Mexican Tax Reform Initiative for 2022

 

What are the most relevant aspects of the economic package presented in Congress?
 

On September 8^th, 2021, the Mexican president presented to the Mexican Congress the economic package for the year 2022, which includes measures related to the General Criteria of Economic Policy, the Initiative of the Mexican Revenue 

Law for 2022, including the Federal Expenditure Budget Project.; In addition, this economic package includes modifications to the Federal Tax Code (CFF), Income Tax Law (LISR), Value Added Tax Law (LIVA), and the Excise Duty (LIESPS).

The economic package does not propose the addition of new taxes or increases to the existing ones. Nevertheless, certain adjustments over the current provisions were proposed.

As part of these measures, the most relevant aspects of this economic package is summarized, it is important to mention that amendments may arise during the  discussion and approval by Mexican Congress, which will be informed on following communications.

 

Economic indicators

It is estimated that the Mexican gross domestic product (GDP) will growth between 3.6% and 4.6% for 2022, considering a punctual growth rate of4.1% and inflation is expected to reach 3.4% in the year.

The price of Mexican oil barrel is estimated to amount an average of USD 55.1 and in case of the Mexican Federal Treasury Certificates (CETES by its acronym in Spanish) it is expected that its weighted average yield of 28 days be from 5%.

Also, the Economic Package estimate that the annual average of the US dollar exchange rate will amount MXN $20.30 pesos.

 

Surcharges

The current surcharge rates will not be subject to modifications in cases of extension, as shown below:

 

Surcharges for	Monthly rate
Extension	0.98%
Partial payments up to 12 months	1.26%
Partial installments from 12 to 24 months	1.53%
Partialities greater than 24 months and deferred payment	1.82%

 

For such purposes, it is specified that the surcharge rates include the updating of contributions.         

 

Tax incentives

The tax incentives that is expected to be granted during 2022, will be  maintained as the ones included on the Mexican Federal Revenue   Law for 2021, which are  highlight as follows:

• The tax stimulus consisting of credit the Excise duty paid against the Income Tax (ISR) derived from for the acquisition of diesel for its final consumption, such as:
  
  
  • Acquisition of diesel used for the operation of machinery that related with taxpayers  business activities, as well as marine vehicles. This stimulus may apply for taxpayers total its annual income do not exceed  60 million pesos.
    
    
  • Acquisition of diesel used to carry out agricultural or forestry activities; optionally, a limited refund scheme may apply for these taxpayers.
    
    
  • Acquisition of diesel for automotive use in vehicles that are exclusively used for public and private transportation of persons or cargo; this stimulus is not applicable in the case of taxpayers that predominantly provide services to its related parties.
    
    
• Credit of 50% of the payments made in the national network of toll highways is allowed for taxpayers who are dedicated only to public or private land transportation of cargo or passage.
  
  
• Acquirers of fossil fuels, when these are not used for combustion, are allowed to credit the corresponding Excise Duty against the Income Tax for the year.

 

Income tax withholding by institutions that comprise the Mexican financial system

During the year 2022, it is proposed that the institutions that comprise the Mexican financial system will determine the tax that should be withhold to individuals considering an annual rate of 0.08% applicable on the amount of the principal that origin the payment of interest. Only as comparative data in 2021 the applicable rate is 0.97%, which represents a decrease of 21.25%.

It is important to keep in mind, that this withholding shall be filed and paid before Mexican Tax Authorities under an estimated Income Tax return, which means that when the individuals that  are obliged to file and paid its  annual tax return for the fiscal year 2020, will be required to include as part of its taxable income the amount of the real interest obtained (amount of the interest less an inflation adjustment) and over the Income Tax obtained they may credit the tax withheld.

Likewise, individuals who obtain income from real interests of less than MXN 100,000 pesos and those who are not obliged to file an annual tax return, the tax withheld to them shall be considered as a definitive tax.

