On October 14, 2016, the Mexican Tax service (SAT) announced that Mexican and US tax authorities had reached an agreement to give legal certainty to companies with subsidiaries in Mexico that conduct operations in the maquila sector. The agreement includes the methodology for a proper assessment of income tax. The Spanish languish announcement (unofficial translation below) stated:

In order to implement equitable tax processes and avoid double taxation, thus improving competition in the Mexican foreign trade, the Tax Administration Service (SAT) and the Internal Revenue Service of the United States of America (IRS, for its acronym English), reached a technical agreement on the methodology for resolution of transfer pricing, regarding the maquila operation.

With this, both authorities shall accept the results of the methodology for determining the income tax in the maquila industry operations carried out between subsidiaries of US companies in Mexico. With this it is planned to solve a significant portion of the more than 700 requests for confirmation of transfer pricing APAs (APAs) requested to date.

The agreed methodology builds on the relevant regulations on transfer pricing in both countries; It will be an option for processing and expeditious resolution of requests that only apply when companies express it through writing.

The SAT will notify taxpayers who qualify for this agreement with the IRS, through an announcement that, besides the procedure and all relevant specifications, will detail the considerations and steps to be taken to adhere to the terms of the agreement.

The agreement between the Mexican authorities and US represents the culmination of over two years of collaboration, which results in strengthening ties between the two governments on taxation of multinational companies and commitment to provide legal certainty to taxpayers.