Tax News Bulletin October 2024

TAX OBLIGATIONS AND COMPLIANCE:

PROVISIONAL OR DEFINITIVE PAYMENTS

Provisional or definitive payments must be made by the 17th of the month following the relevant tax period. However, some taxpayers may have extended deadlines depending on the sixth numerical digit of their Taxpayer Identification Number (RFC), as per Article 5.1 of the "Decree Compiling Various Tax Benefits and Establishing Measures for Administrative Simplification," published on December 26, 2013:

SAT SYSTEM MALFUNCTION:MASS SIGNATURE REVOCATIONS

An error in the system resulted in the status of taxpayers' electronic signatures being displayed as "revoked" as of October 23, 2024. The Mexican Institute of Public Accountants (IMCP) announced that these certificates would show as "active" without requiring clarification requests or visits to SAT offices from taxpayers. However, the SAT has not yet issued an official statement on the issue, leaving the actual situation unclear.

PROGRESS IN THE 2025 TAX REFORM:NEW PROPOSALS

In October, initial updates were made public regarding the upcoming 2025 tax reform proposals. Notable measures under consideration include simplifying tax regimes for individuals, introducing a digital income tax for large tech companies, and reducing the VAT rate on basic goods and services. Although no firm dates for approval are set, the Mexican government has committed to presenting a detailed project during the first quarter of 2025.

RULES FOR ISSUING AND CERTIFYING CFDI (DIGITAL TAX RECEIPTS)

Taxpayers who engage in activities, earn income, or withhold taxes must issue a CFDI. Before issuing, they must send it to the SAT to verify compliance, assign a folio, and add a digital stamp. Alternatively, taxpayers may use an authorized certification provider within 24 hours after the transaction. If using an authorized provider, the CFDI must be certified within a maximum of 72 hours. The issuance date must match the transaction date.

In some cases, taxpayers issue the CFDI after a payment, which is not in line with regulations. If payment is made in installments or deferred, a CFDI must be issued for the entire transaction and additional CFDIs for each subsequent payment. Some suggest using "PPD" (payment in installments) and later adding a payment supplement, but this practice lacks regulatory support and may be flagged by tax authorities.

The SAT uses CFDI information to pre-fill tax returns, which can create uncertainty for taxpayers, especially regarding tax credits. For Income Tax (ISR), deductions must be completed before the end of the fiscal year, while for Value Added Tax (IVA), it must appear separately on the CFDI for the month in which the transaction occurs. The CFDI’s issuance date must match the transaction date, with certification required within 72 hours.

THE CHAMBER OF DEPUTIES UNANIMOUSLY APPROVED A REFORM THAT OBLIGES EMPLOYERS TO PROVIDE SEATS OR CHAIRS WITH BACKRESTS FOR WORKERS.

Employers must provide sufficient seating or chairs with backs for workers in the service, commerce and similar industries to use during their workday, either to perform their duties or to rest. These seats must be located in areas designated for periodic breaks, whenever the type of work permits.

The proposal, known as the “Chair Law,” also prohibits employers from forcing workers to stand at all times or preventing them from sitting periodically. In addition, rules on mandatory breaks and the right of employees to use seating will be included in work regulations.

The bill has already been approved by the Chamber of Deputies and is awaiting review and approval by the Senate. If the Senate approves it, it will be published in the Diario Oficial de la Federación and will become effective, but it is not yet known when exactly. Once enacted, companies will have to comply with these new rules.

IMPACTS OF RETURNING TO THE SIMPLIFIED TRUST REGIME (RESICO)

Under the transitional Article 3 of the Second Amendment to the 2024 Miscellaneous Tax Resolution (RMISC 2024), taxpayers who were removed from the Simplified Trust Regime (RESICO) may re-enter this regime if their income did not exceed 3.5 million pesos the previous year. Re-entry can occur in three ways:

__1.Authority-Updated Taxpayers: __If the authority updated their status, they must submit clarification in the SAT Portal by December 31, 2024, to express intent to return to RESICO. This action nullifies their exit.

2.ISR Deduction Benefit: Taxpayers re-entering RESICO can apply previously paid ISR on business, professional, or rental activities against their RESICO ISR obligations until the prior payments are exhausted, applying to 2022-2023 filings and 2024 monthly payments.

3.Update Option by January 2025: Taxpayers not falling under the first case can update activities and obligations before January 31, 2025, though they will not receive the ISR reduction benefit.

4.Pending Legal Action: Taxpayers with pending cases challenging their exit from RESICO (such as nullity, appeal, or amparo) and without a firm decision will be automatically updated to RESICO by the authority, with ISR credit benefits retained and exit rulings voided.

Potential Drawbacks and Impacts

Fiscal losses: Some taxpayers may have fiscal losses they can no longer use if automatically updated to RESICO. Though RESICO rates are lower, prior losses cannot be applied.

Withholding in business activities: Individuals in business activities without legal entity withholding could be impacted, as RESICO imposes a withholding rate that will not apply to the monthly payment, complicating ISR calculations.

Taxpayers should carefully assess their situation with a tax advisor before opting to return to RESICO, as this may bring short-term benefits or challenges. Those already challenging their exit may consider clarifying or adjusting their status as appropriate.

AUTHORIZATION FOR DEFINITIVE IMPORT OF USED VEHICLES TO MEXICO

For a one-year period, the Ministry of Economy (SE) will permit the definitive import of used vehicles across the country, including border areas, under specific conditions detailed in a new decree. This decree specifies eligible vehicle types, import requirements, and formalities.

ELIGIBLE VEHICLES FOR IMPORT

Eligible used vehicles include those with a Vehicle Identification Number (VIN) corresponding to vehicles manufactured or assembled in Mexico, the U.S., or Canada, classified under certain tariff sections:

• Passenger Transport: Vehicles transporting 10 or more passengers, or up to 15 passengers.
• Goods Transport: Cargo vehicles and road tractors.
• Concrete Mix Trucks: Subject to a 10% duty for models 8-9 years older than the import year.

In northern border areas (such as Baja California, Baja California Sur, and parts of Sonora), reduced tariffs apply:

• For vehicles up to 9 years old, a 1% tariff applies. • For vehicles up to 10 years old, a 10% tariff applies.

RESTRICTIONS

Used vehicles will not be permitted if they:

• Are restricted in their country of origin due to technical characteristics. • Fail to meet safety or environmental standards. • Have been reported stolen.

OWNER OBLIGATIONS

Owners must register imported vehicles in the Public Vehicle Registry (REPUVE) and submit the import declaration to validate their legal status in Mexico. The SAT may issue necessary provisions to ensure compliance with the decree.

PUBLICATION AND VALIDITY

The decree was published on November 4, 2024, in the Official Gazette of the Federation (DOF) and takes effect the following day, remaining valid for one year

This Newsletter is prepared by AS Consulting Group Written by: C.P. Samantha Hernández y L.C. Mariana García

---

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.