First, before deciding whether to enter into negotiations for an APA, a maquiladora entity needs to consider the following:
- The information provided by the taxpayer as part of the APA negotiation will become part of the taxpayer’s record.
- Information required to be submitted is specified in recently enacted tax law (Miscelánea Fiscal 2014).
- The taxpayer’s information must be presented in a comprehensive manner at the outset of the APA negotiations, so that the tax authorities do not have to follow up with requests for additional information—thus, preventing delays in the APA negotiation process and ultimate resolution of the application.
In addition to the information specified in the 2014 tax law, it has been the experience of tax professionals in Mexico that certain other information will serve to move the APA negotiations forward, such as reports providing:
- Amounts (calculations) of maquila income for the past three years
- Amounts of tax incentives made available under the maquiladora decree for the past three years
Given this, taxpayers may want to review their transfer pricing study, any pertinent tax advice provided to them, and their financial statements, and to be prepared to explain any differences between the financial information used in the transfer pricing transfer pricing study and the tax advice provided.
When there are certain intercompany transactions involving the maquila operation, it may be appropriate to provide segmented information for each additional transaction as well as related-party information.
Another element to consider is the transfer pricing methodology that will be proposed to apply under the APA. As such, the taxpayer will want to verify and fully document certain information used in establishing its transfer pricing methodology—e.g., the set of comparable companies selected, etc.
Read a July 2014 report (Spanish) prepared by the KPMG member firm in Mexico: Proceso de negociación de un acuerdo anticipado de precios (APA)
Contact a tax professional with KPMG's Global Transfer Pricing Services.