Issue 150 - November-December 2020

December 15, 2020
The New U.S.-Mexico Relationship

300 Palabras

By Mario Melgar-Adalid

The arrival of Joe Biden to the White House will bring about changes in the U.S.-Mexico relationship. Although both countries will fundamentally remain the same, what will change is how the new U.S. administration will handle international relations, specifically the relationship with its neighbor south of the Rio Grande. For starters, talks on the border wall that was supposed to be built will be canceled and, generally, a more institutional and predictable relationship can be expected. For example, it is unlikely that Mexico will once again face threats of tariffs to reduce the burden of tens of thousands of immigrants, mostly Central Americans, but many Mexicans too, crossing the border and settling in the U.S. The reality is that those … read more

December 15, 2020

Political Thermometer

Amidst the background of the economic and health crises that continue to plague the world, the issue that continues to be a concern for Mexico is politics. Indeed, everything is gearing up for 2021 to be the year in which we will see high temperatures on the Mexican political thermometer. On Sunday, June 6, 2021, the largest election in the history of the country will be held. There will be elections in all 32 states of the Republic. There will be a new slate in the lower congressional Chamber of Deputies, with 300 members to be elected by a relative majority, and 200 to be elected by the proportional representation principle. The following fourteen states will have elections for governor: … read more

Economic Indicators

On December 15, 2020, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $20.1778 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 43,543.35 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.4745%

Considerations in Mexico Relating to Taxpayers Conducting Presumptively Non-Existent Transactions
By Esteban Gómez Aguado

Article 69-B of the Mexican Federal Tax Code sets forth a procedure to be followed by taxpayers who contract with suppliers of goods or services who, pursuant to public information published in the Official Journal of the Federation and on the Tax Administration Service website on a quarterly basis, are listed as companies that invoice simulated (non-existent) transactions (“EFOS” by its initials in Spanish). Compliance with the aforementioned procedure is important because if the veracity of a transaction is questioned and cannot be proven to have actually occurred, then the taxpayer’s tax receipts from the EFOS are considered null with no tax effect, meaning that the expenses may neither be deducted for income tax purposes nor creditable for value added … read more

Mexico Now Requires Disclosure of Aggressive Tax Planning Transactions
By Miriam Name and Esteban Gómez Aguado

The Mexican omnibus tax bill for 2020 was published in the Official Journal of the Federation on December 9, 2019. Among other changes, a new Section, “Regarding the Disclosure of Reportable Transactions,” was added to the Mexican Federal Tax Code (“CFF” for its acronym in Spanish), which sets forth a mandatory disclosure or reporting requirement for certain transactions including or involving tax planning structures (“Reportable Transaction”). Depending on the date of implementation of the tax planning transaction and other factors, the tax planning transactions must be disclosed or reported by either the tax advisor involved or the corresponding taxpayer. The primary objective of the new reporting requirement is to prevent transactions that involve aggressive tax planning. As a practical matter, … read more

Notice of Change in Owners or Shareholders of Companies Domiciled in Mexico to be Filed with Mexico’s Federal Taxpayers’ Registry (RFC)
By José Soto

Section VI of Part B of Article 27 of Mexico’s Federal Tax Code (Código Fiscal de la Federación) was recently amended to require entity taxpayers to file notice with the RFC stating the name and RFC number of their owners or shareholders each time the composition of the owners or shareholders of such entity is modified or changed. Rule 2.4.19 of the Miscellaneous Tax Resolutions for 2019/20 (RMF) stipulates that the notice must be filed using transmittal form 295/CFF and occur within 30 business days following the effective date of the change of the composition of owners or shareholders. Apart from the above notice, Transitory Article Forty-Sixth of the RMF establishes that entities and other business associations that have not … read more

Mexico’s Solar Industry Outlook: Notes Regarding the “Solar Asset Management Mexico” Conference
By Antonio Riojas y Elena Hernández

The third edition of “Solar Asset Management Mexico”, one of Mexico’s most important conferences on solar energy, was held during the month of October 2020. Due to the current pandemic, the conference was held virtually via a high-quality digital platform that brought together representatives from the entire Mexican electricity sector. Over the course of four days, more than 200 participants attended the presentations of more than 30 panelists, they had the opportunity to interact with each other, and they received a complete picture of Mexico’s current solar industry. The energy sector has not been impervious to the challenges posed by the pandemic.  A number of actions taken by Mexico’s current federal administration have also created an environment that has slowed … read more

Mexico Enacts New Federal Protection of Industrial Property Law
By Antonio Campero

Mexico’s new Federal Protection of Industrial Property Law (“LFPPI” for its initials in Spanish) was published in the Official Journal of the Federation on July 1, 2020 and entered into force on November 5, 2020.  The LFPPI repealed its predecessor statute, the Industrial Property Law (“LPI” for its initials in Spanish), and contains numerous changes as compared to the LPI. Below are the most relevant changes set forth in the LFPPI: The Mexican Industrial Property Institute (“IMPI” for its initials in Spanish) is granted the authority to impose fines, to determine the amounts of the fines it imposes for infringements in administrative proceedings, and to collect payment and any other corresponding amounts due. Likewise, it grants the IMPI the authority … read more

Foreign Employees – Return of Investments in AFORE Retirement Funds
By Adrián Salgado

On November 13, 2020, the Plenary Court on Labor Matters of the First Circuit issued a ruling in contradiction of ruling number PC.I.L. J/67 L (10a.) entitled: “Foreign employees. Such are entitled to the return of the accumulated funds in their individual Retirement Fund Administrator (AFORE) accounts, as well as contributions to the housing subaccount fund when they permanently return to their country of origin, and without being subject to the requirements otherwise set forth in the law.” In its ruling, the court held that the funds corresponding to the retirement subaccounts, advanced age and old age unemployment funds, as well as housing funds, must be paid to foreign employees who permanently return to reside in their country of origin, … read more