 

INCOME TAX LAW

LEGAL ENTITIES

Members of the financial system

Mexican Tax Administration Service (SAT) is entitled to issue General Rules that are necessary for the correct identification of the members of the Mexican financial system.

 

Exchange rate differences

It is established that gains from exchange rate differences will be determined considering the exchange rate to settle obligations established by the Mexican Central Bank of Mexico (Banxico, by its acronym in Spanish) in the official gazette, on the date on which such gain is received, previously such reference was made only to losses.

 

Credit of the Income Tax paid abroad.

Under the calculation of the Mexican Corporate Income Tax and in order to give legal certainty, credits shall be prioritized in the following order ; starting with the monthly estimated tax  prepayments for the year and continuing with the income tax paid abroad, currently this mechanism is contained in a General Tax Rule.

 

Credits subject to the Mexican Back to back provision.

Under the Mexican back to back provisions it is proposed to include as part of its scope the secured loans the financing operations from which derive interests from Mexican taxpayers of foreign resident who are related parties, when they do not have a business reason, a situation that may be controversial.

 

Monthly estimated Income Tax payments

It is clarified that the authorization provided to decrease monthly estimated  income tax payments  refers to the decrease in the profit coefficient for the year and not to the amount of payments that derive from the payment mechanism.

If such authorization is given and monthly estimated  income tax payments lower than those that would have correspond to the original profit coefficient obtained; monthly supplementary tax return should be submitted with its corresponding surcharges. Previously, the entirety of the aforementioned surcharges was feasible to be made in the statement for the year.

 

Taxable Income.

It is proposed to consider as accrued income, the consolidation of the bare property and the usufruct of an asset. The bare owner will accrue the value of the usufruct right, which must be valued by a person authorized by the tax authorities.

For these purposes, public notaries, are obliged to report the dismemberment of the aforementioned property, within 30 days following the transaction takes place.

 

Property dismemberment

The methodology is established to determine the gain from the alienation of the usufruct or bare ownership of a good, subtracting from the price obtained, the original amount of the investment in proportion to the price of the transmitted attribute. Said proportion will be determined by dividing the price of the transmitted attribute by the total value of the good.

 

Business reorganization

The sale of shares at tax cost for restructuring will be authorized when taxpayers complies with certain requirements among others:

• An opinion by a registered public accountant is filed before SAT where the proven adjusted acquisition cost is indicated; book value of the shares to be authorized, organization chart of the group with percentages of participation in capital with direct and indirect shareholding of the Group before and after the restructuring; business segments and business lines of the issuing and acquiring entities and certification that both entities consolidate their financial statements.
  
  
• The relevant operations related to the restructuring in the 5 years prior to the request for authorization.
  
  
• If relevant operations are carried out after the restructuring within the following 5 years, the acquirer must report it.
  
  
• If the authority detects that the restructuring lacks of business reason or that requirements are not fulfilled, the authorization will be considered without effect, and the transferor must pay the corresponding tax updated for the sale of said shares at market value or in accordance with an appraisal performed by an authorized person.

 

Deductions

• It is proposed that the tax invoices (CFDI as per its acronym in Spanish) for the purchase of fuel contains the permission granted to the fuel supplier in terms of the Hydrocarbons Law, and it is verified that it is not suspended on the date of issuance of the CFDI.
  
  
• Technical assistance, technology transfer or royalties should be received by a supplier that have the technical elements to provide such and that this can be demonstrated to tax authorities, that is received directly and not through third parties, with the exception of the provision of services or execution of specialized works.
  
  
• In case of the loans higher than 30,000 Investment Units (UDIS by its acronym in Spanish), it is proposed that they be deductible until the taxpayer obtains a final resolution that shows that all the means of collection have been exhausted and that it was impossible to obtain favorable resolutions, if this reform is approved, it will not be enough for the taxpayer to suit the debtor before these instances to claim the deduction.
  
