miércoles, 11 de enero de 2017

IRS announces position on unilateral APA applications by Mexican maquiladoras

The Internal Revenue Service on October 14 announced that US taxpayers with maquiladora operations in Mexico will not be exposed to double taxation if they enter into a unilateral advance pricing agreement (APA) with the Large Taxpayer Division of Mexico’s Servicio de Administración Tributaria (SAT) under an elective framework that has recently been agreed to by the US and Mexican competent authorities.
Maquiladoras typically operate in Mexico as contract manufacturers of foreign multinationals. In 1999, a set of safe harbors was introduced in a transfer pricing agreement between the United States and Mexico that established what both governments determined was an arm’s length result for a maquiladora operating in Mexico. Then, in 2014, the Mexican tax laws were reformed, and as part of that reform, maquiladora companies were essentially required to enter into a unilateral APA to receive income tax benefits. As a result, approximately 700 maquiladoras have requested unilateral APAs from the Mexican government, often in an effort to negotiate a profitability rate that is less than the rates included in the 1999 agreement.
The IRS’s announcement – IR-2016-133 – represents the culmination of two years of collaboration between the competent authorities to address the current inventory of pending APA applications. The two governments believe this is an important step forward in strengthening ties between the IRS and the SAT and in providing certainty in the taxation of multinationals.
The centerpiece of the new maquiladora framework is an election the SAT would extend to “qualifying taxpayers” with unilateral APA requests pending with the SAT. The SAT has indicated that the term “qualifying taxpayer” will exclude the following two types of companies: (i) large taxpayers (Mexican maquiladoras with annual revenues in excess of MXN 1,200 million or approximately $64 million); and (ii) maquiladoras with a principal company located in a country other than the United States. Those taxpayers will not be eligible for the new maquiladora framework.
Source & more info: PwC

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