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2 Wealth Consulting and Estate Planing
1 Financial Consulting
3 Integrated Taxes Consulting
4 Legal Consulting
5 Partners
6 Compensation Program
7 Transfer Pricing
8 Financial and Tax Audit

Definition

TRANSFER PRICES are the prices charged by an individual entity in a multi-entity corporation on transactions among the entities involved. A treaty between the international members of the OECD regulates these prices in order to avoid double taxation. Mexico became a member of the OECD in 1994, and therefore, the Mexican transfer pricing legislation enforces the guidelines of the OECD.

Objectives

  • To document reasonable prices for companies that transfer contributions (assets, tangible and intangible, services and funds) within the organization, in preparation for external financial or tax audits. .
  • To develop documentation on consultations with the authorities to determine the company’s transfer pricing policies.
  • To develop documentation of APAs (Advanced Price Agreements) in preparation for the formal authorization requests in order to avoid potential penalties.
  • The Auditing Norms and Procedures indicate that when there are operations that are subject to the Pricing Transfer regulations, the auditor should consult the corresponding studies.
  • If the studies do not exist, the report may contain an assertion to the effect that an opinion cannot be expressed.
  • The principle of Denial by Default (if Treasury doesn’t answer within a certain timeframe, it is assumed that the proposal is denied) is applied.
  • In the previous case, the taxpayer is able to take legal action and bring the case to trial.
  • The APAs (Advanced Price Agreements) are formal bilateral authorization processes of the respective tax authorities.
  • The objective is to obtain formal agreement of the tax authorities on the fixed Transfer Prices to avoid future problems.

 

Submittals

  • Conceptual Framework.
  • Business Environment (Strategy, Finances, Market, Macro Factors).
  • Description of the operations and transactions that are subject to Transfer Pricing regulations.
  • The calculation method(s) to be used.
  • The results of the analysis.
  • Conclusions and recommendations.

Processing Time

  • The elaboration of the Transfer Prices Studies will take between six and eight weeks.
  • Once the technical study is delivered to the client, at the request of the client, we can submit the Advanced Price Agreement (APA) application to the tax authorities.

 

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