US-Mexico Treaty Notification And Protective Claim Requirements

In Mexico, a company with a local presence that is currently undergoing, or may in the future undergo, a tax review for FY 2020 of its transfer pricing policies (or other international tax matters) that may give rise to a case that could be resolved by the Mexican and US competent authorities under Article 26 of the Mexico-USA Income Tax Treaty¹ (the "Treaty") should notify the IRS pursuant section 12 of U.S. Revenue Procedure. 2015-40 ("Treaty Notification") no later than September 30th, 2025. The potentially affected US affiliate should do the same.

For example, a taxpayer facing a potential transfer pricing audit by the Tax Administration Service of Mexico ("SAT") that would result in the allocation of additional accruable income needs to take immediate action to file the Treaty Notification in order to preserve its opportunity to initiate a Mutual Agreement Procedure (MAP). Taxpayers may file a Treaty Notification even before an audit has been initiated but