  

It is considered that there is a notorious practical impossibility of collection in the loan portfolio, among other aspects, in the event that the authorities perform powers of verification, the taxpayers can provide the same information provided in the primary database controlled by the credit companies.
 

Mexican thin capitalization rule.

It is proposed that when the option to consider the taxpayer’s tax attributes Capital Contribution Account and Net After Tax Profit Account (CUCA and CUFIN respectively as per its acronym in Spanish) is chosen, the amount of tax losses pending to be amortized be reduced. This option is not applicable if the result of considering the tax attributes is greater than 20% of the stockholders’ equity of the corresponding year. There seems to be an error in the drafting of the new provision, since if it remains as it is currently drafted, it shall make the option inapplicable.

Regarding the non-inclusion of debts related to infrastructure in strategic areas for the country or for the generation of electricity, it will only be applicable to those who are assignees or contractors, or holders of the permits established in the Electricity Industry Law or the repealed Law of the Public Electric Power Service.

The exception to apply the capitalization rules will not be applicable for unregulated multiple purpose financial companies (so called SOFOMES ENR) that carry out activities predominantly with their domestic or foreign related parties.

 

Investments

The concept of the original amount of the investment is modified in order to include concepts such as physical location, installation, assembly, handling, delivery and contracted services for the investment to work.

The obligation to present a notice is established to claim the deduction of those assets that are no longer useful to generate income.

The acquisition of the usufruct right over a property is included as a fixed asset.

Expenditures made for the acquisition of mining concession titles (exploitation rights) will be considered as a deferred expense.

 

Finance system

It is established as a requirement for the origin of the deduction of technical reserves of the insurance companies that these are constituted in accordance with the provisions issued by the National Insurance and Surety Commission.

The informative return related to cash deposits must be filed on a monthly basis, instead of annually.

 

Tax losses

In the case of spin-off of companies, tax losses can only be divided between the splitting and spin-off companies that are engaged in the same line of business in which they were suffered.

In the cases of company mergers, the cases in which a change of control is considered to exist are extended.

 

Transfer pricing

It is established that the obligation to obtain and keep the transfer pricing documentation also applies to operations with domestic related parties. It is also established that the functional analysis covers the related parties with whom the transactions are carried out.

Likewise, it confirms that the comparability elements are required to be documented for each transaction and for each related party, as well as the obligation to include as part of the supporting documentation the detail of the comparability adjustments that are applied and that the accounting records must identify the transactions with related parties not only foreign, but also domestic.

The obligation to file the informative return of operations with related parties is established no later than May 15 of the immediately subsequent year, and that it includes operations with related parties resident both abroad and in national territory.

The obligation to file the local return is established for May 15 of the immediately subsequent fiscal year instead of December 31.

It is specified that the determination of accrued income and authorized deductions must consider not only the prices but also the profit margins that independent companies would have used, being consistent with the transfer pricing methods established by Law.

It also establishes that the information of comparable companies must be that of the year under analysis and the use of information from two or more years will only be accepted if it is shown that the business cycle or commercial acceptance of a product cover several years.

In the case of maquiladoras, the option to request an advance transfer pricing resolution (APA) is eliminated, leaving only the option of “Safe Harbor”; it also establishes that compliance with the latter will be stated in the Informative Tax Return of Manufacturing companies, Maquiladoras and Export Services (DIEMSE as per its acronym in Spanish) no later than June of the immediately following year.

In the same way, the option for the shelter maquilas to request an advance resolution of transfer prices is eliminated, leaving the “Safe Harbor” as the only option.

 

Individuals

Personal deductions

Regarding the limit to the deductions amount, there are two relevant changes; the maximum amount to be considered may not exceed 5 times the value of the Unit of Measure and Update (UMA as per its acronym in Spanish), instead of annual minimum wages or the equivalent of 15% of income.

