On July 2013, the Organization for Economic Co-operation and Development (“OECD”) issued a plan consisting of 15 Actions to fight tax base erosion and profit shifting by multinational enterprises known as “BEPS”. Action 13 of the plan consists on performing a new transfer pricing documentation analysis, while Action 15 suggests implementing a multilateral agreement by means of which BEPS combat strategies can be applied.
In compliance with Action 15, on November 24th 2016 the OECD presented a multilateral instrument to implement measures on tax treaties in order to fight BEPS. The text aims to establish measures to neutralize hybrid mismatch arrangements and prevent the artificial avoidance of a permanent establishment status. This instrument was negotiated between more than 100 countries and will bring changes on more than 2000 tax treaties around the world. The signing ceremony will take place on June 2017.
Furthermore, on December 5th 2016, in compliance with Action 13, the OECD published a guide for the implementation of the “Country-by-country report” on transfer pricing matters, which recommends tax authorities to grant multinational enterprises reasonable deadlines to file such reports.
It is worth mentioning that, despite such recommendation, in Mexico the obligation of filing the “Country-by-country report” is already established in article 76-A of the Mexican Income Tax Law.
The lawyers of the tax area of this Firm will be pleased to answer any doubt on the scope and effects of all this implemented measures with respect to the companies’ operations.
Mexico City, on December 6th, 2016.