Mexican and United States Transfer Pricing Developments

Tax attorneys James Dawson, Joshua Odintz, Alan Granwell, Mario Barrera and Catalina Mandujano hosted a webinar focusing on important transfer pricing developments in Mexico and the United States.

Transfer pricing remains a leading contentious issue between taxpayers and their governments. An Advance Pricing Agreement (APA) is an important alternative dispute resolution mechanism for resolving transfer pricing issues. In 2022, Mexico accounted for 5 percent of all bilateral APA applications filed with the Advance Pricing Mutual Agreement Program in the United States. In view of the foregoing statistic, Mexico and U.S. taxpayers need to be aware of the recent Interim Guidance issued by the U.S. Internal Revenue Service (IRS) on the Review and Acceptance of Advance Pricing Agreement Submissions. This guidance now will require IRS personnel who review APA requests to apply new selectivity criteria to determine whether an APA request should be accepted, which reflects a marked change in past IRS practices dealing with the acceptance of APA requests.

This webinar addressed a number of issues relating to the application of the Mexico-U.S. Income Tax Treaty to transfer pricing matters.

Topics included:

• The Interim Guidance: Why it was issued | What it provides | How to navigate it
• How do external and in-house advisors in Mexico view the Interim Guidance?
• Going forward, is a unilateral or a bilateral APA preferable?
• Mexican treaty issues:
• How to comply with the Mutual Agreement Procedure's notification provision
• An update on the renewal of Competent Authority Agreements on maquiladoras
• The Mexican Judiciary's views on the scope of business profits and its application to APAs and Competent Authority procedures under the treaty