MexicoMexico

Legal ReferenceArticles 76 (section XII) and 179 of the Mexican Income Tax Law (MITL) Articles 51 and 53 of the Hydrocarbons Revenues Law

Legal ReferenceArticle 179 of the MITL and Article 30 of the Hydrocarbons Revenues Law

The OECD TPG are specifically referenced in the Mexican legislation and are used for guidance and interpretation in transfer pricing-related issues.

Legal ReferenceArticle 179 of the MITL

Regarding corporations and for income tax purposes, two or more persons are considered to be related parties when one of them participates, directly or indirectly, in the administration, control or equity of the other, or when a person or group of persons participates, directly or indirectly, in the administration, control, or equity of such persons; members of partnerships are considered to be related, as are the persons who in accordance with this paragraph are considered related parties of such members. Similarly, the head office or other permanent establishments thereof are considered related parties of a permanent establishment, as are the persons indicated in the preceding paragraph and the permanent establishments thereof.

Legal ReferenceArticle 180 of the MITL

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (provided)
• Profit Split (provided)
• Other (not provided)

Legal ReferenceArticle 180 of the MITL

Article 180 of the MITL states that taxpayers must first apply the method set forth in (I) of such Article (i.e. the CUP), and may only use the methods indicated in (II), (III), (IV), (V) and (VI) (i.e. Resale Price, Cost Plus, Profit Split, Residual Profit Split and TNMM, respectively) thereof when the method set forth in (I) is not appropriate for determining if the transactions were performed at arm’s length. Mexico’s approach to method hierarchy is not in conflict with “the most appropriate method” approach of the TPG, given that it considers applying the guidance in paragraph 2.2 of the TPG, which inherently implies making an applicability test for each method taking into account several factors, among other tests.

• Hierarchy of methods (selected)
• Most appropriate method (selected)

Legal ReferenceArticle 51 and 53 of the Hydrocarbons Revenues Law

According to articles 51 and 53 of the Hydrocarbons Revenues Law, when an Exploration/Extraction Assignation Holder transfers hydrocarbons (Oil, Natural Gas, Condensates, Natural Gas Liquids or Methane Hydrates) to related parties, they shall consider for such transactions, the prices and amounts of the considerations they would have used with or between independent parties in comparable transactions, applying to that end the CUP method. Regarding other commodities, no specific guidance is contained in the domestic legislation as of the date of this questionnaire, but through the reference to the TPG in the MITL, the commodities guidance is applicable.

Legal ReferenceArticle 179 MITL

Through the reference to the OECD TPG in the MITL, the guidance on comparability analysis is applicable.

Although in principle there is a preference for local comparables, Mexico has limited local comparables, and in practice, foreign comparables are relied upon.

Legal ReferenceFederal Fiscal Code, articles 46, 48 and 69

Any information to which the tax authority has access may be used. However, the use of secret comparables is case-specific (only to on-site visits/audits). References are contained in articles 46, IV, 48, VII and 69 of the Federal Fiscal Code.

Legal ReferenceArticle 180 of the MITL MITL Regulations Article 302

The use of the interquartile range is required.

Legal ReferenceArticle 179 of the MITL

Article 179 of the MITL states that transactions or enterprises are considered comparable when there are no differences among them that significantly affect the price or consideration amount or the profit margin referred to in the methods set forth in Article 180 of the MITL, or when any such differences that do exist are eliminated through reasonable adjustments.

Article 179, section I, d) of the MITL includes guidance related to comparability in transactions between related parties that involve intangibles. Additionally, through the reference to the OECD TPG in the MITL, the intangibles-related guidance is applicable.

Legal ReferenceOfficial positions 4/ISR/NV and 33/ISR/NV contained in Annex 3 of the 2025 Miscellaneous Regulations

Miscellaneous Regulations, include official positions regarding deductibility of royalty expenses related to intangible property developed in Mexico and the proper performance of the comparability analysis in transactions involving intangibles.

Legal ReferenceArticle 179 of the MITL

No specific guidance is contained in the MITL as of the date of this update, but through the reference to the OECD TPG in the MITL, the HTVI guidance could be applied. Further, as indicated above, Article 179, section I, d) of the MITL includes guidance related to comparability in transactions between related parties that involve intangibles.

