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. SeeBEPS 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.
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