On December 17, 2012, the “Decree to enact the Federal Revenue Law for the 2013 Tax-Year” was published in the Federal Official Gazette, with corrigenda published on December 24, 2012. This entails that, for the initial part of 2013, the current federal legal framework on tax matters will continue in effect with the limitations, additions and remarks detailed in this Bulletin.
For the 2013 tax-year, the effectiveness of the 29% corporate rate is deferred, to remain in 30%, which constitutes the maximum progressive rate applicable to individuals as well.
Likewise, the effectiveness of the amendment on calculations and withdrawal of income tax over interests, initially scheduled for 2011, is again deferred for the year 2014.
On the other hand, the benefit of the 4.9% income tax rate on interests received by foreign banks and financing entities with limited purpose that comply with the placement and deposits’ ratios set forth by the Tax Administration Service, registered before tax authorities and residing in a country with which Mexico has entered into an agreement to avoid double taxation, will continue for the year 2013.
The most relevant aspect of the provisions effective on this date is the partial or total cancellation of certain tax credits resulting from federal taxes administered by the Tax Administration Service, countervailing duties, inflationary updates and their accessories, as well as fines for infringement of federal tax obligations other than payment, subject to the guidelines contained in the Federal Revenue Law for the 2013 Fiscal Year that are mentioned below and which will be regulated by tax authorities.
FEDERAL REVENUE LAW FOR THE 2013 TAX YEAR
For the 2013 tax-year, it is estimated that the Federation shall collect revenue in the amount of $3 trillions, 956 billions, 361.6 million pesos. Said amount shall be obtained under the following items: a) “Federal Government Revenue”, in the amount of $2 trillions, 498 billions, 646.5 million pesos; b) “Revenue from institutions and companies”, in the amount of $1 trillion, 102 billions, 425.5 million pesos and c) “Revenue from financing”, estimated in the amount of $355 billions, 289.6 million pesos.
ADMINISTRATIVE FACILITIES AND TAX BENEFITS
- Surcharge rate
The surcharge rate for extension in payment of any tax credits for 2013 shall be 0.75% per month on any outstanding balance.
In case payment in installments is authorized according to the Federal Tax Code, the applicable rate, including update-restatement, shall be the following:
- 1% per month for installments up to 12 months;
- 1.25% per month for installments from 12 months and up to 24 months;
- 1.50% per month for installments above 24 months, as well as for payments with deferred term.
- Governmental charges
The Federal Executive is authorized to set any governmental charges to be collected in the 2013 tax-year for use, enjoyment, benefit or exploitation of assets of public dominion or for the provision of services in exercise of public law attributions for which governmental fees are not established or these are not paid for any legal cause.
Until the governmental charges for the 2013 tax-year have not been authorized, those effective as of December 31, 2012 shall be applied, multiplied by the corresponding factor for the month in which they were authorized, or in case a later amendment has been made, from the last time they were modified in said taxyear.
Governmental charges for use of services determined as percentages in the 2012 tax-year will continue to be applied during 2013, until the Ministry of the Treasury and Public Credit issues a response to the authorization request.
- Governmental proceeds
The Federal Executive is authorized to issue specific resolutions to set or amend any governmental proceeds intended to be collected by government agencies during the 2013 tax-year, even if their collection is set forth in other laws.
Any governmental proceeds that have not been submitted for approval by the Ministry of the Treasury and Public Credit may not be collected by the corresponding government agency after March 1st, 2013.
Until governmental proceeds for the 2013 tax-year have not been authorized, those effective as of December 31, 2012 shall be applied, multiplied by the corresponding factor related to the month in which they were authorized, or in case a later amendment has been made, from the last time they were modified in said tax-year, in accordance with the factor chart set forth for calculating fees for use of services.
Governmental proceeds determined as percentages in the 2012 tax-year will continue to be applied during 2013, until the Ministry of the Treasury and Public Credit issues a response to the authorization request.
- Imposition of sanctions
Tax authorities shall not impose sanctions to taxpayers when infringement of customs’ provisions discovered under the procedure described in Article 152 of the Customs’ Law (Administrative Procedure for Omitted Contributions) occurred before January 1st, 2013, and for which the corresponding sanctions have not been previously determined as of the date of enactment of the Revenue Law. The above, provided that and when due to circumstances pertaining the offender or in which the offense was committed, the applicable tax credit is not above 3,500 investment units or its equivalent in Mexican currency as of January 1st, 2013.