No specific guidance is contained in the MITL as of the date of this update, but through the reference to the TPG in the MITL, the intra-group services guidance is applicable. Nonetheless, Article 179, section I, b) of the MITL includes guidance related to comparability in transactions between related parties that involve services.

Legal ReferenceArticle 28, section XVIII of the MITL Miscellaneous rule 3.3.1.27

Pro-rata expenses paid to foreign parties/service providers are deductible from a Mexican tax standpoint only if the information specified in the Miscellaneous rule 3.3.1.27 is provided. As such, and in general terms, taxpayers must have evidence, as well as information demonstrating that the services (i) were actually rendered, (ii) provided a benefit to the Mexican taxpayer, (iii) were not duplicative services, and (iv) the amount for the consideration was at arm’s length.

Legal ReferenceArticle 179 of the MITL

No specific guidance is contained in the MITL as of the date of this update, but through the reference to the TPG in the MITL, the financial transactions guidance is applicable. Nonetheless, Article 179, section I, a) of the MITL includes guidance related to comparability in financial transactions between related parties.

Legal ReferenceArticle 28, sections XXVII and XXXII of the MITL

In line with BEPS Action 4, Mexico has implemented measures that limit interest deductions that exceed 30% of EBITDA, with no changes to this percentage foreseeable in the coming years, applicable only to taxpayers with interest expenses exceeding MXN $20,000,000.00 in a given fiscal year. Additionally, Mexico has thin capitalization rules in order to limit interest deductions.

Legal ReferenceRegarding corporations and for income tax purposes, article 76 (sections IX, X, and XII) of the MITL Article 76-A of the MITL Miscellaneous rules 3.9.7. to 3.9.13.

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (selected)
• Other (specify): (not selected)

Legal ReferenceArticle 76 (section X) of the MITL Article 76-A of the MITL Miscellaneous rules 3.9.7. to 3.9.13.

The documents associated with the three-tiered approach of TP documentation (i.e. Master file, Local File and CbC Report) must be filed by Taxpayers. Local file must be filed in Spanish by May 15th of the succeeding required year; whereas Master file and CbC Report must be filed by December 31st of the succeeding required year, and the contents of these documents are in line with BEPS Action 13 Report/TPG Chapter V. Furthermore, according to Miscellaneous Rule 3.9.15., the Master File can be submitted in English. Specific TP informative return must be filed in conjunction with the annual tax return or statutory tax report as of March 31st of the succeeding required year.

Legal ReferenceFederal Fiscal Code, Articles 32-D, 76, 81 (sections XVII and XL), 82 (sections XVII and XXXVII), 83 (section XV), 84 (section XIII)

Article 32-D (IV) - The public sector will not contract with taxpayers that failed to submit a tax return. This section is applicable to Article 76-A of the MITL. Article 76 - Penalty on omitted tax whenever it is unveiled by the tax authority: 55% or 75% of the omitted amount. The penalty of 30% or 40% applied to the exceeding amount reported as a fiscal loss over the real losses. Articles 81-XVII and 82-XVII - Whenever the taxpayer fails to inform about its transactions performed with related parties as set forth in Article 76 of Income Tax Law, a penalty of MXN 99,590 to MXN 199,190 is imposed. Articles 81-XL and 82 XXXVII - Whenever the taxpayer fails to submit the related parties informative returns as set forth in Article 76-A of Income Tax Law, or such returns are inaccurate, a penalty of MXN 199,630 to MXN 284,220 is imposed. Articles 83-XV and 84-XIII - Whenever the taxpayer fails to identify transactions executed with related parties residing abroad and reports them accordingly to Article 76 of Income Tax Law in its accounting records, a penalty of MXN 2,260 to MXN 6,780 is imposed for each transaction. *Due to inflation effects, the amounts of the above penalties may change each year.

Legal ReferenceArticle 76 section IX, second paragraph of the MITL Article 76-A of the MITL and Federal Fiscal Code, Article 32-H Miscellaneous rule 3.9.2.

