Executive answer
An intercompany transaction is not substantiated solely by an agreement, invoice and transfer pricing report. The file reconstructs what was requested, who acted, what occurred, what Mexico received, which need or benefit it addressed, how the charge was calculated, how it was booked and how it was paid. Each layer answers a different question.
Criterion 44/ISR/PI in Annex 3 of the 2026 RMF reflects the tax authority’s administrative position on deductions where effective service performance is not substantiated. It is not a statute and does not replace Income Tax Law requirements. Evidence should follow the facts rather than be presented as a checklist guaranteeing deductibility.
Research and verification cutoff: August 2, 2026. Conclusions depend on the transaction, period, evidence and applicable framework.
Five evidence layers
First, legal existence: parties, rights and obligations. Second, execution: people, time, activity and deliverable. Third, benefit or need: why the entity received value. Fourth, price: base, key, markup and arm’s length result. Fifth, recording: CFDI invoice, accounting, payment, withholding and filings.
One layer does not replace another. Market price does not prove performance; a deliverable does not prove allocation; payment does not prove benefit.
From inventory to file
Build the universe from ledger, CFDI invoices, payments, agreements and counterparties. Classify services, reimbursements, royalties, goods, loans and adjustments instead of grouping “corporate charges.”
Assign a file and owner to each category. Reconcile with the report and filings before selecting samples.
Request and need
Show who requested or approved the service, the problem, scope, period and expected outcome. Budgets, tickets, email, orders and minutes may support it.
Recurring services can follow an annual agreement, but the current need still requires support. A global contract does not prove that Mexico needed every activity.
Provider and people
Identify entity, team, roles, location, time and capacity. Link people and costs to services. Third-party invoices do not automatically prove that the parent served Mexico.
Separate dual roles. Shareholder administration differs from an activity an independent recipient would buy.
Executed activity
Describe concrete tasks by period using reports, tickets, calendars, presentations, files, logs, deliveries and communications. Generic function lists do not prove volume or execution.
Metadata, authors and recipients help. Preserve originals. A later presentation may explain but does not replace contemporaneous evidence.
Recipient and use
Identify Mexican people or processes receiving and using the result. Sending a file to a global list does not prove useful receipt. Interviews and later decisions can link use.
The recipient confirms scope and outcome rather than offering a generic statement. Compare with systems and deliverables.
Expected benefit
Ask whether an independent would pay or perform the activity. Benefit can be revenue, savings, compliance, mitigation or capability. It need not create immediate profit, but should be reasonable.
Use before-and-after evidence where possible. Explain qualitative benefit through indicators and decisions rather than “synergies.”
Duplication
Compare with local functions, other providers and charges. Similar work is not always duplicate; it may be temporary, complementary or a control. Explain the difference.
Exclude or justify duplication. The matrix identifies provider, activity, recipient, period and outcome.
Shareholder activity
Separate costs solely tied to share ownership, group governance or parent obligations from services to Mexico. Analyze the activity, not the department name.
A global board function may contain distinct components. Segment shareholder reporting from local operating advice.
Reimbursements and pass-through
Prove expense, third party, benefit, value added and allocation. Reconcile original invoice and distribution. Not every third-party cost passes through without markup.
Coordination, negotiation or risk may constitute a service. Characterization determines price and evidence.
Cost base
Define included and excluded accounts, direct, indirect and overhead amounts. Reconcile provider accounting and remove duplicate, shareholder, penalty and unrelated costs. Document period and currency.
Account labels do not decide. Sample items and bridge cost to charge.
Allocation keys
The key should relate to expected benefit: headcount, users, revenue, transactions, assets or another metric. Explain source, date, exceptions and alternatives.
Convenience is not reliability. Revisit changes in service or structure and do not target a desired charge retrospectively.
Request a Materiality Defense Pack to build evidence from service request through payment and reconciliation.
Markup and price
Determine value-adding functions and method. Cost methods may suit routine services; unique contributions require more. Avoid one markup for unlike services.
Retain benchmark search, comparables and period. Arm’s length pricing follows existence and benefit; it does not substitute them.
Agreements
Describe service, parties, obligations, price, base, key, term, delivery, ownership and termination. Update quantitative schedules.
Compare conduct. A retroactive agreement cannot create historical performance. Document past facts and fix future processes.
Invoice and CFDI
The description should identify nature and period and connect agreement and calculation. Reconcile currency, tax and date. Generic descriptions need stronger schedules.
The CFDI is relevant documentation but does not alone prove performance. Retain calculation and receipt evidence.
Accounting and payment
Connect journal, account, cost center, invoice, payment and bank record. Explain offsets, netting, balances and currency. Compare counterparty recording.
Late payment or permanent balances may raise financing questions. Assess terms and conduct.
Withholding, VAT and filings
Review nature, residence, treaty, withholding, VAT and information reporting as applicable. The contract label does not decide treatment. Reconcile filings.
An income-tax correction may affect other taxes. The file demonstrates integrated review without asserting a universal result.
Sampling
Define population, value, criterion, size, months, providers and exceptions before selection. Include adverse and high-value items and show coverage.
One good example does not prove the population. Segment and increase coverage where quality differs. Do not extrapolate without basis.
Service matrix
Columns include service, need, request, provider, people, activity, deliverable, recipient, benefit, duplication, base, key, markup, invoice, journal, payment, tax and risk. Link sources.
