Tax News Bulletin December 2024

PROVISIONAL OR FINAL PAYMENTS

Provisional or final payments must be made no later than the 17th of the month following the corresponding payment period. However, this deadline may be extended for certain taxpayers based on the sixth numerical digit of their Federal Taxpayer Registry (RFC) code, as stated in Article 5.1 of the "Decree Compiling Various Tax Benefits and Establishing Administrative Simplification Measures" published on December 26, 2013:

INFORMATIVE DECLARATION OF TRANSACTIONS WITH THIRD PARTIES

You must report the payment, withholding, crediting, and transfer of VAT for transactions conducted with your suppliers no later than the month following the corresponding period:

The declaration must be submitted by January 31, 2025.

MULTIPLE INFORMATIVE DECLARATION OF IEPS

You must report the details of individuals to whom the tax was explicitly transferred during the reporting period.

Taxpayers required to file quarterly must submit the report for the 4th quarter of the current year no later than January 31, 2025.

EXTENSION TO ENABLE THE TAX MAILBOX

The Tax Administration Service (SAT) has announced that taxpayers have until December 31, 2025, to enable the Tax Mailbox. Failure to comply with this tax obligation after the deadline will be considered a violation.

This measure, established in 2020, requires all individuals and legal entities registered in the Federal Taxpayer Registry (RFC) to enable, register, and keep their contact information up to date in the Tax Mailbox, with the following exceptions:

• Individuals and legal entities whose tax status in the RFC is canceled or suspended. • Individuals without tax obligations and no economic activity. • Salaried taxpayers or those assimilated to salaries who earned less than 400,000 pesos in the previous fiscal year.

The Tax Mailbox is a communication tool designed by the SAT to streamline administrative notifications and deliver messages securely and efficiently. Its benefits include:

1. A private and personalized portal.
2. Electronic notifications accessible anytime and anywhere with an internet connection.
3. Timely updates on information requests or resolutions related to completed procedures.
4. Information on tax benefits, facilities, and invitations to participate in tax-related programs.
5. Useful guidance for fulfilling tax obligations and managing procedures.
6. Time and resource savings.
7. Legal certainty for SAT-issued acts and resolutions, as well as for taxpayer transactions.

The Tax Mailbox is not only a legal requirement but also a valuable tool to help taxpayers stay informed about their fiscal responsibilities and simplify the management of their tax-related processes.

REFUND OF INCOME TAX BALANCES IN FAVOR FOR RESICO INDIVIDUALS

Taxpayers under the RESICO regime (Simplified Trust Regime for Individuals) can request a refund of the balance in their favor declared in their final monthly return. This can be done either in the following month or jointly, as long as it involves the total balance in favor for the fiscal year and is requested starting January 17 of the following year.

DEADLINES FOR CFDI CANCELLATION IN 2024

The Miscellaneous Tax Resolution (RMISC) establishes that taxpayers issuing invoices (CFDI) can cancel them no later than the month in which their annual tax return is due (Rule 2.7.1.46 for 2025). However, this rule does not specify exceptions regarding the reasons for cancellation. Therefore, CFDI issuers must make any modifications or cancellations before the annual return deadline to avoid penalties.

Regarding CFDI cancellation using a credit note, while the Annex 20 guidelines allow the issuance of an expense voucher to correct or reduce an income voucher, it is not appropriate to use it as a substitute for canceling a CFDI to avoid income accumulation. For the SAT, the voucher remains valid and continues to have tax implications, such as income accumulation or improper deductions by the recipient.

To prevent these issues, it is crucial to cancel the CFDI properly and within the established timeframe.

INCREASE IN PAYROLL TAX RATE (ISN)

Starting in 2025, the Payroll Tax (ISN) rate in Mexico City will increase by one percentage point, reaching 4%. Revenue generated from this increase will be allocated to a public fund called the Infrastructure Fund, which will finance projects related to urban mobility, environmental initiatives, water policies, technology, and security.

Additionally, a tax benefit will be offered to businesses:

• Microenterprises (0 to 10 employees) will receive a 1% reduction in the tax rate.
• Small businesses (11 to 50 employees) will receive a 0.5% reduction in the tax rate.