The most relevant change is to consider within the limitation deductions for donations made and voluntary contributions to retirement plans

 

Tax reform related to international provisions

General dispositions

 Treaty benefits

It is added as a requirement to be eligible for treaty benefits, having complied with the filing of the annual informative tax return on taxpayer situation or, file the statutory tax report when the taxpayer is obliged, This requirement is striking since the benefit would be applied in this case by the foreign resident and not by a Mexican taxpayer.

 

Income related with immovable property.

In the cases of income from acquisition of immovable property obtained by the foreign resident, which derives from the appraisal carried out by the tax authorities, the alienator Mexican resident or foreign with permanent establishment in Mexico, must withhold and pay the corresponding tax; otherwise, the taxpayer (foreign resident) will have that obligation.

 

Alienation of Shares or securities

To have access to the exemption of gains in the sale of shares listed in the stock market, the foreign resident of a country with which Mexico has in force a treaty to avoid double taxation, must provide, in addition to the letter stating under oath, the registration or tax identification number issued by the foreign competent authority. If this information is not provided the 10% withholding tax will be applicable.

In the case of corporate reorganizations subject to deferral, the sale value of the shares  will be determined according to market prices or the authority’s appraised value.

It is also understood that the shares remain outside the group when the company issuing the shares and the acquirer cease to consolidate their financial statements.

Authorizations will be without effect when the corresponding transactions, or those that preceded during a period of 5 year prior to the authorization , as well as those of the 5 years after the issuance of the authorization, have a lack of business reason or when exchange of shares due to the reorganization an income subject to a preferential tax regime was generated.

It is also added the possibility that Tax authorities are entitled to condition the validity of an authorization to the fulfillment of additional requirements to those established in the Law.

 

Interest

In order to apply the reduced rates of 10% and 4.9%, It is established as a requirement that the payment is not carry out in more than 5% to its related parties, previously this requirement only applied in the case of interest derived from bonds.

 

Other taxable income

The case is regulated when a judgment or arbitration process orders to make severance payments severance, without distinguishing if such payment corresponds to damages or losses, in this case, the foreign resident may request the refund of the tax withheld in excess, related to severance of damages, provided that is shown which part of the payment corresponds to compensation for damages and which part corresponds to compensation for losses.

 

Legal representative

As part of the requirements to be legal representative, it has been added the obligation to voluntarily assume joint and several liability, which will not exceed the contributions that the foreign resident must pay with the condition that such representative has enough assets to respond as jointly obligated.

 

Preferential Tax Regimes

To determine whether an income is subject to a preferential tax regime, as well as in the calculation for the payment of the respective Income Tax, if it has the obligation to do so under this Title, the annual adjustment for inflation should not be included, nor the exchange gain or loss derived from the fluctuation of the foreign currency, with respect to the Mexican peso.

 

Simplified Reliance Regime.

The initiative proposes the incorporation of a new tax regime which it calls the “Simplified Reliance Regime”, applicable to both legal entities with individual shareholders and individuals with income from business activities and the temporary use or enjoyment of assets, who meet certain requirements.

In the Explanatory Statement, is argued that the regime will be implemented to facilitate taxpayers voluntary compliance with their tax obligations and that it be carried out in a simplified way, making the most of technological tools, allowing citizens to contribute to public expenditure in a quick, practical and simple way.

The initiative states that there are 79.8 million active taxpayers at the end of the 2020 financial year, of which 12.5 million are individuals who carry out business activities belonging to the regimes that are similar in their way of paying taxes, of which 10.2 million taxpayers receive income less than MXN 3,500,000 pesos per year, which represents that 81.6% of said taxpayers will benefit from the new Simplified Reliance Regime.

In the case of legal entities, it is stated that there are 2.1 million taxpayers who are micro and small establishments that are subject to the same obligations as any other larger scale, which may involve significant administrative costs, this group being micro and small taxpayers who will benefit from the new Simplified Reliance Regime.

This regime is largely based on cash flow.

