On July 4, a Second Amendment Resolution to the 2014 Tax Miscellaneous Resolution was published, the most relevant aspects to the contract manufacturing industry include the list of revenues that may be received in connection with their contract manufacturing operation, benefits for companies certified regarding VAT and Special Tax on Products and Services (IEPS) refunds, as well as the extension of the term to comply with the requirement for income perception exclusively to maquila activity, which shall be extended to October 1, 2014.
The following are the most important items of said rules:
Revenues for Contract Manufacturers
The items that can be deemed revenue from contract manufacturing (maquila) activity are:
♦ Rendering of personnel services (only with related parties)
♦ Lease of real and personal property
♦ Sale of waste derived from materials used in connection with its maquila manufacturing activity
♦ Sale of real and personal property
♦ Other revenues in connection with its operation
♦ The sum of aforementioned revenues cannot exceed 10% of the total revenues for the maquila operation.
♦ Accounting shall be segmented per type of revenue obtained, as well as of the other types of operations in connection therewith.
♦ Operations carried out with related parties shall comply with transfer pricing rules in accordance with Income Tax Act.
♦ On the annual maquiladora statement (Declaración anual informativa de maquiladoras (DIEMSE)), information shall be given regarding aforesaid income.
♦ A notice shall be filed before the Transfer Pricing Fiscalization Administration when revenues are received derived from the sale of real or personal property, indicating the business that led to said operation.
♦ In the event of revenues for the lease of real and personal property to companies that are not related parties, there shall be a term of 3 years to commence as of the starting date established by the agreement, said term may only be exceeded under authorization given by SAT. The foregoing is not applicable to agreements entered into before January 1, 2014.
It is important to mention that aforesaid revenues shall not be taken into consideration for the transfer pricing rules for contract manufacturers, and they cannot carry out the application of the additional deduction of payments that are exempt revenues for workers in accordance with the Decree published on December 26, 2013.
Benefits and requirements for VAT and IEPS tax refunds, for certified companies.
The terms for obtaining refunds are confirmed, for companies obtaining certification as to VAT and IEPS, which are as follows: (View PDF)
In order to obtain this benefit, the following requirements need to be fulfilled:
♦ VAT balance in favor shall be generated and reported as of January 2014.
♦ The revenue on the refund application shall be as of the obtaining of the certification.
♦ During the period requested, there shall be no prior application or any abandonment of said application.