ISSUANCE OF PAYROLL CFDI FOR THE 2024 FISCAL YEAR

According to Rule 2.7.5.6, employers who issued Payroll CFDI with errors or omissions during 2024 can correct them until February 28, 2025:

• Erroneous CFDI issued between January 1 and December 31, 2024, may be canceled.
• New CFDI must reflect the corresponding 2024 payment date.

This measure provides greater flexibility to address fiscal discrepancies before the accounting closure. However, it does not exempt taxpayers from paying any differences in withholdings, along with the applicable interest and surcharges.

EMPLOYMENT SUBSIDY 2025

Starting January 1, 2025, significant changes will benefit workers in Mexico:

• Increased Subsidy: The subsidy rate will rise from 11.82% to 13.8% of the monthly value of the Unit of Measurement and Update (UMA), equivalent to $475.00 per month.
• Higher Income Limit: The income threshold to qualify for the subsidy will increase to $10,171.00 per month, extending the benefit to more workers.
• Provisional Rate for January 2025: A provisional rate of 14.39% of the 2024 UMA value will apply in January, as the annual UMA update will take effect in February 2025.

Combined with the increase in the general minimum wage for 2025, from $248.93 to $278.80 per day, workers with taxable incomes up to 1.2 times the minimum wage will see a proportional rise in their disposable income.

These changes aim to improve workers' economic conditions and provide greater support to lower-income sectors.

LEGAL ENTITIES EXEMPT FROM THE INFORMATIVE DECLARATION OF BAD DEBTS

According to Article 27, Section XV, Subsection a), last paragraph of the Income Tax Law (ISR), taxpayers must submit a notice regarding deductions for losses from uncollectible debts. This notice must be submitted according to the procedure outlined in Annex 1-A.

It is important to note that taxpayers will comply with this requirement if they have chosen or are required to undergo an audit. In this case, the relevant information must be included in the annex of the tax audit report, called the "RECONCILIATION BETWEEN ACCOUNTING AND TAX RESULTS FOR INCOME TAX PURPOSES."

The accounting-tax reconciliation is a crucial process that businesses in Mexico must follow to adjust the differences between accounting profit and taxable profit, ensuring the correct determination of the tax base for Income Tax (ISR).

This process is necessary because accounting standards, such as the Financial Information Standards (NIF), and the fiscal provisions set out in the Income Tax Law (LISR) have different objectives and criteria for recognizing income, expenses, and deductions.

The main purpose of the accounting-tax reconciliation is to ensure that tax calculations are accurate and comply with current tax regulations. This is achieved by documenting and justifying the differences between accounting records and tax rules, allowing businesses to meet their tax obligations correctly and avoid potential inconsistencies or issues with the tax authorities. This procedure is key for proper tax management and ensuring compliance with legal tax requirements.

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We are AS Consulting Group, a member of SMS Latinoamérica, a firm specializing in accounting, tax advisory, financial services, legal, labor, foreign investment, and consulting services for small and medium-sized enterprises (SMEs), both domestic and foreign, in Mexico since 1991. Our expertise ensures the peace of mind and growth of your business. Being part of SMS Latinoamérica allows us to have a presence in over 21 countries and to be a member of the Forum of Firms, a committee of the International Federation of Accountants (IFAC).

SMS Latinoamérica is a network of professional firms, each of which operates as a separate and independent legal entity under its own name while identifying as a member of SMS Latinoamérica. Each member firm operates within a specific geographical area and provides professional services subject to the laws and professional regulations of the country or countries in which it operates. SMS Latinoamérica does not provide services to clients and is not responsible for the actions or omissions of any of its member firms. The member firms are legally separate and independent entities with no binding connection or control over one another.

This publication contains general information for informational purposes only. Neither AS Consulting Group, Arreguin Sánchez y Asociados, SMS Latinoamérica, nor any of their member firms or respective affiliates provide advisory services or professional guidance through this publication. Before making any decisions or taking actions that may impact your finances or business, you should consult with a qualified professional advisor. No entity shall be liable for any loss suffered by any person or entity relying on the information contained in this publication. ASCG