 

Simplified Reliance Regime for individuals.

For these purposes, it is proposed to create a new section in the Title of individuals, eliminating the Regime of Tax Incorporation, or RIF.

The main support element of the regime will be the CFDIs, since through the information contained in said document, an automation of tax calculations is foreseen.

To timely comply with tax obligations, the taxpayer must, among others: register or update their Federal Taxpayers Registry (RFC as its acronym in Spanish) , generate their advanced electronic signature, activate tax mailbox, issue CFDI’s for their income, etc.

The new regime will be optional and may be applied by individuals who only carry out business or professional activities or grant the use or temporary enjoyment of assets.

It is established as a requirement that the own income obtained by the individual in the immediately preceding fiscal year would not have exceeded MXN 3,500,000 pesos and for those taxpayers who start activities, they may apply it as long as they estimate that their income will not exceed said amount.

Taxpayers will be obliged to calculate and find out the Income Tax on a monthly basis no later than the 17th day of the immediately subsequent month after the one to which the payment corresponds, as well as submit an annual tax return in the month of April of the following year of which the return corresponds.

Tax calculations will be based on the income obtained, without considering costs and expenses as tax deductions.

The annual tax rates provided for by said regime will be applied progressively according to the level of income that the individual receives (cash flow basis) which goes from a minimum rate of 1% when they do not exceed MXN 300 thousand pesos and a 2.5% maximum rate for income of up to MXN 3.5 million pesos.

Legal entities that carry out operations with individuals that are within the Simplified Reliance Regime, must retain 1.25% of the amount of the payments made to them.

It is proposed that taxpayers who currently pay taxes under the Tax Incorporation Regime (RIF), automatically migrate to the Simplified Reliance Regime as of fiscal year 2022 or else join the “ordinary” regime of business and professional activities.

If approved, the Simplified Reliance Regime for individuals would enter into force on January 1, 2022, and through transitory provisions, facilities for application would be granted in terms of credits and deductions pending to apply from year 2021 and earlier.

 

Simplified Reliance Regime for Corporations.

It is proposed to add the regime for legal entities in the Income Tax Law as part of the Tax Incentives Title, which will be applicable to the following taxpayers:

• Legal entities resident in Mexico incorporated only with partners or shareholders who are individuals, and whose total income in the immediately preceding fiscal year does not exceed MXN 35 million pesos, or
  
• Legal entities resident in Mexico constituted only by individuals who start operations and who estimate that their total income will not exceed MXN 35 million pesos.

In the event that the taxpayer exceeds the referred amount of income in the corresponding fiscal year, it will cease to apply said regime and should pay taxes in the general regime of legal entities, as of the immediately following fiscal year and file no later than January 31 of said year the corresponding notice of updating of economic activities against the SAT.

In this new regime, the accrue of income and the deduction of expenditures would mostly occur until they are actually collected and paid, respectively, that is, on a cash flow basis.

In terms of deductions, it would be allowed to give tax effect to the acquisitions (purchases) of merchandise and raw materials, and the application of cost of sales provisions is eliminated.

Regarding investments, a deduction scheme is proposed through maximum authorized percentages higher than those provided for in the general regime and conditions that the total investments in the year do not exceed MXN 3 million pesos.

The monthly tax payments must be made no later than the 17th day of the immediately following month after the one to which the payment corresponds, and their calculation must be made on the basis of cash flow and apply the 30% tax rate of.

Regarding the calculation of the annual tax, the obligation to calculate is established following the same basis of the general legal entity regime, that is, considering cumulative income, authorized deductions, profit and tax result.

Derived from the addition of this regime, through transitory provisions it is established that taxpayers who are currently taxing in the optional chapter of income accumulation, also contained in the Title of Tax Incentives or in the General Regime for Legal Entities, must apply the provisions set forth in this new “Simplification Reliance Regime”, provided that they meet all the requirements and file the update notice no later than January 31, 2022.

