Transfer pricing documentation is a fiscal obligation requiring the determination and evaluation of prices or payment amounts for operations carried out between related people, companies, or entities in order to ensure their compliance with the Arm´s Length Principle (ALP). Currently, a large portion of international commerce is carried out between affiliated enterprises, making the applications of transfer pricing numerous.
Importance for Tax Authorities
Transfer pricing has acquired greater relevance due to the fact that a poor administration of intercompany operations can affect a nation’s tax revenue.
The effect on tax revenue is generally made via pricing, transferring wealth created in one country to another, potentially creating fiscal benefits. The same can happen with businesses located within one country, where the manipulation of prices for goods and/or services between related businesses can help the businesses lower their effective tax rate as a group.
How can Mazars Help?
- Identifying areas of opportunity. A transfer pricing study is a useful tool for decision-making In as much as it helps identify and take advantage of opportunities in administrative, financial, and fiscal areas
- Risk management (preparing a transfer pricing study). We assist our clients by preparing transfer pricing documentation, eliminating fiscal risks by ensuring compliance with the obligation to obtain and keep this documentation
- Policy implementation. An appropriate transfer pricing policy provides a complete panorama of the related businesses, creating an opportunity to increase the efficiency of intercompany operations with respect to the functions, assets, and risks that each related party holds, reducing costs and increasing benefits
- Insertion in global markets. Having a transfer pricing policy provides a competitive edge when entering international markets. It is an initial guide to compliance with fiscal obligations abroad.
- Global Core Documentation. If your business has related parties located in different countries, global core documentation can be a powerful tool that gives you a complete diagnostic of the ways in which intercompany operations are carried out abroad. In addition, our international transfer pricing team has the ability and the experience necessary to develop documentation in compliance with the legislation of any country where it is necessary
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Article 76-A of the Income Tax Law
Mexico, as a member of the Organization for Economic Cooperation and Development (OECD) as well as the Group of 20 of the most industrialized countries (G20) and other international organizations, is committed to participating and implementing in its legislation the international agreements reached regarding cooperation in the exchange of information and coordination of efforts in fiscal matters.