On April 3, 2017, Mexico’s Office of the Taxpayer Advocate (PRODECON) published a final report for presenting the master file, local file and country-by-country (CbC) report under Article 76-A of the Income Tax Law. These documentation requirements apply from January 1, 2016, with initial CbC reports due by December 31, 2017 for the 2016 tax year. See BEPS Action 13.
Through a public consultation, multinational companies, tax consulting firms and other organizations issued comments with respect to the rules. As a result of these comments, the following reporting rules were modified:
- Local file – replaces local transfer pricing documentation requirements.
- Local file – no longer a requirement to file financial statements and tax returns of foreign related parties.
- CbC report – Mexican groups can file one report for the group.
- Master file – should meet Action 13 requirements.
- Master file – only five products/services or products/services representing more than 5% of group income should be reported.
- Master file – clarification of terms, such as multinational business group, intangible assets and business restructuring.
- Master and local file – English version of master file is acceptable, as well as for intercompany agreements and business descriptions of comparables in local file.
- Local file – Description of intercompany transactions.
- Master file and CbC report – Can be reported in foreign currency.
- Local file – analysis may establish that intercompany transactions are in accordance with arm’s-length principle.
- Local file – only advance pricing agreements available to the Mexican taxpayer should be provided.
- Master file – can submit electronically.
- Master file – all entities subject to filing master file must file only one document for the group.