 

Value added tax

Regarding  the value added tax, the modifications proposed by the Executive have as main purpose to provide legal security with minimal modifications to the procedure for determining the tax. The elimination of the references to the Tax Incorporation Regime (replaced by the Trust Reliance Regime), the modifications related to the non-subject activities and the tax credit, as well as the additions and details in the disposals subject to the rate of 0%.

 

Disposals subject to the 0% rate

As regards disposals taxed at the rate of 0%, it is proposed to incorporate menstrual health products into these.

It is expressly clarified that food products priced at 0% include both those intended for human and animal consumption. If this modification is approved, it will be a determining factor to resolve various controversies related to the applicability of the zero rate in animal feed.

 

Requirements for accreditation

Regarding the tax paid on imports, it is specified that the document that supports the accreditation will be the import motion and must be in the name of the taxpayer who intends to carry out the VAT accreditation.

Additionally, it is proposed to limit the crediting of the tax paid when the expenditures or investments from which the payment derives are related to acts or activities not subject to tax.

This objective is seeked  to be achieved by including non-target activities within the determination of the crediting factor. In the same way and to provide certainty regarding said modifications, the definition of “acts or activities not subject to the tax” is incorporated, which includes those carried out outside the national territory, as well as those other than disposals, provision of services, granting of the use or temporary enjoyment of goods and importation.

In particular, a similar initiative had been proposed by the Executive in the General Tax Rules of the 2019 economic package, however, it was discarded at the time by the Congress, in addition to certain legal precedents that have generated uncertainty. If this initiative progresses, it will be important to assess the impact on the crediting factor and cash flow of the organizations.

Regarding the pre-operational periods, it is established that the proportion of taxable acts determined by the taxpayer must also include the activities not subject to the tax, as well as the obligation to report the month in which the taxpayer begins their activities.

 

Obligations of digital service providers

Regarding the provision of digital services, the Executive does not propose changes related to its definition or the cases in which a foreigner who provides these services is obliged to pay the tax, nor does it propose modifications or the elimination of the sanction of disconnection to the internet.

However, only the wording of the articles related to the obligation of the quarterly informative return regarding the operations carried out with digital service recipients is modified, to establish it on a monthly basis, which is presented with the VAT return. This aspect was already clarified through General Tax Rules.

 

Granting of use or enjoyment of goods

Regarding the granting of the temporary use or enjoyment of tangible goods, it is proposed to establish that it will be considered as a VAT taxed activity regardless of where the material delivery of the good is made, when the good object of the operation is used in activities carried out in Mexico.

 

EXCISE Duty

Regarding the Excise Duty, the Executive proposes modifications of a mostly clarifying nature, highlighting new powers for the customs authorities, incorporation of definitions, elimination of references related to the Tax Incorporation Regime and updating of the applicable fuel quotas

 

Automotive fuels

It is proposed to grant the authorities of the faculty to apply the corresponding quotas to the fuels for which the payment of the IEPS has been partially or totally omitted. This must occur in the performance of its verification powers and the fees may not include any decrease.

In addition, the transitional provisions propose the updated quotas to be applied to automotive fuels by 2022:

 

Fuel	Quota (MXN per liter)
Gasoline less than or equal to 91 octanes	5.2887
Gasoline greater than or equal to 91 octanes	4.4660
Diesel	5.8123
Non-fossil fuels	4.4660

 

Alcoholic drinks

The definition of “electronic tag” and “final consumption establishment” are incorporated.

Likewise, it is intended to establish facilities for final consumption establishments related to the obligation to destroy the containers that had contained alcoholic beverages, in addition to the obligation to implement a QR code reading system so that the consumer can verify the labels by themselves.

As for the manufacturer, producers, packers or importers of denatured alcohol and un-crystallizable honeys, it establishes that for these it is not necessary to register in the “Register of Taxpayers of Alcoholic Beverages” as they are not obliged to incorporate labels and seals.

