Last week the Federation’s Revenue Law for 2018 was approved by the House of Representatives and passed on to the Senate for approval. Even though we do not expect a comprehensive tax reform for 2018, there are certain modifications that are worth highlighting. Mijares, Angoitia, Cortés y Fuentes, Taxand Mexico, presents the highlights.
From our perspective, the most important modifications are:
The obligation to provide certain information by a personnel services provider to its client will be deferred until 2018. As long as the taxpayer complies with this obligation during such fiscal year through the application that will be available in the Mexican tax authorities’ website, it will be understood that such taxpayer complied with it during 2017
Certain incentives are granted to individuals that were affected by the earthquakes that hit Mexico during September
Taxpayers who are obliged to pay the hydrocarbons exploration and extraction tax will be able to offset balances in favour against subsequent payments of such tax
The monthly surcharges rate for late payment of taxes will increase from 1.13% to 1.47%
The withholding rate applied by members of the financial system on the principal giving rise to such interest will decrease from an annual rate of 0.58% to 0.46%
The obligation to provide certain information regarding relevant transactions will be incorporated to the Federation’s Revenue Law for 2018 given the recent rulings issued by the Supreme Court of Justice. In this sense, taxpayers will be obligated to provide on a quarterly basis to the Mexican tax authorities information regarding financial derivative transactions, transactions with related parties, transactions related to the participation in the equity of other companies and changes to tax residence, corporate restructures and other similar transactions
Other modifications include the renewal of excise tax and toll roads incentives and the deduction of employee’s profit sharing for purposes of advance income tax payments
It is worth noting that there are no further amendments in connection with the BEPS action plan.
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Taxand's Take
Despite global trends such as the tax reform in the United States which is in progress, considering Mexico’s political situation (i.e. heading on to a presidential election year), we will not see any substantial changes to the tax laws in 2018. However, we may expect additional pressure from the tax authorities on captive taxpayers to collect taxes, particularly given exchange of information programs becoming effective.
