On February 19, 2016 the Tax Administration Service [in Spanish: el Servicio de Administración Tributaria (SAT)], published on its webpage the instructions on how to fill out the corresponding DIEMSE form for the 2014 tax year, the same which is an obligation for those companies which carry out contract manufacturing.
It’s important to mention that this return should have been filed on the last day of June 20151 however, this period has been modified on three occasions by means of general rules2, 3with the filing due date agreed upon as April 15, 20164.
DIEMSE Form (New Format)
The new DIEMSE form requests more information compared to the previous DIEMSE form that was used in the 2013 tax year, and which highlights the following required information:
Indicate if the company is certified with respect to the Value-Added Tax [in Spanish: IVA] and the Special Tax on Production and Services [in Spanish: IEPS].
As we can see, the amount of information requested for this new DIEMSE has increased. This stems from the Income Tax Reform of 2014 that had a significant impact on the maquiladoras.
Main inconsistencies in filling out the DIEMSE
Derived from new information that is required for the filling out of the corresponding DIEMSE for the 2014 tax year as of today. The following inconsistencies exist that are relevant to this new format.
IMMEX Program Scheme
Commencement date of operations of IMMEX program The tax return only allows you to input the aforementioned date as of November 01, 2006, therefore there may be some companies that have program authorization prior to this date.
Heading or Certifying Letter In foreign trade according to rule 3.8.1 of the General Rule of Foreign Trade [in Spanish: RCGCE], there are some manufacturing companies that do not have the certification; nevertheless, the same format will not allow you to advance if you don’t select the type of certification.
Name of economic sector that you belong to This information corresponds to the aforementioned certification.
Taxable profit before and after Employee Profit Sharing [in Spanish: PTU] through different transactions that are different than those of maquila A case may exist whereby a tax loss was generated in the year stemming from activities that differed from those of maquila. The same format does not consider this line item, nor does it allow you to enter negative amounts.
Points to consider for filling out DIEMSE
Income that is different than that of maquila For this category one must consider scrap sales, rental income, product sales, and other income that is different than that of maquila. It’s important to mention that income that is generated by interest fluctuations and interest will not be considered; as long as the required financial information is used for determining the income from the operation.
Credited VAT In this category one must consider the credited VAT, including the withheld VAT that was done by the suppliers.
Withheld VAT The Value-Added Tax withheld by clients must be considered.
VAT claimed in annual return Take into account the claimed VAT credit balances refund during the month which corresponds to the requested information. You only need to consider unreturned credit balances for the 2014 tax year.
VAT refund in the year You must consider only refunded VAT credit balances during the month that corresponds to the requested information. Take into account only those credit balances for the 2014 tax year.
VAT refund from previous years Consider VAT credit balances during the month that corresponds to the requested information. Take into account only those credit balances before the 2014 tax year.
Calculating the percentage of machinery and equipment used in the maquila activity
Percentage of machinery and equipment that is the property of the foreign resident from the total machinery and equipment used in the maquila operation. This percentage must be at least 30% of the requirement by the contract manufacturing companies (not lodging). However, there is a two-year transition period for those companies that were operating as a maquila prior to 2010; and as such they must fulfill this obligation until 2016. Therefore, the percentage may be lower for this type of company.
Foreign trade transactions module
The filling out of this section as per the comments of the contract manufacturing industry is only applicable to contract manufacturing companies under the system of lodging; and the aforementioned section requests the value of temporary imports, transfers received, final imports, returns, and exports.
As we can see, there are some inconsistencies in the filling out of the new DIEMSE. We hope, therefore, that the rules will be published in the foreseeable future, or that modifications to the format will be made, in order to file the return with the correct information.