Mexico’s Taxpayer Office published a final report regarding master file, local file and country-by-country (CbC) report under Article 76-A of the Income Tax Law on April 3, 2017. These documentation requirements became effective on January 1, 2016, with introductory CbC reports due by December 31, 2017 for the 2016 assessment year.
As a result of the public consultation, multinational companies, and other organizations issued comments regarding 13 key points of reporting which were modified by the Mexican tax authorities:
1) Local File: Replaces Local transfer pricing documentation requirements of Article 76 fractions IX and XII of the MITL.
2) Local declaration: With regard to the Local declaration, the elimination in all cases of the requirement to file financial statements and tax returns of parties.
3) CbC Report: With regard to the Country-by-Country declaration, it was possible for business groups do not have to present several declarations of this kind, but can file one report for the group.
4) Master file: Regarding the Master file, it was possible to recognize the validity for tax purposes statements made by a foreign parent with a Mexico, when the requirements established in Action 13 of the Plan of Action BEPS.
5) Master file: Regarding the Master file, only five types of products or services representing more than 5% of the total income of the group.
6) Master file: The meaning of concepts such as multinational business group, business restructuring, intangible assets and policies of Transfer Pricing restructuring.
7) Master and local file: Regarding the Master and Local file, it was possible to recognize the validity of the English language for the master file as well as for intercompany agreements and business clarification of comparable in local file.
8) Local file: Possible description of intercompany transactions.
9) Master file and CbC report: Can be presented in foreign currency.
10) Local file: Analysis included in the Local File provides the elements to initiate that intercompany transactions are in accordance with the arm’s-length principle.
11) Local file: As for the Local file, only the list of Advance Transfer Pricing Agreements of the group, but that the taxpayer only provide copies of those in their possession.
12) Master file: As for the Master file, it was possible to enable the delivery of the same by line of business.
13) Master file: With regard to the Master file, there was a possibility that all entities subject to filing master file must file only one document for the group.