Traffic-light status applies by assertion. Green means reconciled evidence at cutoff, not guaranteed deduction.
Digital evidence
Logs, tickets, access, repositories and calls can evidence activity with context. Preserve extraction, user, time zone and system. Do not provide mass data without explanation.
Protect personal data and trade secrets under law. Security requires governance rather than lost evidence.
Interviews and confirmations
Ask about specific requests, decisions and use and request documents. Do not coach uniform answers. Investigate differences.
Annual confirmations supplement, not replace, evidence. The signer should know the facts and describe scope.
Criterion 44/ISR/PI
Present it as an administrative criterion in Annex 3 of the 2026 RMF. Do not call it a statutory article, legislative reform or judicial precedent. It identifies deduction without proof of effective service performance as an improper practice.
The file begins with law and facts. The criterion helps identify the authority’s position, but creates neither a closed evidence list nor an automatic conclusion.
Audit response
For an official request, select evidence based on the act with legal review. Do not automatically deliver the repository. Prepare an index, narrative and bridges.
Retain the submitted package and acknowledgement. Assertions should align with reports, agreements and accounting.
Prospective remediation
Change requests, tickets, agreements, keys, invoicing or archiving for future periods. Preserve prior reality and assess options. Never fabricate historical deliverables.
Assign owner, date and closure evidence and retest with a fresh sample.
Governance and monthly controls
Shared-services, tax, legal and finance owners should review new service categories, missing evidence, cost-base changes and key exceptions every month. The meeting records decisions and assigns actions before invoices are issued. A quarterly review tests a fresh sample and reconciles cumulative charges.
The service owner confirms operational need; finance confirms amounts; tax confirms characterization and price; legal checks agreement and rights. Separation of responsibilities prevents one team from approving its own unsupported charge. Material exceptions reach the CFO with amount, evidence gap, option and deadline.
Root-cause classification
Classify a gap as design, performance, documentation, data, pricing, invoicing or payment. A missing ticket calls for a different response from a service that never occurred. The action plan should solve the cause rather than add documents indiscriminately.
After remediation, verify changed conduct. A new template is not closure unless teams use it and evidence is produced during the next cycle. Preserve the test and residual risk.
Materiality is not amount alone
A small charge can be qualitatively important because of nature, counterparty, recurrence, deduction or missing evidence. A large charge is not proved by more pages but by coverage and consistency. Management thresholds may prioritize work but should not be described as a legal exception.
The matrix considers amount, risk, frequency, complexity and dependency. Extraordinary or sensitive transactions may require full review; routine populations can use designed sampling. Record why effort is proportionate.
Negative assertions and alternatives
Document what did not occur as well: no duplication, no equivalent local team, no shareholder activity or no markup on a pass-through. Those assertions need population, comparison or policy rather than a declaration alone.
Where the ideal source is unavailable, identify independent alternatives such as outcomes, access records, third parties, decisions or correspondence. State limitations. Several imperfect but coherent sources may be stronger than one later generic confirmation.
Automated services and platforms
For SaaS, cloud, licenses and platforms, connect users, access, consumption, functionality, territory, support and invoicing. Distinguish use rights, services, royalties and reimbursement from facts. A log proves access but not need or price alone.
Review inactive, duplicate and shared accounts. Users or consumption can support allocation where they reflect benefit, with catalog and period controls.
Provider and recipient evidence
The provider proves resources, activity and cost; the recipient proves request, receipt and use. The file is stronger when both perspectives align. Bridge differences in dates, names or scope.
Do not rely on the provider alone, which may describe a global service without knowing Mexico. The local owner confirms facts and retains evidence in the deducting entity.
CFO package
Executive reporting shows charges by category, evidence coverage, base, key, markup, tax, exceptions and actions. It separates existence, benefit, price and recording risks. One aggregate readiness score hides weaknesses.
The CFO approves new categories, material changes and open risks. Approval does not replace proof but demonstrates governance and resources before close.
Illustrative example
Mexico pays IT support, human resources and strategy charges. The file separates categories, excludes shareholder work, links tickets and users, reconciles costs, applies different keys and proves invoices and payments. One category lacks sufficient evidence, remains a risk and is remediated prospectively.
Warning signs
Warnings include agreement and invoice as sole proof, generic presentations, unidentified people, benefits without recipients, duplicates, mixed shareholder costs, unreconciled bases, target-driven keys, inconsistent CFDI invoices and unmatched payments. Calling 44/ISR/PI law is another.
These signs concentrate risk, but every transaction requires factual analysis.
Conclusion
Materiality is demonstrated through a coherent chain of request, execution, receipt, benefit, pricing, recording and payment. No single document covers the transaction.
An in-year file improves deductibility, transfer pricing and response capability without relying on later reconstruction.
Request a Materiality Defense Pack to assess each service and build an evidence and reconciliation matrix.
Verified official sources
- Mexican Chamber of Deputies, current Income Tax Law, applicable deduction and related-party requirements.
- SAT, Annex 3 of the 2026 RMF, administrative criterion 44/ISR/PI.
- Mexican Chamber of Deputies, current Federal Tax Code, applicable accounting, invoice and verification provisions.
- OECD, Transfer Pricing Guidelines 2022.
Verification closed on August 2, 2026. 44/ISR/PI is an administrative criterion, not an autonomous statutory provision.