On July 22, 2024
The Tax Administration Service (hereinafter “SAT”) updated its website regarding the “Resolutions for Companies Providing Maquila Services” (hereinafter the “Website”), pursuant to the renewal of the Qualified Maquiladora Approach agreement (“QMA”) by the SAT and the Internal Revenue Service of the United States of America (hereinafter “IRS”).
RENEWAL DETAILS
The Website contemplates a tab called “Qualified Maquila Approach” (QMA), which has the following purposes:
(I) Avoidance of double taxation for U.S. taxpayers with maquila operations in Mexico; and
(II) Ensure the correct taxation of maquiladora companies in Mexico.
Such purposes will be achieved by obtaining a unilateral Advance Pricing Agreement (hereinafter “APA”) with the General Administration of Large Taxpayers of the SAT, pursuant with the terms previously established between the competent authorities of both countries.
In this regard, the renewal of the agreement regarding the QMA maintains fundamental elements to the 2019 version, such as the transfer pricing framework, as well as the importance of the levels of accounts receivable pending by the maquiladora companies at when assessing the maquila income.
In order for maquiladora companies to obtain an APA resolution for the period 2020 through 2024 under the QMA, the following requirements must be met:
(I) Maquiladora companies must have applied for, obtained and correctly implemented an APA resolution for the 2019 or prior fiscal years under the applicable QMA;
(II) Alternatively, maquiladora companies that have correctly applied the provisions of article 182, first paragraph of the Income Tax Law, which refers to the “Safe Harbor” rules; and
(III) The 2019 or earlier APA resolution shall not be in dispute by any means of defense.
If the prior APA resolution has been disputed, the prior APA resolution shall have been waived and properly implemented or, alternatively, the Safe Harbor rules shall have been properly implemented.
CONCLUSIONS
The following are some key points to be considered regarding how to proceed before the renewal of the agreement related to the QMA:
(I) In case of not having obtained the resolutions regarding the years 2018 and 2019, to file with the tax authorities in order to expedite the process of issuance of such resolutions, and thus initiate the process of the resolution corresponding to the period 2020 through 2024; and
(II) Based on the updated QMA, update the financial information of the maquiladora company in order to evaluate possible tax impacts resulting from the agreed methodology.
In light of the above, in Bravo Abogados we would be happy to answer any questions you may have regarding this legal alert.
Jair Bravo Gutiérrez
Socio Administrador / Managing Partner
jbravo@j-bravo.com
Sebastián González Fuentes
Asociado / Associate
sgonzalez@j-bravo.com
Ana Paula Cantú Chapa
Asociado / Associate
acantu@j-bravo.com
52-81-24748538
www.j-bravo.com
Blvd. Antonio L. Rodríguez 3000, Colonia Santa María, 5to piso, Interior 501 Torre Albia, C.P. 64650 Mty, N.L., México T.
