Deadlines and obligations For the 2020 tax period, the formal obligations in terms of transfer prices to be submitted in 2021 consist of the following:
| Transfer Prices Study | ||
| Subject | Legal Basis | Deadline for Compliance |
| Individuals Taxpayers carrying out business activities whose income in the immediate previous financial year exceeded $13,000,000.00, as well as taxpayers whose income derived from the provision of professional services had exceeded $3,000,000.00; excepting taxpayers who have transactions with companies or entities subject to Preferred Tax Regimes (REFIPRE). | Proven documents of transactions with related parties (Transfer Price Study) Income Tax Law Title IV of Individuals Art. 110 fraction XI. | Along with the annual return for the financial year at the latest on April 30, 2021. |
| July 15, 2021 for individuals choosing the option of dictum taxation. (SIPRED) | ||
| Legal entities Taxpayers carrying out business activities whose income in the immediate previous financial year exceeded $13,000,000.00, as well as taxpayers whose income derived from the provision of professional services had exceeded $3,000,000.00; excepting taxpayers who have transactions with companies or entities subject to Preferred Tax Regimes (REFIPRE). | Supporting documentation operations carried out with related parties, domestic and foreign residents (Transfer Price Study) LISR Art. 76 fractions IX and XII | Along with the annual return for the financial year at the latest on March 31, 2021. |
| March 31, 2021 For Legal entities forced to submit ISSIF | ||
| July 15, 2021 for individuals choosing the option of dictum taxation. (SIPRED) | ||
| DIM Annex 9 | ||
| Subject | Legal Basis | Deadline for Compliance |
| Individuals Taxpayers who carried out transactions with related parties residing abroad. | Informative Statement of Operations with Related Parties Abroad (DIM Annex 9) Income Tax Law Art. 110 fraction X | Along with the annual return for the financial year at the latest on April 30, 2021. |
| Legal entities Taxpayers who carried out transactions with related parties residing abroad. | Informative Statement of Operations with Related Parties Abroad (DIM Annex 9) Income Tax Law Art. 76 fraction X. | Along with the annual return for the financial year at the latest on March 31, 2021. |
| March 31, 2021 For Legal entities forced to submit ISSIF | ||
| July 15, 2021 for individuals choosing the option of dictum taxation. (SIPRED) | ||
| Annual Informative Statements | |||
| Annual Informative Statements | Subject | Legal Basis | Deadline for Compliance |
| Master File | Legal entity with accumulative Income over $815,009,360.00 | Income Tax Act Art. 76-A fraction I. | At the latest on December 31, 2021 |
| Local File | Legal entity with accumulative Income over $815,009,360.00 | Income Tax Act Art. 76-A fraction II | At the latest on December 31, 2021. |
| Country by Country Informative Statement (CbC Report) | Legal entity who is the controlling entity of a multinational group or who is the entity designated as responsible of providing this statement by the controller of the group, as well as all taxpayers who generated consolidated accounting income equivalent or over twelve billion pesos. | Income Tax Act Art. 76-A fraction III. | At the latest on December 31, 2021. |
COVID-19 impact
The new circumstances created by COVID-19 have had an impact on transfer prices, the strict measures that are being implemented in almost every country in the world are essential to contain the advance of the virus but are pushing our economies towards unprecedented uncertainty. Within the possible effects of this situation, we have: low in the consumers´ demand, supply chain interruptions, increase on risk aversion caused by the lack of trust by the consumer and companies, increases in extraordinary expenses, as well as price changes in products caused by exchange rate volatility. Considering the mentioned above, local companies that are part of multinational groups may face the risks of reductions in their profitability levels, in the operating income of multinational companies and in the cash flows of subsidiaries. Of course, these situations would have a direct impact on transfer prices and how entities of the same group make transactions with each other.
What should companies do?
- Document and collect evidence.
- Review contracts and their transfer prices policy.
- Consistency globally at group level.
- Monitor the OECD guide.
- Review financing and credit conditions.
- Review the exchange rate.
Relevant Miscellaneous Rules
Transfer Price Adjustments It is considered Transfer price adjustment, any change to prices, amounts of considerations or profit margins for transactions held by the taxpayer with its related parties, made to consider that the accumulative income or authorized deductions derived from such transactions were determined considering the prices or amounts of considerations that would have been used with or between independent parties in comparable transactions , even when no delivery of cash or other material resources is made between the parties. Basis: Rule 3.9.1.1.RMF 2020 Taxpayers who do not issue their financial statements June 30. Taxpayers who do not issue their financial statements for tax purposes may submit the information corresponding to the tax year concerned referred to in those transactions, contained in Annex 9 of the DIM at the latest on June 30 of the immediate year following the end of the financial year concerned. Basis: Rule 3.9.4 RMF 2020 Taxpayers who choose or are forced to have a dictum on their financial statements July 15. Taxpayers who chose the option or who have the obligation referred to in Article 32-A of the CFF, may submit the information corresponding to the tax year concerned referred to in those transactions at the latest on the date in which they have to submit the dictum of financial statements. Background: Rule 3.9.3 and 2.13.2 RMF 2020 Reportable schemes Any plan, project, proposal, advice, instruction or external recommendation expressly or tacitly in order to materialize a series of legal acts, which generate, directly or indirectly, obtaining a tax benefit in Mexico and that has any of the features of Article 199 of the Federation Tax Code. The time lapse for submitting the informative return is within 30 days following the one in which the scheme is available for the taxpayer to implement it or when the first legal act forming part of the scheme is performed, what happens first. Basis: Rule 2.22.1 Authorized Donors Article 82 fraction VIII of the Income Tax Law establishes the obligation of legal entities with non-profit purposes, which mentions. Inform the tax authorities, in the terms established by Tax Administration Service (SAT) through general rules, of the transactions they hold with related parties and the services they receive or the goods they acquire, from people who have given them deductible donations under the terms of this Law. OECD Transfer Price Guides The OECD issues the guide on the transfer price implications derived from COVID-19.