On May 26, the Tax Administration Service (SAT, by its acronym in Spanish) issued a press release announcing the results obtained from the implementation of its audit strategies and the analysis of the collection carried out for large taxpayers, for the periods from 2013 to 2018; and 2019 to 2024.
According to the SAT, the tax collection amounts stand out:
- Period 2013-2018: MXN 28,966 millions
- Period 2019-2024: MXN 106,117 millions
- The increase in collection from one period to the next was 367%
The data is consistent and supports the message shared by the Mexican government since taking office: "A tax reform is not necessary at this time." In this regard, Mexican government also stated that if additional reforms are needed, they will be worked on over the next year, as there are still many opportunities for collection without the need for a deep tax reform.
Let's remember that at the beginning of the year, the SAT published the Master Plan 2025, with which this authority aims to reach its tax collection target for this fiscal year, which is MXN 5.3 trillion.
The Master Plan highlights the focus on programming and auditing, targeting the following sectors:
- Automotive
- Alcoholic beverages and cigarettes
- Construction
- Electronics
- Pharmaceutical
- Hydrocarbons
- Hospitality and lodging
- Metallurgical
- Digital platforms
- Insurance and financial services
- Private health services
- Private education services
It should be noted that the increase in audit processes has focused on large taxpayers, which are mainly comprised of companies that are part of Multinational Groups. In Mexico, there are 16,131 large taxpayers, representing approximately 52% of the collection.
In this context, it is important for multinational group companies monitor compliance with the transfer pricing (TP) rules applicable to them when conducting transactions between related parties, domestic or foreign, especially in view of the increase in audits.
As mentioned in the Master Plan 2025 issued by the SAT, the statement highlights the continued use of technological tools to monitor and ensure compliance with tax obligations and the detection of irregularities, amongst others:
- Analytical techniques to monitor and detect irregularities in tax and employer obligations, as well as in the marketing and distribution of fuels
- Statistical learning models to identify irregular behaviors
- Identification and monitoring of atypical refund requests for Value Added Tax, Special Tax on Production and Services, and Income Tax
Considerations
Based on the above, it is important for the management of companies belonging to multinational groups to assess their circumstances and risks regarding transfer pricing for periods that are open to potential tax review. They should consider the various legal means available to establish multilateral advance pricing agreements, to be prepared for possible scenarios of an audit by the mexican tax authority.
Finally, for multinational companies undergoing a tax review process regarding transfer pricing, it is essential to explore options for accessing mutual agreement mechanisms incorporated in treaties to avoid double taxation.