During the 2013 tax-year, any taxpayers fined for infringements resulting from noncompliance of any federal tax obligations other than payment obligations, including those related with the Federal Taxpayers’ Registry, the submission of returns, applications, notices, the obligation to have accounting, as well as those that are fined for not making provisional payments of a contribution, with the exemption of those imposed for declaring excessive tax losses and those pertaining to challenging the exercise of capacities to carry on with inspections in the tax domicile of the taxpayer, regardless the tax year for which they implement actions to correct their situation which may result from such inspection, will pay 50 percent of the corresponding fine if such payment is made once tax authorities have initiated exercise of their inspection capacities and before the final resolution regarding the inspection visit or the official communication with remarks is issued; provided, further, that in addition to such fine, any omitted contributions and accessories, as the case may be, are paid.
Additionally, whenever taxpayers mend their tax situation and pay any omitted contributions together with any accessories, as the case may be, after the final certificate of the inspection visit is issued or the official communication with remarks is notified, but before the resolution determining the amount of omitted contributions is notified, will pay 60 percent of the corresponding fine, provided any omitted contributions and accessories, as the case may be, are paid.
- Tax incentives and Exemptions
For purposes of the special tax on production and services, tax incentives are maintained setting forth the possibility of crediting said tax against (i) some sectors acquiring diesel for their final consumption including persons who carry on with entrepreneurial activities, especially those devoted to agricultural or forestry activities, with the exception of those devoted to mining; and (ii) taxpayers acquiring diesel for their final consumption and for use in automotive vehicles used for public and private transportation of people and cargo.
Likewise, tax incentive is maintained for taxpayers devoted exclusively to the public and private ground transportation of cargo or people using the national network of toll highways, which consists in allowing a credit against income tax for expenses made in payment of services for use of toll highway infrastructure, equal to 50% of the total expenses made for this concept.
Regarding exemptions during the 2013 tax-year, the following shall apply:
- Exemption for payment of the tax on new cars shall continue being applicable for individuals or legal entities that sell in retail or definitively import automobiles propelled by rechargeable electric batteries, as well those electric vehicles that also have an internal combustion engine or an engine that works with hydrogen, pursuant to the provisions set forth in the Customs’ Law.
- Likewise, exemption remains for payment of the Fee for Customs’ Procedure caused in connection with the import of natural gas pursuant to the terms of Article 49 of the Law on Federal Governmental Fees.
PROVISIONS EFFECTIVE FOR ONE YEAR
- Provisions regarding income tax
ART. 21, PARAGRAPH I
- Interests’ regime
The enforcement of the new scheme to calculate and withhold interests contained in the “Decree which amends, complements and repeals several provisions of the Laws on Income Tax, Tax on Cash Deposits and the Value Added Tax, of the Federal Tax Code and of the Decree which establishes the obligations that may be denominated in Investment Units; and which amends and complements several provisions of the Federal Tax Code and the Income Tax Law published on April 1st, 1995”, published in the Official Gazette of the Federation on December 7, 2009, is deferred until January 1st, 2014.
As a consequence of the above, the annual rate for withholding income tax continues to be 0.60% per annum for the 2013 tax-year.
- Charity institutions
For 2013, the concept of charity institutions that qualify as non-taxable are those devoted to: “social charity” pursuant to the Law on the National System for Social Assistance and in the General Health Law; “civic activities”; those that “foster development of indigenous villages and communities”; “promote gender equality”; “contribute with services to assist social groups with disabilities”; “promote sports”; “support the exploitation of natural resources, protect the environment, flora and fauna, preserve and restore ecologic balance, as well as promote sustainable development at regional and community level of urban and rural zones”; “promote and foster education, culture, art, science and technology”; “encourage actions to improve popular economy”; “participate in civil protection actions”; “provide services which support the creation and strengthening of organizations which carry on with activities foster purpose of the Federal Law to Foster Activities Carried Out by Civil Society Organizations”; as well as “promote and defend consumers’ rights”.
- Registry of Banks
During the 2013 tax-year, a rate of 4.9% will be applicable to interests earned by foreign banks and financing entities with limited purpose which comply with the placement and fund-receiving percentages set forth by the Tax Administration Service, that are residents in countries with which an effective treaty to avoid double taxation has been executed with Mexico and provided, further, the requirements set forth in the treaty are met to apply the rates set forth therein for this type of interests.
