Jorge Octavio Oropeza Tena
Transfer Pricing Partner, Kreston BSG Mexico

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Jorge is a Transfer Pricing Partner at Kreston BSG. He has more than 15 years of experience in transfer pricing, valuation of companies, brands and patents. He is a member of the College of Economists as the head of the consulting vow where he has given different presentations to the members. He is also a Mexican-German Chamber of Commerce and Industry CAMEXA member. Has published several articles on issues focused on transfer pricing and economics in the main specialised magazines in the sector. He has been a speaker in forums of important universities such as UDLAP, IBERO, and Anahuac. He is also an economist who graduated from the Faculty of Economics of the Universidad Nacional Autónoma de México (UNAM) specialising in the Production Sector.

Transfer Pricing in the Mexican Hydrocarbons Revenue Law

November 30, 2023

The Mexican Hydrocarbons Revenue Law (LISH) has introduced significant provisions for Transfer Pricing in the wake of the Energy Reform. This article aims to elucidate the implications for companies involved in hydrocarbon exploration, drilling, and extraction, particularly in light of the increased private investment in this sector.

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Understanding the dual scrutiny of Transfer Pricing compliance

Under the LISH, companies in the hydrocarbon sector face compliance scrutiny from both the Tax Administration System (SAT) and the National Hydrocarbons Commission (CNH). These entities oversee TP obligations through various articles in the LISH, placing a dual layer of regulatory oversight on companies in this field.

The evolution of Hydrocarbon exploration in Mexico

Post-Energy Reform, the hydrocarbon exploration landscape in Mexico has transformed. This section delves into the historical context, detailing how the opening up of the sector to private investment has led to significant changes in exploration activities, especially in the Gulf of Mexico.

The role of CNH and SENER in the post-reform era

Exploring the responsibilities and powers of the CNH and the Ministry of Energy (SENER) in the new regulatory environment. This includes overseeing exploration contracts, managing technical aspects, and ensuring compliance with Transfer Pricing provisions in the The Mexican Hydrocarbons Revenue Law.

Key Transfer Pricing provisions in the Hydrocarbons Revenue Law

A critical examination of the specific articles in the LISH that govern Transfer Pricing. This includes the application of the Comparable Uncontrolled Price Method (CUP) and other relevant methods for pricing, investment evaluations, and transactions with related parties.

Comparative analysis of the Mexican Hydrocarbons Revenue Lawand in Transfer Pricing application

An insightful comparison between the Mexican Hydrocarbons Revenue Law and the Income Tax Law (LISR) concerning Transfer Pricing, focusing on the application of the CUP method, the functional analysis required for its application, and the scenarios where alternative Transfer Pricing methods may be necessary.

Final thoughts on Transfer Pricing compliance in the Hydrocarbon Sector

Concluding with expert insights on the challenges and necessities of TP documentation in the hydrocarbon sector. Emphasizing the importance of robust functional analysis and the need for a comprehensive approach to TP method selection.

To speak to a Kreston Global Transfer Pricing expert in Mexico, please visit the Kreston Mexico website.