© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. WMTA Breakfast meeting July 2012 Tax Bulletin Current News

2012 Maquila Transfer Pricing and Tax issues to consider

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 3 Tax Bulletin Current News Maquilas are required to calculate a minimum tax profit. For this purpose the MITL provides the following methods: I.-Transfer Pricing Study using a cost plus methodology -- Cost and expenses incurred in the maquila plus a % of mark-up (most common) -- Adding 1% of the net value of machinery and equipment property of the foreign resident II. Safe Harbor Applying the maximum profit derived from 6.9% of the total assets used on maquila operations or 6.5% on operative expenses. III. Advanced pricing agreement (APA) with tax authorities. - Transfer pricing study mark up is authorized by hacienda through a negotiation with them.

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 4 Tax Bulletin Current News Special issues in 2011 that could be applicable in 2012 a)Change from TP to safe harbor because exchange gain cover minimum profit b)Increase of A/R c)Exchange gain / Loss effect Non-realize profit IT, IETU and PTU 956 in USA d) A/P reimbursement of exchange/inflationary effects

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 5 Tax Bulletin Current News IETU benefit for 2012 and 2013 must comply with the following requirements: Filing the monthly and annual tax returns. Not owing any tax liability, final or not. Submitting in time the auditor’s report for Tax purposes or the optional information. Filing the DIOT monthly informative return Filing the DIEMSE informative return for Maquiladoras. Having an active taxpayer’s registry (RFC) That the information rendered to the tax authorities through the RFC is not fake or inexistent, and that notices of tax domicile changes, new branches or establishments are dully filed. Complying with IMMEX regulations, among other annex 24. Having supporting documentation of the customs operations. Complying with the requests of information or documentation by tax authorities, regarding the maquiladora operations in relation to its tax or customs obligations. That the name or tax domicile of the supplier, producer, addressee, or buyer, resident abroad, specified at the pedimento or invoice is not fake or inexistent.

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 6 Tax Bulletin Current News IETU benefit for 2012 and 2013 must comply with the following requirements: Failure to meet any of the tax obligation formalities may result in a suspension of the Importers Registry. Failure to meet any tax obligation and customs obligation may result not to be eligible for IETU tax reduction

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 7 Tax Bulletin Current News Shelters companies eligible for Income Tax and IETU benefit in 2012? Income Tax benefit (must be applicable Art 2 paragraph 8 MITL, Maquila PE issues) IETU benefit (must be applicable art 216-Bis MITL and Art 2 paragraph 8 MITL, Maquila PE issues) Federal Income Law (Art 21) During 2012, no PE to Shelter companies, if the foreign resident who provide M&E and Materials is not a related party of the Mexican company (Shelter) Shelter companies have a waiver of PE under Federal Income Law, so under this situation is not applicable Art. 2 paragraph 8 or 216-Bis of MITL)

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 8 Tax Bulletin Current News SAT Audits regarding TP Maquila studies a)Challenging comparable companies (update comparable) b)Challenging capital adjutments (A/R, A/P, M&E, Assets, etc) c)Non compliance of art 216-Bis no benefit on presidential decree of 2003 d)Non compliance of art 216-Bis no IETU benefit e)Mexican Market sales correct allocation of numbers for the Income Tax and IETU benefits

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 9 Tax Bulletin Current News

© 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. Deloitte se refiere a Deloitte Touche Tohmatsu Limited, sociedad privada de responsabilidad limitada en el Reino Unido, y a su red de firmas miembro, cada una de ellas como una entidad legal única e independiente. Conozca en la descripción detallada de la estructura legal de Deloitte Touche Tohmatsu Limited y sus firmas miembro. Deloitte presta servicios profesionales de auditoría, impuestos, consultoría y asesoría financiera, a clientes públicos y privados de diversas industrias. Con una red global de firmas miembro en más de 150 países, Deloitte brinda capacidades de clase mundial y servicio de alta calidad a sus clientes, aportando la experiencia necesaria para hacer frente a los retos más complejos de los negocios. Los aproximadamente 182,000 profesionales de la firma están comprometidos con la visión de ser el modelo de excelencia. Tal y como se usa en este documento, “Deloitte” significa Galaz, Yamazaki, Ruiz Urquiza, S.C., la cual tiene el derecho legal exclusivo de involucrarse en, y limita sus negocios a, la prestación de servicios de auditoría, consultoría fiscal, asesoría financiera y otros servicios profesionales en México, bajo el nombre de “Deloitte”. Esta publicación sólo contiene información general y ni Deloitte Touche Tohmatsu Limited, ni sus firmas miembro, ni ninguna de sus respectivas afiliadas (en conjunto la “Red Deloitte”), presta asesoría o servicios por medio de esta publicación. Antes de tomar cualquier decisión o medida que pueda afectar sus finanzas o negocio, debe consultar a un asesor profesional calificado. Ninguna entidad de la Red Deloitte, será responsable de pérdidas que pudiera sufrir cualquier persona o entidad que consulte esta publicación. Héctor Vega Tax Partner