In an article for Bloomberg Tax, White & Case partner Kevin Spencer and local partner Elizabeth González Gasca discussed the Servicio de Administración Tributaria's (SAT) substantial increase in tax revenue from its transfer pricing audits.
The SAT is the revenue service of the Mexican federal government, which Kevin explained has been an early adopter of using technology in its transfer pricing audits. The article noted that the SAT had a 367% increase in its tax collections from 2019 to 2024 compared to the previous six years from transfer pricing audits, driven in part by its use of various audit techniques, including advanced technology.
Elizabeth also noted that Mexico has been ahead of the curve in terms of the digitization of business records and requiring companies to file electronic documents regularly with the tax authorities, saying that the tax authorities have "a lot of information in their hands and from a time ago, and now it's very likely that they will start to take advantage or to make a very strategic analysis of this information."
When discussing the SAT's strategy for 2025, Kevin said that Mexico is "not going to try to pass any new tax laws" to increase tax collection and instead will focus on "auditing and enforcement of their current tax laws." He added that the SAT's focus is primarily "on large taxpayers, multinationals… [in business] sectors like automobiles, pharma, alcohol, and also on … high-value transactions, cost service agreements, patents, IP trademarks."
In addition, Elizabeth touched on the impact of Mexico's judicial reform as judges are being elected rather than appointed, stating that the trend has been "to be more focused on alternative dispute resolutions rather than going up to court."
Read the full article here.
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