On May 2, 2006, we reported that the Mexican Tax Administration Service ("SAT") issued a three-month suspension of taxpayer’s external auditor’s license to certify financial statements. In Mexico, taxpayers of a certain size are required to submit electronically certain financial and tax information to the SAT. An independent certified public accountant ("CPA") must include a declaration with this information regarding the tax compliance of its client. This includes transfer pricing and contemporaneous documentation which the CPA must retain in its files.
Before SAT can examine a taxpayer directly, it must request the documentation from the CPA. If such information is unavailable, an internal Committee is organized to determine if the CPA performed its job professionally. The recently issued suspension resulted from a review of the CPA’s work papers which revealed inadequate transfer pricing documentation.
For further information, please contact a member of the Corporate Practice Group.