Tax Articles

January 12, 2014

The Importance of Designating Successor Trust Beneficiaries in Real Estate Management Trusts

By Marimar Perez-Cacheaux and Ramón Concha

There exist many trusts in Mexico that were created in order for foreigners to acquire and own real estate in the restricted zone (a strip of 50 kilometers – approximately 31 miles – along the coast, or 100 kilometers – approximately 62 miles – from the border). In any of these situations, a foreigner contracts a Mexican bank (the “Trustee”), so that real estate is transferred to the trust and the foreigner, in his/her capacity as trust beneficiary, has the right to use and enjoy the real property. If the trust was duly structured and formalized, the foreigner, as trust beneficiary, shall designate successor trust beneficiaries, meaning that he/she will name the person or persons who will replace him or … read more

June 21, 2013

Legal Entities May File the Notice of Suspension of Activities before the Mexican Tax Administration Service

On June 6, 2013 a new case decision was published in the Judicial Weekly of the Federation (May 2013 – Page 1742) regarding the interpretation of Article 27 of the Mexican Federal Tax Code and Article 25 of its Regulations, which allow legal entities to file a notice of suspension of activities before the Mexican Tax Administration Service (Servicio de Administración Tributaria, SAT), thus ending a pattern which, until such date, had been approved by the tax authority. The title of this case decision is “NOTICE OF SUSPENSION OF ACTIVITIES. SUCH MAY BE FILED BY INDIVIDUALS AND LEGAL ENTITIES (INTERPRETATION IN ACCORDANCE WITH ARTICLE 26, SECTION IV, PARAGRAPH A) OF THE REGULATIONS TO THE MEXICAN FEDERAL TAX CODE, issued by … read more

May 10, 2013

PRACTIQUE LEGAL – The General Applicability (Erga Omnes) of Certain Case Decisions Issued by Mexican Federal Courts as a Result of Mexico’s New Amparo Law (Ley de Amparo).

By Rene Cacheaux

Mexico’s new Amparo Law (Ley de Amparo) was published and entered into force during the month of April, 2013, establishing new legal concepts such as the general application of some case decisions issued by federal courts in which such courts decide to reaffirm the unconstitutionality of a law or generally observed legal provision. Such case decisions reaffirming the unconstitutionality of a law are defined as “General Declarations of Unconstitutionality.. The effect of general application, or erga omnes, of certain decisions issued by Supreme Courts of other countries has proven to be a powerful and useful tool in controlling attempted lawmaking activities by judicial authorities to review and interpret the application of laws and other general dispositions. Unfortunately, two important limitations … read more

February 10, 2013

PRACTIQUE LEGAL – Tax Amnesty Law for Unpaid Taxes in Mexico, The “Get Current” Program

By Rene Cacheaux

Mexico’s annual Federal Fiscal Revenue Law (Ley de Ingresos de la Federación) and Federal Expense Budget (Presupuesto de Egresos de la Federación), by their nature, are the instruments that determine the guidelines for fiscal revenue (taxes that can be collected each fiscal year) and public spending. Nevertheless, in recent years, the Federal Fiscal Revenue Law has included other concepts and aspects, such as the tax regime applicable to Petróleos Mexicanos (PEMEX), rates applicable to surcharges for late tax payments and preferential tax treatment regimes. For fiscal year 2013, the Federal Fiscal Revenue Law includes a tax amnesty program for certain unpaid tax amounts that may or may not be pending resolution in administrative proceedings before Mexican tax authorities, including those … read more

January 10, 2013

Option for not Filing Tax Report

It is important to keep in mind that, in accordance with the Federal Tax Code, taxpayers required to file financial statements through an authorized public accountant that have accumulated income greater than MX$40,000,000.00 for the prior fiscal year or with a value of assets or number of employees in excess of the quantities referenced by such Code and who are choosing not to file such tax report, must give notice of their intent to exercise this option using the normal income tax return corresponding to the respective fiscal year. This option must be exercised within the term established by the legal provisions for the filing of the normal income tax return for the fiscal year (no later than March 31). … read more

October 8, 2011

Extension of Tax Benefits granted to the Maquiladora Industry

On October 12, 2011, the Mexican Department of Finance and Public Credit published the Decree, in the Official Journal of the Federation, by which the tax subsidies granted to the maquiladora industry are extended until December 31, 2013. Such tax subsidies were the result of the Decree granting various tax benefits with respect to income tax and the single rate business tax published on November 5, 2007. The tax incentive granted to the maquiladora industry is in the form of a tax credit applied against the final accumulated single rate business (IETU) tax due by the taxpayer for the fiscal year. This tax incentive was originally in place from 2008 through 2011, but the new Decree extends the tax benefits … read more

January 4, 2011

Exemptions to Requirements to Audit Financial Statements

Companies required to audit their financial statements through an authorized public accountant should keep in mind that, in conformity with the new provisions established in Article 32-A, Section I of the Federal Fiscal Code (Código Fiscal de la Federación) in certain circumstances taxpayers are now allowed to opt out of the obligation of having audited financial records. Certain taxpayers may elect not to have their financial statements audited, so long as they make such election on their annual Mexican Income Tax (ISR) return for the fiscal year such election applies. The option must be exercised within the time period established in Mexican law for filing annual ISR returns. In addition, taxpayers electing not to have their financial statements audited are … read more

July 17, 2010

Administrative Improvements in the Simplification of Tax Returns

On June 30, 2010, the decree that creates administrative improvements in the simplification of federal tax returns was published. The highlights of such decree, effective as of July 1, 2010, are the following: 1.Taxpayers to whom the single rate business tax (IETU) applies may file, in the month that follows the end of the fiscal year, the information used as basis to determine such tax for such fiscal year, instead of filing such information on a monthly or annual basis; 2. In terms of the valued added tax (IVA), taxpayers who must include information with regards to IVA in their income tax (ISR) returns, and to file information as to the payment, withholding, credit and transfer of IVA with regards … read more

November 12, 2009

2010 Tax Reform

On October 31, 2009 Mexico’s Federal Congress approved the Revenue (Ley de Ingresos) for 2010 with a clear purpose of increasing government revenue. The so called “Fiscal Package” amends the Single Rate Business Tax (IETU) Law, the Fiscal Code of the Federation, the Income Tax Law, the Value Added Tax Law, the Cash Deposits Tax Law, the Federal Law of Fees and the Special Production and Services Tax (IEPS) Law. Important points to keep in mind are as follows: I. Single Rate Business Tax (IETU) Law. Credits and Deductions. In 2010 the possibility of crediting in the same tax year amounts derived from an excess in deductions for purposes of the IETU Law against income tax of the taxpayer has … read more

October 12, 2009

Recent Case Decision – Effect of an Amparo Judgment on Tax Rules

Mexico’s Supreme Court of Justice published recently case decision number 2a./J.93/2009, titled “Tax rule that grants benefits to certain taxpayers, excluding other taxpayers that are similarly situated from a legal standpoint. The effect of an amparo judgment ruling its invalidity is that it also benefits the plaintiff.” In this case precedent, Mexico’s Supreme Court of Justice held that constitutional protection of amparo proceedings aimed at challenging a tax rule that benefits certain taxpayers and excludes others similarly situated, and where there is a finding that there is a violation of equity principles in the challenged law, would extend the same benefits that such specific taxpayers enjoy under such challenged law to the plaintiff. This case decision is relevant because the unconstitutionality … read more