On March 15, 2023, the Mexican Supreme Court of Justice of the Nation (SCJN) issued a final and unappealable binding jurisprudence establishing that VAT offsetting transactions would not be considered a VAT payment form. Therefore, the amount of those transactions cannot be used for VAT crediting or the refunding of balances in favor of that same tax, as it is not considered effectively paid o expended.
Although credit compensation is still valid, according to this jurisprudence, the VAT part (16%) of the credits must be transferred in cash; otherwise, that offset VAT will be considered an additional cost.
The tax authority could, in theory, look both back and forward, so any structures reliant on balance offsetting that exist or have existed should be discussed in conjunction with your counsel. This is especially important if recent refunds were based on this compensation structure, such as cash pooling or any other transaction in which cash does not change hands.
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