Taxpayers engaging in business activities whose income in the immediately preceding fiscal year did not exceed MXN 13,000,000 and taxpayers which income from the provision of professional services did not exceed MXN 3,000,000 shall not be bound to prepare transfer pricing documentation, except those taxpayers: ‒ That enter into transactions with entities in low tax jurisdictions; ‒ Taxpayers that are contract or assignation holders in terms of the Hydrocarbons Revenues Law. Taxpayers that do not meet the following requirements are not bound to prepare the Master File and Local file: ‒ Taxpayers that in the immediately preceding fiscal year reported in their annual return revenue equal to or exceeding MXN 1,062,919,860 (approximately USD 51,000,000. This amount is updated every year), ‒ Companies included in the Mexican optional tax regime for groups, ‒ State-owned companies, or Foreign resident legal entities with a permanent establishment in Mexico.

Legal ReferenceFederal Fiscal Code, Articles 34, 34-A, 69-C to 69-H Miscellaneous rules 2.1.32., 2.9.8. and 3.3.1.28. Mexico’s MAP Profile

Regarding Competent Authority procedures, further guidance can be found in Mexico’s MAP profile. Unilateral APAs may be valid regarding the fiscal year in which they are requested, the immediately preceding year, and for up to three fiscal years following that in which they are requested. BAPAs or Multilateral APAs may be valid for a longer period.

• Rulings (selected)
• Enhanced engagement or cooperative compliance programmes (not selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• International Compliance Assurance Programme (ICAP) (not selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): (selected)

As Mexico has a direct reference to the OECD TPG in the domestic tax provisions, it is foreseen to provide details on the application of the simplified and streamlined approach for baseline marketing and distribution activities in temporary regulations. The process of implementation, and introduction of the approach in secondary regulations is still ongoing at this point, but are intended to be issued in the second half of 2025.

• In-scope tested parties resident within the jurisdiction can elect to apply the simplified and streamlined approach (i.e. safe harbour) (not selected)
• In-scope tested parties resident within the jurisdiction are required to follow the simplified and streamlined approach for in-scope qualified transactions and tax administrations are allowed to impose the application of the simplified and streamlined approach to in-scope qualified transactions of tested parties resident within their jurisdiction (i.e. rule) (not selected)
• N/A (selected)

• 20% (not selected)
• 30% (not selected)
• Other (please specify) (not selected)
• N/A (selected)

Legal ReferenceArticle 182 of the MITL

The use of safe harbor rules is limited to a targeted industry (i.e. Maquiladora). The safe harbor mechanism consists in determining the tax profit base as the maximum value that results from applying 6.9% on the total value of the assets and 6.5% on the total amount of costs and expenses.

This administrative procedure is only allowed under the existing context of mutual agreement procedures.

Legal ReferenceFederal Fiscal Code, Article 31-A Miscellaneous rules 3.9.1.1 to 3.9.1.5

Periodical adjustments (i.e., during the year), as well as year-end adjustments, are allowed when registered in the accounts before the end of the fiscal year to make sure that tax and accounting figures are consistent, and compliant with miscellaneous rules in Section 3.9.1. Adjustments have to be reflected in Form 76 (Relevant Transactions), which is required through Article 31-A of the Federal Fiscal Code.

Legal ReferenceMiscellaneous rule 3.9.1.1., Section V.

A secondary adjustment is the adjustment that results from the application of a contribution, in accordance with the applicable tax legislation, after having determined a transfer pricing adjustment to a transaction, which is generally characterized as a presumed dividend. An adjustment is considered a secondary adjustment when applying the provisions contained in articles 11, section II, 140, sections III and VI and 164, section I of the MITL.

The majority of our tax treaties include either a clause following the United Nations Model approach or an anti-abuse clause in paragraph 1 (see Mexico’s reservation under paragraph 93 of the Commentary to Article 7) or some other variations otherwise departing from the version of Article 7 of the OECD MTC as it reads before 2010. Following Mexico’s reservations to Article 7 (see paragraph 96 of the Commentary to Article 7) in none of our 60 treaties does Mexico follow the version as it reads after 2010.

• Article 7 as it read before 2010. (selected)
• Article 7 as it reads after 2010. (not selected)
• Other (please provide additional details): (selected)

Profits attributable to the PE are the profits it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. This approach applies to the whole treaty network.

Legal ReferenceArticles 2, 3, 11, 16, 17, 18, 26 and 180 of the MITL

The MITL establishes dispositions associated with (i) the attribution of income (i.e. through the business activity of the permanent establishment) and (ii) the determination of gross income and authorized deductions for both legal entities and individuals in the context of permanent establishments.

Amount B regulations are intended to be issued in the second half of 2025.