Mexico has introduced transfer pricing documentation requirements for a master file and local file in line with the OECD Base Erosion and Profit Shifting (BEPS) project from 1 January 2016. It will be mandatory to prepare this information for taxpayers with turnover of above 37.11 billion pesos (about €20 million). The master file will contain information regarding descriptions of the group’s capital structure, transfer pricing (TP) policy and significant intangible assets utilized. A local file will contain specific TP information for each relevant country of operation.
Mexico has also introduced Country by Country (CbC) reporting for domestic entities with consolidated turnover above 12 billion pesos. They are required to provide information concerning the amount of revenue earned and tax paid by location, also activities and places of business for dependent entities and permanent establishments within the group. The report must cover group revenue, distinguishing between related and unrelated parties; accounting results before corporate income tax (or similar taxes); and corporate tax (or similar taxes) paid or accrued, including withholding tax.
Penalties for non-compliance with the rules would be imposed in a range of MXN 140,540 (USD 8,365) to MXN 200,090 (USD 11,910) and in addition, a failure to file or presenting incomplete or erroneous reports would be penalized by disqualifying the taxpayer from entering into contracts with the Mexican public sector. The Reform will be effective from 1 January 2016.
