- \n
- Updating of the concept of permanent establishment, in accordance with recommendations set forth in\u00a0action 7 of the BEPS Project.<\/li>\n
- Revision of the provisions addressing hybrid mechanisms, in accordance with recommendations set\u00a0forth in action 2 of the BEPS Project.<\/li>\n
- Modification of various provisions of the Law referring to the Preferential Tax Regimes, differentiating\u00a0the income obtained through tax transparent foreign entities and vehicles, from the income related to
\npreferential tax regimes obtained through controlled foreign entities.<\/li>\n - Introduction of a general rule addressing income realized by tax transparent foreign entities and\u00a0vehicles.<\/li>\n
- Establishment of a new limitation on the deduction of interest setting a cap equal to 30% of the\u00a0Adjusted Tax Profit, as well as modification of the thin capitalization rules.<\/li>\n
- Incorporation of the provision that was previously included in the Federal Revenue Act, allowing the\u00a0reduction of the employee profit sharing upon calculating advanced monthly payments.<\/li>\n
- Addition of a new set of rules dealing with income generated by Mexican resident individuals from the\u00a0sale of goods or the provision of services through the Internet, technological platforms, and similar
\ncomputer applications.<\/li>\n - Elimination of private REITs (FIBRAS), which will trigger the payment of the tax generated by the\u00a0transfer of the assets to the trust as regulated under transitory provisions.<\/li>\n<\/ul>\n
Value Added Tax Law<\/strong><\/p>\n
- \n
- Taxing digital services provided by non-residents with no PE in Mexico, as well as digital\u00a0intermediation services between third parties provided by non-residents with no PE and by Mexican
\nresidents.<\/li>\n - Withholding of tax payable to labor outsourcing service providers.<\/li>\n
- Rules dealing with activities not subject to VAT and their impact on credits.<\/li>\n
- Repeal of the possibility to offset VAT favorable balances against other taxes due.<\/li>\n<\/ul>\n
Excise Tax on Production and Services<\/strong><\/p>\n
- \n
- Repeal of the possibility to offset favorable excise tax balances against other taxes due.<\/li>\n<\/ul>\n
Federal Fiscal Code<\/strong><\/p>\n
- \n
- Establishment of a general anti-abuse rule (GAAR) aimed at transactions that are deemed to lack\u00a0a business purpose and resulting in a tax benefit.<\/li>\n
- Amendment of the rules governing the offset of favorable tax balances, now excluding the\u00a0possibility of being applied with respect to taxes withheld from third parties.<\/li>\n
- Introduction of the obligation for tax advisors to disclose reportable transactions, as well as the\u00a0possibility of performing tax audits to review the compliance therewith and assessing penalties
\nfor non-compliance.<\/li>\n - Addition of various provisions aimed at challenging companies that issue, market and use tax\u00a0invoices from non-existent operations.<\/li>\n<\/ul>\n
For further information with respect to the Proposed Tax Amendments, please get in touch with your regular contacts at Nader, Hayaux & Goebel.<\/p>\n
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<\/a><\/div>","protected":false},"excerpt":{"rendered":"On September 8, 2019, the Executive delivered to the Mexican Congress the Budget Bill for 2020, which includes\u00a0the proposed \u201cDecree by which various provisions of the Income Tax Law, Value Added Tax Law, Law on Special\u00a0Tax on Production and Services and the Fiscal Code are amended, added and repealed\u201d (the \u201c2020 Tax\u00a0Amendments\u201d). Below we highlight…<\/p>\n
- Repeal of the possibility to offset favorable excise tax balances against other taxes due.<\/li>\n<\/ul>\n
- Taxing digital services provided by non-residents with no PE in Mexico, as well as digital\u00a0intermediation services between third parties provided by non-residents with no PE and by Mexican