As we have been alerting, the Constitutionality of the new tax provisions, enacted as part of the Tax Reform of 2014 may be questionable in court. By clicking here, you may check our previous client alerts regarding this issue.

In that sense, the last chance to file an Amparo claim against the limitation on the deductibility of fringe benefits, provided by Article 28, Section XXX of the Income Tax Law ("ITL") is triggered by the filing of the Tax Return of Fiscal Year 2014.

Section XXX of Article 28 of the ITL, provides that the fringe benefits paid, that in turn represent exempt income for the employees, shall only be deductible up to 47%. Such deductible percentage may be of 53% only if the considerations paid to the employees do not decrease in comparison to the fringe benefits paid in the immediate previous fiscal year.

In this respect, the first opportunity to file an Amparo claim against the above mentioned ITL provisions, enacted as part of the Tax Reform of 2014, was triggered within the next 30 business days to the entry into force of such legal provisions. The second and last opportunity of filing an Amparo claim against the provisions mentioned above, was triggered upon the filing of the Tax Return of Fiscal Year 2014, which represents the first act of application and enforcement of such provisions; thus, the taxpayers shall have a term of 15 business days after the filing of the Tax Return of Fiscal Year 2014 to file an Amparo claim.

Maquiladora companies

It is our opinion  that the second and last opportunity, mentioned above, is also applicable for companies that currently have a Maquila Program.

In connection with the above, although the Presidential Decree that Grants Tax Incentives to the Manufacturing, Maquiladora and Exportation Services Industry ("Presidential Decree"), grants to the companies of said industry an additional deduction consistent in 47% of the fringe benefits paid, it is also important to note that the filing of the Tax Return of Fiscal Year 2014 constitutes an act of application and enforcement of Article 28, Section XXX of the ITL, which triggers the second and last opportunity to file an Amparo claim against the enforcement of the provisions at hand.

In connection with the above, it is important to note that there is no certainty of the term the Presidential Decree will be in full force and effect, thus, if the tax incentive granted by the Presidential Decree is repealed, companies will not have the possibility of filing the Amparo claim at hand, against the provisions mentioned above, given that it shall be deemed that the companies consented said provisions.

Moreover, in December 30, 2013, the Miscellaneous Tax Rules for 2014 were published in the Federal Official Gazzette, which provided the rule I.3.3.1.16, that establishes the procedure to determine if the fringe benefits paid decreased in comparison to the fringe benefits paid in the immediate previous year (which will determine if such fringe benefits will be deductible at 47 or 53%).

From a detailed analysis that we have made from the procedure mentioned in the above paragraph, it may be concluded that this procedure does not serve qualitative issues, but quantitative issues. Therefore, it is very likely that the vast majority of the taxpayers will not meet the requirements to apply the 53% of deductibility of fringe benefits, and will only be in possibility of deducting the 47% of the fringe benefits paid.

Due to the above, the maquiladora companies that do not meet the requirements to deduct the 53% of the fringe benefits at hand, will only have the possibility of deducting up to 94% of the fringe benefits. The above, considering that such companies meet the requirements to deduct  the additional 47% granted by the Presidential Decree for companies with a maquila operation for income tax purposes.

Therefore, we suggest to consider the possibility of filing the Amparo claim described herein, questioning  the Constitutionality of Section XXX, Article 28 of the ITL, in order for your Company to be in possibility of deducting the total amount of the fringe benefits paid, that in turn represent exempt income for the employees. Also, we suggest to analyze the alternative options that may be applied regarding the rule I.3.3.1.16, provided by the Miscellaneous Tax Rules of 2014.