Although this title may read like the like a title to a
thriller novel or at least a pretty good campaign soundbite, it
comes very close to the actual name of a recently published
executive decree in Mexico.
Tax amnesties, or legally implemented tax pardons, have been
a tool for the past three administrations. President Fox in
2001, President Calderon in 2006 and President Peña in
2012 all enacted, in one way or another, a form of pardon to
qualifying taxpayers which resulted in large corporate groups
getting huge deals that allowed them to clean the slate from a
All of these pardons were enacted by way of a legislative
amendment to either the Federal Fiscal Code (2000), or to the
Federal Revenue Law (2007 & 2013). All of them included
clear and general requirements and were believed to be
generally absent of abuse or corruption, but not necessarily
absent of controversy.
The discussion stems from the belief that all of these
amnesties were the result of high-level negotiations between
the Executive Branch and large corporate groups seeking to get
out of 'questionable' tax planning structures and operations in
exchange for a low settlement.
Indeed, these amnesties did allow for a large cancellation
of a tax liability, including fines and interest, while only
requiring the taxpayer to pay a rather small percentage of the
While there isn't a general feeling that these processes
were marred by corruption, it is largely believed that they
were tailor-made to benefit specific large taxpayers. It is
important to bear in mind that, in all instances, a significant
amount of taxpayers, (small, medium and large) benefited from
these amnesties, although the large write-offs came from
so-called blue chip companies.
These amnesties are generally considered to be a perverse
motivation for taxpayers to engage in aggressive tax planning,
knowing that they will be eventually bailed out by the federal
government. Fully compliant taxpayers have been very vocal in
condemning these practices inasmuch as they create an uneven
playing field since aggressive tax planning is believed to be
available mainly to large taxpayers.
Given this background, it was to no one's surprise that, at
the beginning of May, President López gave a
presentation, as part of one of its daily press conferences,
centered on the alleged millions of pesos that have been
lost due to these amnesties in the past.
A couple of weeks after, the Executive Branch issued, on May
20 2019, a decree by which it was informed to the general
public that the administration would (a) not issue any more
such tax amnesties, and (b) cancel any decrees which pardoned
tax liabilities to any taxpayers.
At first glance, this would seem like a natural closure to
the whole "tax amnesties are bad" discussion.
The problem is that this decree raises more questions than
it answers. For example, is it legally necessary to include in
a decree a vow to not issue amnesties, or was it only necessary
for the president to abstain from issuing the said tax benefits
and to instruct the Congress, controlled by the president's
party (MORENA) not to enact such amnesties (more so since all
of the past tax amnesties had a limited life span which has
long elapsed by now)?
Furthermore, by cancelling all decrees which pardon tax
liabilities (there are two exceptions), the president actually
creates a very real confusion pertaining to current decrees
that include not only a cancellation of tax liabilities, but
also other tax benefits such as tax credits.
Tax provisions included in the Federal Fiscal Code and in
the Taxpayers' Rights Law include procedures by which fines may
be reduced or even cancelled, and that are pivotal to everyday
settlements. Stopping the issuance of these rulings could
seriously hinder the abilities of taxpayers (regardless their
size) to resolve their tax exposure without having to go to
High-ranking tax officials have stated adamantly that the
intention of the decree is only to cancel amnesties as those
described at the start of this article. The "considerations"
section of the decree actually makes direct reference to the
three amnesties we've addressed, but the actual articles of the
decree are in no way clear.
Unfortunately, until an actual formal guideline is issued,
one cannot foresee how the local and central administrations
will end up interpreting this decree which feels, by any