On January 27, 2016, 31 Countries1 (among them Mexico) signed the Multilateral Competent Authority Agreement for automatic exchange of Country-by-Country reports (the “Agreement”) to be received from their taxpayers as part of the implementation of Action 13 of the Base Erosion and Profit Shifting Action Plan issued by the Organisation for Economic Co-operation and Development.
The Agreement aims to tackle the tax elusion and unlawful profit shifting through the tax transparency on transfer pricing, so that tax authorities know how multinational enterprises (MNE) are structured, how they do business and how they pay taxes in each jurisdiction.
In case of Mexico, as of 2016 it was enacted a new section76-A to the Income Tax Law, which obliges Mexican MNE’s to annually file a country-by-country report, in addition to the master and local reports that must all MNE’s doing business in Mexico must file.
To this date, the tax authority has not published the relevant forms; however, taking into account the scope of such new obligations, we consider that there are sound legal arguments for challenging through an amparo action, this obligation of filing the reports. The lawsuit must be filed no later than February 16, 2016.
The lawyers of the tax area of this Firm will be pleased to answer any doubt on the scope and effects of the Agreement with respect to the companies’ operations.
Mexico City, February 15th, 2016.