Proposed Tax Reform in Mexico considers CbC Requirements

EY TAX Flash
Proposed Tax Reform in Mexico considers CbC
Requirements
On September 8th, a Tax Reform Package including significant transfer pricing disclosure and
documentation requirements was presented to the Mexican Congress for review and approval.
The proposed transfer pricing provisions included in the reform package consider the main elements of
the Guidance on Transfer Pricing documentation and Country-by-Country (CbC) Reporting issued by the
OCDE in 2014 to address Action 13 of its BEPS Project. If the proposed requirements are approved as
proposed, Mexico would become the fourth country, after the United Kingdom, Spain, and Australia with
specific CbC provisions in its tax legislation.
The new requirements contemplate an annual obligation for Mexican corporate taxpayers and permanent
establishments to file three new information returns; namely, a master information return, a local
information return, and a CbC information return. The filing of the CbC information return would be
required only from corporations that qualify as Mexican multinational holding companies or those that
are designated by the parent company of a foreign multinational group as responsible for filing the CbC
Report.
These information returns would be required starting in FY 2016 and would be due for the first time by
December 31st, 2017. Although it is not yet clear whether the filing of the proposed information returns
would be established as a requirement for the deduction of the corresponding payments to foreign
related parties, it would be important to consider that current tax legislation in Mexico establishes that
the timely and accurate filing of transfer pricing information returns is a pre-requisite for deducting the
corresponding amounts. It would also be essential to consider that the tax reform proposal to Congress
clearly establishes that failure to file the proposed information returns would be penalized by disqualifying
the taxpayer from entering into contracts with the Mexican public sector.
For additional information with respect to this alert, please contact the following professionals:
Jorge Castellón
jorge.castellon@mx.ey.com
Mónica Cerda
monica.cerda@mx.ey.com
Alma Gutiérrez
alma.gutierrez@mx.ey.com
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