MEXICO Law and Practice Contributed by: Jesús Aldrin Rojas, Miguel Ángel García Piña and Esteban Ollervides Toribio, QCG Transfer Pricing
7.8 Retroactive Effect for APAs By definition, the Mexican APA rule extends the pro - tection of the agreement to one year prior to the peri - od for which the APA is granted. Procedurally, there are no differences between unilateral and bilateral APAs, except for the involvement of counterparty tax authorities, which can extend the negotiation period of the APA. 8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences Under the current regulatory framework in Mexico, non-compliance with transfer pricing obligations may result in specific penalties, tax adjustments, and other relevant ancillary consequences. Below is a structured analysis of these implications, together with their cor - responding legal foundations. Specific Penalties in the Context of Transfer Pricing The Federal Tax Code establishes various penalties related to the failure to comply with obligations arising from transactions between related parties. Article 69-B bis This provision of the CFF establishes a presumption of the improper transfer of the right to offset tax losses, which may have significant implications in a transfer pricing context. Transfer pricing implications The presumption of an improper transfer of tax losses may directly affect transactions between related par - ties, particularly in cases where: • corporate restructurings, mergers, or spin-offs result in the transfer of tax losses to entities that did not generate those losses; and • deductions derived from transactions with related parties represent more than 50 percent of the tax - payer’s total deductions and increase significantly compared to the prior fiscal year. Article 76 of the CFF Article 76 of the Federal Tax Code (not to be con - fused with Article 76 of the Income Tax Law (LISR),
which governs informational reporting obligations for related-party transactions) establishes the following penalties. This article has the following effects: • where the tax authorities determine omitted tax contributions, a fine ranging from 55% to 75% of the omitted tax may be imposed; and • if a taxpayer reports a tax loss greater than the one actually incurred, a penalty ranging from 30% to 40% of the undue difference applies. Articles 81, Section XVII and 82, Section XVII of the CFF Failure to report information on related-party trans - actions, as required under Article 76 of the LISR, may result in a fine ranging from MXN112,770 to MXN225,500. Note: Penalty amounts are updated annually through the Miscellaneous Tax Resolution. The amounts indi - cated above correspond to the most recently pub - lished update and should be verified against the Miscellaneous Tax Resolution in force at the time of application. Articles 81, Section XL and 82, Section XXXVII of the CFF Failure to submit, or the submission of inaccurate, annual informational returns relating to related-party transactions, as required under Article 76-A of the LISR, is subject to a fine ranging from MXN226,000 to MXN321,770. Articles 83, Section XV and 84, Section XIII of the CFF Where a taxpayer fails to identify transactions with related parties resident abroad in its accounting records and does not report them as required under Article 76 of the LISR, a fine ranging from MXN2,560 to MXN7,680 will be imposed for each unreported transaction. Article 32-D, Section IV of the CFF As an additional measure, public entities are prohibited from entering into contracts with taxpayers that have
153 CHAMBERS.COM
Powered by FlippingBook