Transfer Pricing 2022 - Law And Practice

1. Rules Governing Transfer Pricing

1.1 Statutes and Regulations

In Mexico, the provisions related to the transfer pricing regime are included in the Income Tax Law (ITL) and the Federal Tax Code (FTC).

In general, taxpayers that carry out transactions with related parties, either resident in Mexico or abroad, are required to determine their taxable income and deductions in accordance with the arm's-length standard.

Through a tax audit, tax authorities may challenge the taxable income or deductions of the taxpayer derived from its related party transactions and issue a tax assessment.

The Mexican transfer pricing regime includes provisions that establish the definition of a related party, transfer pricing methods and their applicable hierarchy, what could be considered as a comparable company or transaction, comparability adjustments and business cycle considerations, and information that could be used for interpretation purposes, among other concepts.