Mexico: Updated qualified maquiladora approach applies to APAs for 2020 to 2024

The tax administration (SAT) on July 23, 2024, published on its website updated income estimation mechanics for the years 2020 to 2024 for Mexican taxpayers operating under the maquiladora tax regime who before 2021 requested an advance pricing agreement (APA).

The mechanism (the “qualified maquiladora approach” or QMA), which has been used by the SAT for more than ten years for the resolution of unilateral APA processes, estimates the income attributable to the maquiladora for services rendered to a foreign subsidiary. The updated QMA maintains most of the calculation processes used in previous versions (e.g., the grouping into three industrial sectors, the use of pre-established profit percentages for each industry and for the intensity in the use of assets, and the incorporation of adjustments related to certain tax deductions in Mexico, such as interest payments and exchange loss, as well as balances of accounts receivable for maquila services with collection terms of more than 60 days). In addition, the QMA maintains the possibility of selecting an asset utilization percentage ranging from 80% to 100%.

Read a July 2024 report (Spanish) prepared by the KPMG member firm in Mexico