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Mexico: 2013 tax reform Bill

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David Cuéllar


Claudia Solano

On December 17 2012, the 2013 Economic Package including the Mexican tax reform was published in the Official Gazette. Such Economic Package entered into force on January 1 2013. This is a summary of some of the relevant provisions:

  • The corporate income tax rate of 30% will remain unchanged during 2013 (instead of 29%). Moreover, the package reduces the corporate income tax rate to 29% as from 2014 (instead of 28%). This change will require taxpayers to review their budgets, tax provisions and other tax modeling for 2013 and 2014 to reflect the new rates.

  • The 4.9% rate applicable to interest paid to banks residing in countries with which Mexico has a tax treaty in place will remain for fiscal year 2013, provided all requirements established in the relevant tax treaty and the Mexican Tax Law are met.

  • Entities owned by non-Mexican pension and retirement funds that comply with the requirements established in the Mexican Income Tax Law, may exclude from their total income the taxable annual inflationary adjustment as well as the exchange gain derived exclusively from debts incurred for acquiring or securing income from the leasing of land or buildings located in Mexico.

  • Regarding flat tax, there is no change in the provisions concerning the information return depicting the items used as a basis for determining such tax nor on the flat tax credit represented by the difference of the excess of flat tax deductions over flat tax income, which may only be credited against flat tax arising in the following 10 taxable years or until it is fully utilised.

An amnesty program that will allow significant reductions of taxpayers' combined tax liabilities incurred through December 31 2012 was included in the tax package. These liabilities must be paid to the Mexican tax authorities and must equal the total tax, plus inflationary adjustments, interest and any penalties for noncompliance with tax obligations other than tax payment obligations, attributed to years before 2007.In general terms, the benefits of this program include:

1. Federal taxes due – Compensatory duties and penalties for noncompliance with tax obligations other than tax payment obligations generated before 2007:

  • 80% reduction of the total tax liability;

  • 100% reduction of interest, including those on tax payments authorised to be covered on a deferred basis or in installments

2. For additions to tax amounts on taxes generated from 2007 to 2012, not including the tax itself:

  • Reduction of 100% of the interest and fines, including fines for noncompliance with tax obligations other than tax payment obligations. No reduction applies for additions to tax applicable on taxes withheld or charged or collected from third parties.

Note that certain conditions must be met by the participants in the amnesty program. In this regard, the general rules that determine the procedure(s) that the taxpayer should follow for the application of this program were published in the Miscellaneous Tax Resolution on February 19 2012.

David Cuéllar (david.cuellar@mx.pwc.com) and Claudia Solano (claudia.solano@mx.pwc.com), Mexico City

PwC

Tel: +52 55 5263 5816

Fax: +52 55 5263 6010

Website: www.pwc.com

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