Economic Package for 2019 regarding tax matters
Economic Package for 2019 regarding tax matters

On December 15, 2018, the Economic Package for 2019 was submitted to Congress, integrated by the General Criteria on Economic Policy (CGPE), the Initiative for the Federal Revenues Act (ILIF) and the Project for the Federal Expense Budget (PPEF), which does not include increases on existing taxes or the creation of new taxes.

Next, we will list the most relevant initiatives regarding taxes:

Withholding rate for financial institutions

The annual withholding rate to be applied by financial institutions paying interest during the 2019 fiscal year shall be 1.04 percent.

Elimination of universal off-setting

They propose eliminating universal off-setting, allowing only the compensation of amounts in favor, against sums payable on its own debt, this shall only apply when referring to the same tax, it shall not apply to third-party withholdings and, regarding Value Added Tax (VAT), the recovery of balances in favor shall only be carried out through crediting against the tax payable for the following months until it is used-up or a refund may be requested on the total balance in favor amount.

This would represent an impact on flow for taxpayers with balances in favor who pursue the refund of these through universal off-setting.

Self-regulating program to Prevent Money Laundering

Derived from its attributions on this matter, the Tax Administration Service (SAT) has detected a conside- rable number of subjects executing Vulnerable Activities who are in default in compliance with the obliga- tions mentioned on the Federal Law for the Prevention and Identification of Transactions with Funds From an Unlawful Source (LFPIORPI), it is adequate to implement a facility scheme allowing aforesaid subjects to comply with their obligations regarding the prevention of acts or transactions involving funds from an unlawful source or money laundering and at the same time, allow the competent authorities to obtain use- ful information that is accurate and effective, for the due exercise of its attributions.

There is a proposal to establish, through a transitory provision, that SAT may authorize the implementa- tion of self-regularization programs for subjects who are in default of aforementioned obligations. In this regard, as to the default period under the self-regularization program, SAT shall not impose sanctions or, if the case may be, shall condone fines established in terms of the LFPIORPI.

Authority upon Executive Power to grant tax benefits regarding international treaties

The Federal Executive power is authorized to grant, during the 2019 fiscal year, the tax benefits deemed necessary to comply with the resolutions derived from the application of international benefits to solve legal controversies that determine a violation of an international treaty.

Reduction of rates in border zones

There is a proposal to reduce the Income Tax (ISR) rate and Value Added Tax (IVA) for the border region in the north of the country, to companies and individuals with business activities through tax stimuli gran- ted through a Decree to be issued by the Executive Power.

Surcharge rates

In the surcharge rates in the cases of extension for the payment of tax credits, no changes are foreseen, being the same as in 2018:

Partialities up to 12 months: 1.26%

Partialities from 12 to 24 months: 1.53%

Partialities of more than 24 months and deferred term: 1.82%

Surcharges and interest in charge to federal tax authorities: 1.47%

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