Decree Regarding Various Tax Benefits
Decree Regarding Various Tax Benefits

In December a decree was published regarding various tax benefits and administrative simplifications. Please find below the most important aspects of this decree:

Profit Sharing

This decree contemplates once again that the Profit Sharing paid by companies can be subtracted from the tax profit in the tax installments from May to December which will allow reducing in advance the year’s tax through the tax installments.

People with Physical Disabilities

Taxpayers that hire people with physical disabilities (causing them to have to permanently use a prosthesis, crutches or a wheelchair) mental disabilities, hearing or speech impairments (80% or more of their normal ability) or are blind, will be able to deduct from their income the equivalent of 25% of the wages paid.

Deducting Tuition Fees

Individuals who pay tuition fees for their spouse, parents, grandparents, children in private institutions, as long as they do not receive an income higher than the equivalent of a yearly minimum wage corresponding to the taxpayer’s geographic area, will still be able to benefit from the tax incentive which consists in subtracting from the tax profit the corresponding amount according to the limits indicated below: (VIEW PDF).

The payments referred to above will have to be made by check (from the taxpayer’s account), wire transfer or debit, credit or service card.

Proof of Withholdings – Non Issuance Option

Legal entities that are obliged to withhold Income Tax and VAT will be able to choose not to provide the proof of withholdings as long as the individual that provides the professional services or grants the lease of a property, issues an Online Digital Tax Receipt (CFDI) which specifically states the amount of taxes withheld. The decree emphasizes on the fact that this does not relieve the company from having to carry out the withholdings and pay the taxes duly and on time and file the informative returns.

Monthly Tax Installment Filing Date

Taxpayers who have to file their tax installments at the latest on the 17th of the following month will be able to file them according to the following, depending on the sixth numeric digit of their Tax ID (RFC): (VIEW PDF).

The above mentioned will not apply to taxpayers that have chosen to audit their financial statements according to Article 32-A of the Federal Tax Code, that are considered as large taxpayers, to foreign tax residents that have a permanent establishment in Mexico or to any legal entities residents in Mexico regarding operation carried out with foreign tax residents.

Items to consider

  • * If there is a surplus when the tax benefits are applied against the taxes owed there will be no refunds or offsets.
  • * Tax incentives are not considered as accruable income for Income Tax purposes.
  • * The Tax Authorities (SAT) will be able to issue the necessary general rules to insure the correct and adequate application of this decree.
  • * The notice to apply the tax incentives will not have to be filed per Article 25, first paragraph of the Federal Tax Code, unless the obligation is expressly established.
  • * The tax benefits will apply to taxpayers who file the information established by the SAT in the general rules.
  • * This decree entered in to effect on January 1st, 2014.