 

Security codes

Regarding the security codes in tobacco products (except for cigars and those made entirely by hand), it is proposed to eliminate the figure of the printing service provider to establish that the Tax Administration Service will be in charge of generating and provide them.

In the same way, there is an obligation to incorporate said codes in any presentation in which tobacco products are sold and not limit their application only to packs.

 

Federal Tax Code

Residents in national territory

It is proposed that the status of resident in Mexico is not lost if the change of residence is not proven, or when the change is to a country or territory where their income is subject to a preferential tax regime, in which case, the resident status in Mexico will be maintained for a period of five years (instead of the three years as is currently stated), homologous it to the period with which the tax authorities have to exercise their powers of verification.

In the case of change of residence to a territory where income is subject to a preferential tax regime, it is proposed that the term of five years is not applicable when said territory has a comprehensive information exchange agreement in force with Mexico; and there is a treaty in force that allows mutual administrative assistance in the notification  and collection of contributions.

 

Deadlines

It is proposed to establish the power of the tax authorities to suspend the terms provided for in the tax provisions (fulfillment of obligations and exercise of powers of verification), when there is a cause of force majeure or fortuitous event. Said suspension will be announced through general provisions.
 

Tax receipts in operations with the general public

It is proposed to eliminate the reference to simplified vouchers because operations carried out with the general public must be registered by taxpayers in a CFDI, using the generic Federal Taxpayers Registry.

 

Merger or spin-off

It is proposed to apply the rules and tax consequences corresponding to the alienation of assets on mergers or splits carried out, when in the exercise of verification powers the tax authority detects that said operations lack of business reason.

For this purpose, the relevant operations related to mergers or splits carried out in the five years immediately before and after their completion are specified, which the tax authority may take into consideration to determine if there was a valid business reason.

The financial statements to be used in cases of merger or division of companies, as well as those prepared as a result of these acts, must be audited

Likewise, it is proposed to clarify that, in the case of division of companies, the transfer that must be made is that of the share capital.

Due to the above, the shareholders of the spin-off company must maintain the same proportion in the share capital of the spin-offs that they previously had in the spin-off prior to the corporate act so that it is not considered as alienation.

 

Royalties

It is proposed to grant the tax treatment of royalties to taxable income as a result of the exploitation of the copyright inherent to the image itself, by including within the concept of the “use or concession of use of a copyright on a literary work, artistic or scientific ”to the right of image.

 

Advanced electronic signature

The authorization of advanced electronic signature or, where appropriate, the Digital Seal Certificates will be denied, when the tax authority detects that the legal entity requesting it has a partner or shareholder who is in an irregular situation without having corrected their tax situation.

 

Cancellation of Digital Seal Certificates (CSD)

It is proposed to establish that once the procedures to correct irregularities detected due to the cancellation of Digital Seal Certificates have been exhausted; non-existence of operations and; undue transmission of tax losses, without the taxpayer having distorted or corrected them, the authority will proceed to notify the resolution regarding the cancellation of the Certificate of Digital Stamps.

Likewise, in the case of taxpayers who have exhausted the procedures related to said irregularities, without having distorted them, they will only be able to obtain a new Certificate when they correct their tax situation.

 

Calculation of the deadline for the refund request.

Regarding the powers of verification exercised in the framework of a refund procedure, it is proposed to exclude from the computation of the period of forty days (in cases where there is a request for information and documentation by the authority) the period that elapses between the notification of the first requirement and the date on which the taxpayer carries out the contribution thereof in its entirety, either when attending the first or, where appropriate, the second requirement made by the authority.
 

Submission of return requests in electronic format.

All refund requests submitted by taxpayers will be required to be made in electronic format with advanced electronic signature. In such a way that the income limit previously contained within said provision is eliminated.

