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Decree providing certain tax benefits to taxpayers of the regions affected by hurricane “Alex” within Coahuila, Nuevo Leon and Tamaulipas

19/07/2010
Contact:
José Angel Eseverri-Ahuja
jae@sanchezdevanny.com
Gonzalo Buenrostro-Flores
gbuenrostro@sanchezdevanny.com
Mariana Eguiarte-Morett
meguiarte@sanchezdevanny.com
Ricardo León-Santacruz
rls@sanchezdevanny.com
José Ricardo Ibarra-Córdova
jribarra@sanchezdevanny.com

Decree providing certain tax benefits to taxpayers of the regions affected by hurricane “Alex” within Coahuila, Nuevo Leon and Tamaulipas

19/07/10

On July 16, 2010, a Decree providing certain tax benefits to taxpayers of the regions affected by hurricane “Alex” within Coahuila, Nuevo Leon and Tamaulipas (the “Decree”) was published at the Federal Official Gazette so that tax compliance does not delay the efforts to recover productivity and to reactivate the economic activity of the affected regions.

For purposes of applying this Decree it is important to bear in mind the following: (1) The regions considered to be affected by hurricane “Alex” (“affected regions”) are those municipalities listed on the statements published or to be published by the Ministry of Government on the Federal Official Gazette in lieu of this natural disaster; (2) The benefits of the Decree will be limited to income, assets, value of acts or activities, and expenses that correspond to the tax domicile, agency or any other establishment located within the affected regions; (3) Taxpayers will be deemed to have their tax domicile, branch, agency, or any other establishment within the affected regions as long as they have duly filed the relevant notice with the Federal Taxpayers' Registry before July 1, 2010; and (4) Taxpayers applying this Decree must do so with respect to provisional or monthly tax returns pending to be filed by the date it becomes enforceable.

The following benefits are included on the Decree and their application is subject to compliance with the requirements described on the preceding paragraph as well as to compliance with additional requirements (as specifically detailed on the items below):

  1. Corporate taxpayers taxed under Title II of the Income Tax Law are relieved from the obligation of effecting Income Tax and Flat Tax provisional payments that correspond to June, July, and August, 2010.
  2. Individual taxpayers engaged in business and professional activities as well as individual taxpayers taxed under the intermediate regime for business activities are relieved from the obligation of effecting Income Tax and Flat Tax provisional payments that correspond to May, June, July, and August, 2010.
  3. Individual taxpayers engaged in the leasing of real estate are relieved from the obligation of effecting Income Tax and Flat Tax provisional payments that correspond to the first semester of 2010.
  4. Individual taxpayers taxed under the regime of minor taxpayers are relieved from the obligation of effecting the third and fourth bimonthly Income Tax, Flat Tax, and Value Added Tax final payments for 2010.
  5. Taxpayers investing in fixed assets that are eligible for the tax incentive foreseen under article 220 of the Income Tax Law (i.e. immediate deduction) are allowed to apply a 100% depreciation rate to the cost of the investment instead of the reduced depreciation schedule provided by the said provision as long as the relevant investments are used exclusively and permanently within the affected regions.  If the taxpayer was indemnified under an insurance policy for the total or partial loss of the fixed assets, the benefit is limited to the additional amounts invested in the purchase of new fixed assets.
  6. Taxpayers effecting payments in concept of salaries as well as in concept of the rendering of subordinated personal services (except for payments assimilated to salaries) are allowed to defer the payment of the relevant Income Tax withholdings that correspond to June, July, and August, 2010.  This benefit is limited to subordinated personal services rendered within the affected regions.  The payment ought to be done in 3 monthly and consecutive installments starting as of October, 2010.  The second and third installments shall be indexed by inflation, but no surcharges will be triggered.  Taxpayers taking advantage of this benefit will not be obliged to file any guarantee of payment as required under the Federal Fiscal Code, but if they fail to comply totally or partially with 2 or more installments (either consecutively or not) the benefit will be deemed revoked and the tax authorities will claim the payment in-full indexed by inflation together with the corresponding surcharges.
  7. Taxpayers subject to Value Added Tax for their acts or activities are allowed to defer the final payment that corresponds to June, July, and August, 2010.  The payment ought to be done in 3 monthly and consecutive installments starting as of October, 2010.  The second and third installments shall be indexed by inflation, but no surcharges will be triggered.  Taxpayers taking advantage of this benefit will not be obliged to file any guarantee of payment as required under the Federal Fiscal Code, but if they fail to comply totally or partially with 2 or more installments (either consecutively or not) the benefit will be deemed revoked and the tax authorities will claim the payment in-full indexed by inflation together with the corresponding surcharges.
  8. Taxpayers that before July, 2010 were authorized term payments of unpaid contributions and their ancillary charges as foreseen under the Federal Fiscal Code are allowed to defer the installments corresponding to July, 2010 and thereafter thereby being obliged to resume the authorized term payments as of September, 2010 without the triggering of any surcharges either in concept of deferral or in concept of default.

This Decree entered into force the same day of its publication and will conclude its enforceability on January 1, 2011.

This note has been issued for information purposes only and does not constitute nor should it be relied upon as a legal opinion.  To determine the tax implication of a specific fact pattern, please contact our Tax Department.