Country-by-Country (CBC) reporting is a crucial component of international taxation transparency, aimed at providing tax authorities with valuable insights into the global operations of multinational enterprises (MNEs). In Mexico, the presentation and compliance with CBC reports play a pivotal role in ensuring transparency and fairness in the taxation of companies operating within the country. In this article, we will explore how CBC reporting is structured in Mexico and outline the essential information that companies must know to comply with the country’s regulations.

CBC reporting is part of a broader initiative under Action 13 of the Base Erosion and Profit Shifting (BEPS) project developed by the Organisation for Economic Co-operation and Development (OECD). The goal is to prevent the erosion of tax bases and the shifting of profits to low-tax jurisdictions by multinational corporations.

In Mexico, the legal framework for CBC reporting is established through the tax provisions outlined in the Income Tax Law, particularly Article 76-A. The country adheres to the international standards set by the OECD, which require large multinational groups to provide comprehensive information about their global activities, financial performance, and tax contributions.

Key Components of CBC Reporting in Mexico:

1. Applicability and Thresholds:
   • CBC reporting is mandatory for MNEs with consolidated group revenue exceeding specified thresholds. In Mexico, entities meeting the criteria are required to file CBC reports.
2. Reporting Entities:
   • The ultimate parent entity of the MNE group is responsible for filing the CBC report. However, subsidiaries or entities within the group may also have reporting obligations in certain circumstances.
3. Information to be Reported:
   • CBC reports must include a wealth of information, such as the global allocation of income, taxes paid, and other essential economic indicators. This information enables tax authorities to assess transfer pricing risks and ensure fair taxation.
4. Filing Deadline:
   • The deadline for submitting CBC reports in Mexico is generally within 12 months from the end of the fiscal year. Timely compliance is crucial to avoid penalties and maintain good standing with tax authorities.
5. Confidentiality and Exchange of Information:
   • While the information provided in CBC reports is confidential, it may be exchanged between tax authorities of different jurisdictions. Mexico has established mechanisms for the exchange of CBC reports with other countries to enhance global transparency.
6. Penalties for Non-Compliance:
   • Non-compliance with CBC reporting requirements may result in significant penalties. It is essential for companies to understand and meet their obligations to avoid legal consequences.

Practical Steps for Compliance:

1. Identify Reporting Entities:
   • Determine which entities within the MNE group meet the criteria for filing CBC reports in Mexico.
2. Gather Relevant Information:
   • Collect and organize the necessary financial and operational data required for CBC reporting.
3. Assess Transfer Pricing Policies:
   • Review and ensure that the transfer pricing policies adopted by the MNE group align with international standards and comply with Mexican regulations.
4. Implement Robust Reporting Systems:
   • Develop or enhance internal systems to facilitate the preparation and submission of accurate and timely CBC reports.
5. Stay Informed:
   • Regularly monitor updates to tax regulations and guidelines to ensure ongoing compliance with evolving requirements.

Navigating CBC reporting in Mexico is a complex but essential task for multinational enterprises. Compliance with these regulations not only ensures adherence to international standards but also fosters transparency and accountability in the global business environment. By understanding the key components and taking proactive measures, companies can position themselves to meet their CBC reporting obligations in Mexico successfully.