- In-bond (maquila) under the Shelter form
As for 2012, for the 2013 tax-year, it shall not be considered that residents abroad that directly or indirectly provide raw materials, machinery or equipment to carry on with maquila activities through companies authorized with a maquila program under the shelter form authorized by the Ministry of Economy have a permanent establishment in the country, provided that such residents abroad are not related parties of the company with maquila program under the shelter form, nor a related party of other party that is related to such company.
For the above, maquila companies that operate under the shelter form shall submit, no later than on June, 2014, information related to operations carried on under such modality, pursuant to the General Provisions issued by the Tax Administration Service for such purpose.
Additionally, maquila companies mentioned in the preceding paragraph shall comply with the following requirements:
- Comply with the provisions of the Federal Tax Code related to payment or guaranteeing any tax credit assessed and notified by the tax authority (Article 32-D of the Federal Tax Code).
- Submit a report with its financial statements as set forth in the Federal Tax Code when compelled to do so or, else, in case there is no obligation to submit such report pursuant to the “Decree compiling several tax benefits establishing administrative simplification measures”, published in the Official Gazette of the Federation on March 30, 2012, submit the information in the terms and means set forth in generally applicable rules issued by the Tax Administration Service.
- File annual and monthly federal tax returns, the Informative Statement regarding Operations with Third Parties, as well as the Informative Statement for Manufacturing, Maquila and Export Service Companies.
These companies shall not apply the transfer-pricing provisions for maquila companies (Art. 216-Bis of the Income Tax Law) and, in case any of the abovementioned obligations are not complied with, the Tax Administration Service will require such company to, within a term of 30 calendar days, clarify what it deems to be in its interest or, in case such non-compliance is not remedied, the company will be removed from the Importers’ Registry.
- Pension and Retirement Funds
During the 2013 tax-year, legal entities that have foreign pension and retirement funds as shareholders, which comply with the requirements set forth in the Income Tax Law to qualify for an exemption of such tax, may exclude the annual accruable inflation adjustment and any income obtained from exchange rates deriving exclusively from liabilities contracted for the acquisition or to obtain income for the granting of temporary use or enjoyment of plots of land or constructions attached thereto located in the country.
- Derivative financial transactions
It is provided that no income tax will be paid on derivative financial debt transactions which make reference to the Interbank Equilibrium Interest Rate (TIIE, for its initials in Spanish, Tasa de Interés Interbancaria de Equilibrio) or to credit instruments issued by the Federal Government or the Bank of Mexico or any other determined by the Tax Administration Service by means of generally applicable rules or which, in addition to making reference to said rate or instruments, make reference to any other interest rate or underlying instruments which, in turn, make reference to the TIIE or any of the above-mentioned instruments, or to such rate or instruments and to any other interest rates, provided they are traded in stock exchange or recognized markets, pursuant to the Federal Tax Code and that the effective beneficiaries are residents abroad.
- Income tax rate
Reduction of the corporate rate and maximum rate for individuals set forth in Article Second, Paragraph II of the Provisions on the Temporary Effectiveness of the Income Tax Law, included in the “Decree which amends, complements and repeals several provisions of the Laws on Income Tax, Tax on Cash Deposits and the Value Added Tax, of the Federal Tax Code and of the Decree which establishes the obligations that may be denominated in Investment Units; and which amends and complements several provisions of the Federal Tax Code and the Income Tax Law published on April 1st, 1995”, published in the Official Gazette of the Federation on December 7, 2009", is deferred. Pursuant to the recently published provision, the reduction of such rate shall be applicable for the 2014 tax-year. For the 2013 taxyear, instead of the above-mentioned Article Second, Paragraph II, the following will apply:
- For purposes of the general corporate rate, a 30% shall be applied instead of the 29% rate that was set forth in the transitory provision.
- In case the 1.3889 factor (gross-up) is applicable pursuant to the Income Tax Law, the 1.4286 factor shall be applied (Dividend taxation).
- In case the 0.3889 factor (gross-up) is applicable pursuant to the Income Tax Law, the 0.4286 factor shall be applied (Dividend taxation).
- In case a 25% reduction is applicable pursuant to the Income Tax Law, a 30% reduction shall be applied (agricultural, livestock, fishing, forestry developed exclusively).
- For purposes of salaries and taxes calculated considering the progressive rate of salaries, the corresponding tax shall be calculated in accordance with the provisions set forth, applying the progressive rate effective as of December 31, 2012.
