2013 Mexican Tax Bill

Versión en español


On December 13, 2012, Congress approved the tax reform included in the 2013 Economic Package which will be published in December, 2012. That package includes General Economic Policy Criteria as well as the Federal Disbursement Budget and the Federal Revenue Law, discussed below:


2013 Federal Revenue Law (FRL)

  1. Estimated economic data for 2013
    Item Estimation
    Budget revenue 4.4%*
    Gross domestic product 3.5%*
    Inflation 3.0%
    Average nominal interest rates (28-day Cetes) 4.6%
    Average price of the barrel of crude oil 86 USD
    Average exchange rate 12.90
    Deficit 0%**

    *Growth as compared to 2012, in real terms
    **Not considering the investments of Petroleos Mexicanos


  2. The Income Tax Law
    Income tax rates.
    The corporate income tax rate of 30% remains in place, as well as the monthly and annual rates for individuals. These top rates were to come down from 2013 and instead will now be reduced to 29% as from 2014.

    Interest. The new interest regime is postponed to January 1, 2014, (instead of 2013). This includes a procedure for determining interest on mortgage loans, among other interest rules.

    Interest paid to banks resident abroad.
     There is no change in the 4.9% income tax withholding rate applicable to interest paid to banks resident in countries with which Mexico has signed a tax treaty.

    Permanent Establishment (PE) immunity on Shelter Maquilas. The rules to be met by parties resident abroad engaged in maquila operations in Mexico, through companies with permits to operate as shelter maquila companies, in order for these entities to also not to be considered to have a permanent establishment in Mexico, are extended to 2013.

    Pension and retirement funds located abroad.
    As in 2012, when determining whether or not they are entitled to certain exemptions, entities with stockholders that are pension and retirement funds located abroad, may exclude from total revenue the taxable annual inflation adjustment and the exchange gain arising exclusively from debts contracted for the acquisition or securing of income from the leasing of land or buildings located on Mexican soil.

    Exemption of derivative financial operations.
    There is no change in the exemption from the payment of income tax for any derivative financial operation in which a portion of the swap operation is referred to the interbank interest rate (TIIE).

    Nonprofit entities.
    The types of entities qualifying as nonprofit entities in 2013, are again listed in the bill.  


  3. Flat tax
    There is no change in the provisions concerning:

    The informative return.
    Taxpayers subject to flat tax must continue filling an annual informative return (by March 31 of the following year) reporting on the items used as a basis for determining that tax.

    Flat tax credit for excess deductions. A tax credit, arising from excess amounts deducted from income, may only be credited against flat tax arising in the following 10 periods, until exhausted.  This credit may not be applied to income tax payable for the period as was the case for some of the prior years, where the credit was allowed.


  4. Excise tax
    Rates applicable to beer and alcoholic beverages. There is no change in the rates in effect in 2012, applicable to beer of up to 14° GL and alcoholic beverages and beer with a GL of 20° (i.e., 26.5% and 53%, respectively). These originally were to come down for 2013. Instead,  rate  reductions were approved at 26% and 52%, respectively for 2014.


  5. Governmental charges for certain rights
    Duties for discharging residual waters.
    The term of the pardon of this duty is extended to December 31, 2013.


  6. Tax incentives and exemptions
    The following tax incentives remain in place:
    • The credit for excise tax on diesel, acquired by individuals engaged in business activities for final consumption as fuel in general machinery, or by persons using diesel in farming or forestry activities. This credit is also applicable to taxpayers for final consumption of diesel for use in vehicles used exclusively for private and public passenger transportation
    • The credit of 50% of the tolls paid for the use of highways, applicable to taxpayers engaged exclusively in public and private overland transportation.
    • The exemption from the payment of the new automobile tax (ISAN) for individuals or entities making sales to the general public or engaged in permanent importation of hybrid automobiles.
    • The exemption from customs processing fees on imported natural gas.


  7. Tax Amnesty Program
    An Amnesty program was also approved allowing significant reductions of combined tax liabilities owed  by taxpayers up to 2012,  which are payable to the Mexican Tax Administration Service (SAT) , corresponding to the total tax, inflation adjustments, interest and penalties, including fines for noncompliance with other obligations, attributed to years before 2007.

    In general terms, the benefits of this program include the following:  

a) For amounts due for federal taxes, compensatory duties and fines for noncompliance with other obligations non involving payments (such as informative returns)  generated prior to 2007:

  • 80% reduction of the total tax liability
  • 100% reduction of surcharges, including interest on tax payments authorized to be covered on a deferred basis or in installments

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

  • Reduction of 100% of the surcharges and fines,  including fines for noncompliance with tax obligations that do not involve tax payments (such as tax information reporting) and except for these items when generated on taxes withheld,  or charged or collected from third parties.

    Certain qualification conditions are established for participants in this program

 

Liability Period Reduction Requirements
  Omitted tax, inflation, interest and penalties   Originating in pre-2007  years 80% of the omitted tax plus inflation and penalties, and 100% of interest for late payment The proportion of the original liability not forgiven should be paid through a total single payment
100% in case the taxpayer has been audited for years 2009,2010 y 2011 No tax omissions or they have been paid in audits for 2009-2011
Penalties and interest from tax liabilities different from those in its character of withholding agent and indirect taxes Originating in 2007 through 2012 100% 100% of the tax liability should be paid through a total single payment
Penalties from lack of compliance, e.g. failure to file notices, information returns, etc. (not related to tax payment omissions, nor overstatement of tax losses) Originating in 2012 y 2013 60% Should be paid no later than 30 days after notification

Note: The mechanics depend on final regulations and practice.