Tax transfer at an incorrect rate

Last November 20th the Official Gazette of the Federation, [in Spanish: el Diario Oficial de la Federación], published in the modifications to annex 3 of the Periodic Amendments for 2015 a new non-binding criterion regarding the Value-Added Tax, which considers inappropriate tax practices carried out by taxpayers who credit the Value-Added Tax when the said expenses would have been taxed at 0% or exempt; but by mistake or a through a failure to interpret correctly, or perhaps both, they should have levied the 16% rate of the Value-Added Tax.

This modification replaces and repeals the regulatory criterion: “3/VALUE-ADDED TAX/N Tax transfer at an incorrect rate”, which permitted, in case the taxpayer made a mistake by interpreting incorrectly, the implication of having to accumulate the Value-Added Tax that was transferred to the taxpayer for Income Tax purposes, and that would have been charged and considered a deductible expense of the excess payment that was made by the misapplication of the Value-Added Tax, regarding transactions at 0% or exempt activities.

With this new criterion the implication of a misinterpretation of the provisions of the Value-Added would imply:

* That it be considered an inappropriate tax practice.
* Non-deductibility of the Value-Added Tax that was unduly paid.
* The accumulation, for the purposes of the Value- Added Tax, of the amounts unduly charged to the taxpayer who transfers the tax.

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