- For purposes of the individual annual tax returns, the corresponding tax shall be calculated in accordance with the provisions set forth, applying the rate effective as of December 31, 2012.
- Provisions of the flat-rate business tax
ART. 21, PARAGRAPH II
The obligation continues to provide tax authorities with the corresponding information for concepts that served as basis to determine the flat-rate business tax, using the format issued for such purpose by the Tax Administration Service by generally applicable rules. Information mentioned in this paragraph shall be submitted even when no tax must be paid pursuant to the provisory payment filings or the corresponding annual returns.
Additionally, also for 2013, taxpayers may not credit against income tax, any tax credit for deductions above their income in the year in which such credit was generated.
- Provisions regarding the special tax on production and services
ART. 21, PARAGRAPH III
For the 2013 tax-year, the 26.5% rate will continue to apply on the sale of beer with alcohol content up to 14° G.L., instead of the 26% rate set forth in the transitory provision. For the 2014 tax-year, the 26% rate shall be applied.
Likewise, for beverages with alcohol content above 20° G.L., the 53% rate shall continue to be applicable for 2013, instead of applying the reduced 52% rate, which shall be applied for the 2014 tax-year.
- Cancellation of Tax Credits
ART. TRANSITORY THIRD
The following tax credits consisting of federal contributions managed by the Tax Administration Service (SAT, for its initials in Spanish, Servicio de Administración Tributaria), countervailing duties, updates and their accessories, as well as fines for infringement of federal tax obligations, other than payment obligations are subject to cancellation:
Cancellation does not result in any return, compensation, credit or balance in favor.
- Percentage cancelled.
- Cancellation shall be of 80% in the case of tax credits consisting of federal contributions, countervailing duties and fines for infringement of federal tax obligations other than payment obligations caused before January 1, 2007.
Surcharges, charges for extension, fines and execution expenses in connection therewith may be cancelled in 100%.
To qualify for this cancellation, the non-cancelled part must be paid entirely in one single installment.
- Cancellation of 100% is granted in case of taxpayers who were subject to review by tax authorities during the fiscal years of 2009, 2010 and 2011, and it was determined that they complied correctly with their tax obligations or, else, that any deficiencies determined were paid and they are currently in compliance with their tax obligations.
- Cancellation of 100% may be granted in case of surcharges and fines arising from tax credits and countervailing duties and federal contributions other than those the taxpayer should have withheld, transferred or collected, as well as fines for infringement of federal tax obligations other than payment obligations that have been caused between January 1, 2007 and December 31, 2012.
To qualify for this cancellation, the non-cancelled part must be paid entirely in one single installment.
- Fines imposed for infringement of federal tax obligations other than payment obligations during the fiscal years of 2012 and 2013 shall be reduced by 60%, with the exception of those imposed for declaring excessive tax losses, provided these are paid within thirty days following their notice.
- Balance pending payment may be cancelled in the case of deferred tax credits or those being paid subject to term pursuant to the Federal Tax Code (Código Fiscal de la Federación).
- Cancellation requirements.
Tax credits determined by tax authorities as well as those self-determined by taxpayers, whether spontaneously or as a result of correction procedures, are eligible for this cancellation.
Taxpayers must submit the application and any exhibits as the Tax Administration Service may require by generally applicable rules before the corresponding Local Administration of Taxpayers’ Services (Administración Local de Servicios al Contribuyente) for its tax domicile.
The Tax Administration Service will issue the rules required to apply for the cancellation set forth in this provision, which must be published in the Official Federal Gazette no later than on March 2013.
In case tax credits have been contested, they are eligible for cancellation provided the corresponding contestation procedure has been concluded by a firm resolution as of the date of the application or the taxpayer includes in the application the proof of delivery of a request of relinquishment to such means of defense.
No payment in kind, payment on account or compensation for the non-cancelled part of any tax credits will be accepted.
In case of default with payment obligations, the authorities shall deem the cancellation application as not filed and will commence administrative execution procedures.
Resolutions issued by the authorities regarding cancellation applications do not constitute jurisdictional resolutions and, therefore, cannot be contested.
In case of tax credits managed by federal entities, cancellation must be requested to the corresponding tax authorities of the Federal Entity, who shall issue the corresponding resolution subject to the above-mentioned provision and, as may be applicable, any general rules issued by the Tax Administration Service.
- Tax credits not subject to cancellation.
Tax credits that have been paid and any debts resulting from any violations that have been confirmed by criminal conviction are not subject to cancellation.