International Tax Newsletter - Spring/Summer 2012 - Mexico
TAX BENEFITS TO MAQUILADORA INDUSTRY
On 12 October 2011, a Decree, originally published on 5 November 2007, was amended relating to various tax benefits for the Maquiladora industry:
- There will be a tax incentive to companies that carry out assembly operations (Maquila activity) and determine their income based on Article 216-Bis of the Income Tax Law
- The benefit consists in multiplying the tax profit determined for the income tax at a flat tax rate (17.5%).
Highlights of the amendment:
- The application of tax incentives relating to Tax Rate for companies carrying out Maquila operations is extended to 31 December 2013.
- Effective 1 January 2012 and up until 31 December 2013, tax incentives may be applied provided that the:
- Company files the federal tax statements
- Company has not been charged with a tax credit
- Company submits its audited financial statements
- Company files an information statement reporting any transactions with third parties under the terms and conditions provided by the tax provisions
- Company files a statement on Manufacturing, Maquiladora and Export Services in the terms and conditions provided by the tax provisions
- Company’s Federal Taxpayer Registry is current and active
- Company addresses the requirements of the authorities to submit documentation and information demonstrating compliance with its tax or customs obligations in relation to Maquila operations
- Data provided to the Federal Registry of Taxpayers is not false or non-existent
- Name and tax address of the supplier, producer, consignee or purchaser abroad, stated in the invoice, is not false or non-existent
- Supporting documentation of foreign trade operations is available.
The Decree is good news for the Maquiladora industry, but there are still some outstanding issues that need to be addressed by the tax authorities.
INTERPRETATION OF THE OECD MODEL
The federal court of fiscal and administrative justice has resolved that, when the tax authorities publish comments on the interpretation of the OECD Model Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion in the Official Journal of the Federation, individuals may rely on those comments in interpreting and applying a Treaty signed by Mexico, provided the Treaty in question is consistent with the Model Treaty.
2012 FISCAL IMPROVEMENT
In December 2011, the legislative bodies approved the following changes to tax provisions applicable in 2012:
- Credit for taxes paid on fuel purchases against income tax remains in force for taxpayers engaged in farming, forestry, and public and private transport activities.
- Credit of 50% of fees paid for the use of national roads against income tax remains in force.
- When accounting information is expressed in a language other than Spanish, or values are entered in foreign currency, the Tax Authorities may request a Spanish translation or provision of the exchange rate used.
- Requirements for the issuance of digital invoices are simplified.
- Standards of proof for tourists to obtain a refund of VAT paid in Mexico are set-up.
- New statute of limitations for criminal proceedings in the case of tax offences is established.
- Failure to submit final tax statements for more than 12 consecutive months has been equated to tax fraud.
More information on these developments can be provided by Mario Camposllera and Veronica Barba, PKF Mexico, through the EisnerAmper contacts listed at the end of this Newsletter.
International Tax Newsletter - Spring/Summer 2012 Issue