Decree providing administrative measures in lieu of tax simplification

Decree providing administrative measures in lieu of tax simplification

01/07/10

On June 30, 2010, a Decree providing administrative measures in lieu of tax simplification (the “Decree”) was published at the Federal Official Gazette with the purpose of reducing the complex and burdensome current tax structure in Mexico.  The Decree foresees the following measures seeking to simplify compliance with tax obligations:

(1) Taxpayers being obliged to file information pertaining to the concepts that were considered for the calculation of Flat Tax both in the monthly tax returns and in the annual tax return are granted the option of filing only the information corresponding to the tax year.  The foregoing provided that such information is filed within the month that follows the end of the relevant tax year.  The Mexican Internal Revenue Service (“Mexican IRS”) will make available through Treasury Regulations (“REGS”) the media and forms that ought to be used to file this information.

(2) Taxpayers of the Value Added Tax (“VAT”) being obliged to file the annual information return as requested on the relevant Income Tax return are granted the option of omitting compliance with this obligation.  The foregoing provided that they duly comply with their obligation of filing monthly information returns pertaining to payment, withholding, crediting and transfer of VAT in their transactions with suppliers.

(3) Taxpayers being obliged to audit their financial statements for tax purposes because of the amount of their income, the value of their assets, and/or the number of their employees, as well as those obliged to audit compliance with their social security obligations are granted the option of omitting the filing of the relevant audit reports.  The foregoing provided that they file certain information in accordance with the REGS that will be published in the future by the Mexican IRS.  The benefit of exercising this option is also extended to relieve taxpayers from the obligation of filing with the National Housing Fund for Employees copy of the report on their tax situation and the exhibits related to the employer contributions.

(4) Taxpayers of the Cash Deposit Tax that, after having credited and compensated the relevant concepts, remain on a favorable balance position with respect to this tax are granted the option of requesting refund of such balance without filing an audit report in this regard.  The foregoing provided that they file certain information according to the REGS that will be published in the future by the Mexican IRS.

(5) Advanced electronic signature certificates issued for individuals as of the date the Decree becomes enforceable will be extended from two to four years.

This Decree is enforceable as of today, July 1, 2010, except for the measure described on item (4) above same that will come into effect as of September 1, 2010.