Transfer Pricing Adjustments In Mexico

Mexican tax rules dealing with transfer pricing adjustments entered into force beginning January 1 2017. These rules deal only with primary adjustments and all the formalities related to them, especially those to meet the requirements for deductions. Primary adjustments can even be recognised on a cashless basis. Unfortunately, at this stage secondary adjustments are not covered in these rules. Ricardo Rendón and Yoshio Uehara explain the changes.

Background

Since the implementation into Mexican legislation of the transfer pricing (TP) regime, the Mexican Income Tax Law (MITL) has established that taxpayers who undertake transactions with related parties are required for the purposes of said law, to determine their taxable income and deductions taking into account the prices that would have been used in comparable transactions with or between independent parties. In other words, related party transactions have to be carried out at arm's length.