MEXICO Law and Practice Contributed by: Jesús Aldrin Rojas, Miguel Ángel García Piña and Esteban Ollervides Toribio, QCG Transfer Pricing
under which a foreign resident may be deemed to have a permanent establishment in Mexico. Once a permanent establishment is recognised, profits must be attributed under the arm’s length framework described above. No specific safe harbour rules apply to the allocation of profits to permanent establishments in Mexico. The attribution of profits is determined on a case by case basis following a functional analysis. 10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing Mexican government officials, both during and after their tenure, have participated in the development of the United Nations Practical Manual on Transfer Pric - ing and have also served as members of the Commit - tee of Experts. However, the Income Tax Law directly references the OECD Transfer Pricing Guidelines and does not mention the United Nations Manual. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours In Mexico, safe harbour rules in the context of transfer pricing apply exclusively to maquiladora companies. These rules allow for the determination of a minimum taxable profit by applying the higher of the following percentages: • 6.5% of the total amount of costs and expenses incurred in the maquiladora operation; or • 6.9% of the total value of the assets used in the maquiladora operation, including machinery, equip - ment, and inventories provided by the foreign par - ent company. This mechanism is established under Article 182 of the Income Tax Law and aims to prevent the foreign entity from being considered as having a permanent establishment in Mexico.
Starting from the 2025 fiscal year, maquiladora com - panies are required to mandatorily apply the safe har - bour method in order to comply with transfer pricing regulations. The option to obtain Advance Pricing Agreements has been eliminated, with 2024 being the last year in which APAs for maquiladora companies were accepted. Additionally, the 2026 Miscellaneous Tax Resolution (RMF) establishes specific rules applicable to maqui - ladora companies, including the following. • Related income – up to 10% of total revenue may be derived from activities related to the maquilado - ra operation, such as administrative services or the sale of scrap, provided that these activities are properly segmented in the accounting records. • Documentation requirements – it is essential to have formalised contracts with a certain date, transfer pricing studies, and accounting records to support intercompany transactions. It is important to note that, at present, no other safe harbour rules in Mexico apply to low value added services or provide exceptions to penalty regimes for transactions deemed immaterial. As a result, maqui - ladora companies must ensure strict compliance with tax provisions and maintain robust documentation to support their operations. 11.2 Rules on Savings Arising From Operating in the Jurisdiction The SAT (Mexican Tax Administration) updated sev - eral non-binding criteria to reinforce its position on the economic substance of intercompany transactions. The following are among the most notable. • Criterion 4/ISR/PI concerns royalties for intangible assets originating in Mexico and paid to related parties residing abroad. It requires proof of the effective creation and exploitation of the intangible within national territory. • Criterion 33/ISR/NV addresses the recognition of unique and valuable contributions and requires Specific rules are not currently considered. 11.3 Unique Transfer Pricing Rules or Practices
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