico, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration to the country’s tax bureau?
What is the name of the TP declaration form?

TP-A-30:
Form T106 – Total non-residents transactions value is exceeding CAN 1 million.
Form T1134 – All taxpayer’s residents in Mexico for which a non-resident corporation is a foreign affiliate or a controlled foreign affiliate at any time in the year.

TP-Q-40:   
What are the scenarios in Mexico, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration and TP documentation to country’s tax bureau? What is the name of the TP declaration form and TP documentation form?

TP-A-40:
TP declaration – Form T106 – If total non-residents transactions value exceeding CAN 1 million.
TP declaration – Form T1134 – All taxpayer’s residents in Mexico for which a non-resident corporation is a foreign affiliate or a controlled foreign affiliate at any time in the year.
TP documentation – CbC Report – Form RC4649 – If total consolidated group revenue is less than Euro 750 million in the immediately preceding fiscal year.

Mexico TRANSFER PRICING for professionals

Overview

Canadian transfer pricing legislation and guidelines are generally consistent with the OECD.
Mexico’s transfer pricing rules apply if:

  1. Two or more entities are involved.
  2. At least one of the entities is a taxpayer in Mexico.
  3. It is a cross-border transaction involving Mexico.

Related Party

Includes in the paragraph 251(2)(b) of the ITA, a corporation will be related to another corporation where:

  1. The two corporations are controlled by the same person or group of persons.
  2. Each of the corporations is controlled by one person and the person who controls one corporation is related to the person who controls the other corporation.
  3. One of the corporations is controlled by one person and that person is related to any member of a related group that controls the other corporation.

Acceptable Transfer Pricing method

*Comparable Uncontrolled price method (CUP)
*Resale price method (RPM)
*Cost-plus method (CPM)
*Profit split method (PSM)
*Transactional net margin method (TNMM)

Due dates and respective threshold:

  Preparer Due Date Threshold
1. TP declaration forms
1.1 Form T106, Information Return of Non-Arm’s-length Transactions with Non-Residents UPE and CE in Mexico. Within 6 months of the end of the reporting entity’s tax year. Total non-residents transactions are > CAN 1 million.
1.2 Form T1134, Information Return Relating to Controlled and Non-Controlled Foreign Affiliates CE in Mexico. Within 10 months after the end of tax year or fiscal period. All taxpayer’s resident in Mexico for which a non-resident corporation is a foreign affiliate or a controlled foreign affiliate at any time in the year.
2. TP documentation
2.1 Local File UPE and CE in Mexico. Prepared by the tax return’s filing date and submit within 3 months upon CRA’s request N/A. Does not require to prepare with CRA.
2.2 Master File UPE and CE in Mexico. N/A. Does not require to prepare with CRA.
2.3 Country-by-Country (CbC) Report
– Form RC4649
UPE in Mexico. Prepare and submit within 12 months after the fiscal year-end of UPE. Total consolidated group revenue Euro750million or more in the immediately preceding fiscal year.

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Mexico City Evershine BPO Service Limited Corp.
Email: mex4ww@evershinecpa.com
Manager Cindy Victoria Speak in Bahasa, English, and Chinese.
Whats App +886-989-808-249
wechatid: victoria141193

For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System, please send an email to HQ4yto@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Linkedin address: Dale Chen

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