 

Compensation

The option is incorporated so that taxpayers who are subject to the exercise of verification powers can correct their tax situation by applying the amounts they are entitled to receive from the tax authorities, even when they are different contributions.

 

Modification regarding the application of tax incentives

Regarding the accreditation of tax incentives, it is clarified that the application of these may be made against the tax caused, or the tax paid by the taxpayers. Likewise, it is established that the five-year period for the application of said incentives must be computed from the last day of the fiscal year in which the right to apply the incentive was born, and not from the day on which the term for the presentation expires. of the corresponding annual declaration.

 

Joint responsibility

With regard to joint and several liability arising from the acquisition of negotiations, the assumptions are incorporated by means of which, unless proven otherwise, the existence of a negotiation acquisition may be considered up-to-date.

For its part, it is also proposed to extend joint and several liability to representatives of non-residents in the country, or of residents abroad, with respect to those who have been designated for compliance with tax provisions or for tax purposes, up to the amount of the corresponding contributions or benefits. Specifying, in addition, that the joint and several liability that is assumed voluntarily must be carried out through the means authorized by the tax authorities.

It is proposed to extend joint and several liability with respect to those legal entities that have not submitted the information regarding the transfer of shares carried out between residents abroad without permanent establishment in the country.

 

CFDI

Various obligations are established in the matter of CFDI which tend to a greater control of the operations of the taxpayers, being criticized that the SAT is empowered to establish requirements not contained in the Federal Tax Code.

 

Relevant operations

In the case of information relating to corporate reorganizations and restructurings, the information relating to mergers, spin-offs, as well as the sale of shares or securities must be included in the information.

 

Tax report

As of 2022, it will once again be mandatory to have a statutory report for tax purposes signed by a public accountant for those taxpayers who in the previous year had declared income greater than $876,171,996.50 , as well as companies that have shares placed among the general investing public and on the stock market.

A voluntary scheme is maintained for taxpayers who choose to have their financial statements issued, which they must state when submitting the tax return for the year for which said option is chosen.

The statutory tax report must be filed no later than May 15 of the year immediately after the end of the fiscal year in question and in the event that differences in taxes to be paid are determined, these must be found out by means of a supplementary tax return within 10 days after the presentation of the statutory tax report.

Therefore, it is proposed to reform other articles of different tax regulations in order to adjust the wording to contemplate the obligation to dictate the financial statements.

The sequential review of the tax opinion that is carried out with the registered public accountant (CPI), is subject to an order, first the information must be required from the CPI, later, the taxpayer and, finally, the related third parties.

In this regard, it is suggested to add as an exception to not observe the order of the sequential review, when reviewing the financial statements of big taxpayers and taxpayers who have shares placed among the general investing public in the stock market.

The CPI, when preparing the tax opinion, will have the obligation to inform the tax authority when it learns that the taxpayer has failed to comply with tax or customs regulations, or has committed conduct that may constitute a crime.

Likewise, if the CPI was aware that the taxpayer carried out a conduct that at the time could constitute the commission of a crime, without having informed the tax authority, it may be presumed to be responsible for cover-ups tax crimes.

 

Opinion on compliance with tax obligations.

Inclusion is proposed as a requirement to obtain a positive compliance opinion that complies with the obligations derived from social security.
 

Simulation of legal acts for tax purposes.

It is established that the tax authorities may determine the simulation of legal acts through verification powers, and the determination must contain the identification of the simulated and executed act, the quantification of the tax benefit and indicate the constituent elements and intention of the parties to simulate. the act.

 

Reduction of fines

It is proposed to add as a case of origin for the reduction of fines, when a dispute resolution procedure established in an agreement to avoid double taxation to which Mexico is a party has not been filed.

 

 

The Partners and lawyers of Symbiosis are more than willing to work together with you to support you in analysing the impact of this criterion on your company’s operations in Mexico, as well as in any regularization activity.

- Source: KPMG Cárdenas Dosal, S.C