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Maquiladoras Face Higher Tax Bills Under Transfer Pricing Switch

Sept. 10, 2021, 5:27 PM

Hundreds of Mexican maquiladoras are facing a significant tax base increase after the government proposed a ban on intercompany pricing deals known as advance pricing agreements.

Mexico’s Office for the Treasury and Public Credit has called for maquiladoras—factories located on the Mexican side of the U.S.-Mexico border that benefit from favorable tax treatment—to use a safe harbor approach for determining their taxable profits, rather than advance pricing agreements. The proposal was included in the 2022 budget legislation presented to Congress on Sept. 8.

Intercompany pricing, better known as transfer pricing, refers to the means by which multinational corporations value transactions ...

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