Enter your search here

ARTICLES

LEGAL RESOURSES

Exchange rate:

$ 17.35

    • ARTICLE 199: WHICH IS CONSIDERED A REPORTABLE SCHEME

    A reportable scheme is considered, anyone that generates or can generate, directly or indirectly, the obtaining of a tax benefit in Mexico and has one of the following characteristics:

  • Prevent foreign authorities from exchanging fiscal or financial information with Mexican tax authorities, including by applying the Standard for the Automatic Exchange of Information on Financial Accounts in Tax Matters, referred to in the recommendation adopted by the Council of the Organization for Economic Cooperation and Development (Consejo de la Organización para la Cooperación y el Desarrollo Económicos) on July 15, 2014, as well as other similar forms of information exchange. In the case of the aforementioned Standard, this section will not be applicable to the extent that the taxpayer has received documentation from an intermediary proving that the information has been disclosed by said intermediary to the foreign tax authority in question. The provisions of this section include when an account, financial product, or investment that is not a financial account is used for the purposes of said Standard or when an income or capital is reclassified in products not subject to exchange of information.

    •  

  • Avoid applying Article 4-B or Chapter I, Title VI, of the Law on Income Tax (Ley del Impuesto sobre la Renta).

    •  

  • It consists of one or more legal acts that allow the transfer of tax losses pending reduction of fiscal profits, to people other than those who generated them.

    •  

  • It consists of a series of interconnected payments or operations that return all or part of the amount of the first payment that is part of said series, to the person who made it or to any of its partners, shareholders, or related parties.

    •  

  • Involve a resident abroad who applies an agreement to avoid double taxation signed by Mexico, regarding income that is not taxed in the taxpayer's country or tax residence jurisdiction. The provisions of this section will also be applicable when said income is taxed at a reduced rate compared to the corporate rate in the taxpayer's country or tax residence jurisdiction.

    •  

  • Involve transactions between related parties in which:

    •  

  • Intangible assets that are difficult to value are transmitted in accordance with the Transfer Pricing Guidelines for Multinational Enterprises and Fiscal Administrations, approved by the Council of the Organization for Economic Cooperation and Development (Consejo de la Organización para la Cooperación y el Desarrollo Económicos) in 1995, or those that replace them. Intangible is understood as difficult to assess when, at the time the transactions are held, there are no reliable comparable or projections of future flows or revenues that are expected to be obtained from the intangible, or the assumptions for their valuation, are uncertain, so it is difficult to predict the final success of the intangible at the time it is transferred;

    •  

  • Business restructuring is carried out, in which there is no consideration for the transfer of assets, functions, and risks or when, as a result of said restructuring, taxpayers who pay taxes in accordance with Title II of the Law on Income Tax (Ley del Impuesto sobre la Renta), reduce its operating profit by more than 20%. The corporate restructures are referred to in the Transfer Pricing Guidelines for Multinational Companies and Fiscal Administrations, approved by the Council of the Organization for Economic Cooperation and Development (Consejo de la Organización para la Cooperación y el Desarrollo Económicos) in 1995, or those that replace them;

    •  

  • The use or temporary enjoyment of goods and rights are not transferred or granted without consideration in exchange or services are provided or functions are performed that are not remunerated;

    •  

  • There are no reliable comparable, because they are operations that involve unique or valuable functions or assets, or

    •  

  • Use a unilateral protection regime granted in terms of foreign legislation in accordance with the Transfer Pricing Guidelines for Multinational Enterprises and Fiscal Administrations, approved by the Council of the Organization for Economic Cooperation and Development (Consejo de la Organización para la Cooperación y el Desarrollo Económicos) in 1995, or those that replace them.

    •  

  • Avoid establishing a permanent establishment in Mexico in terms of the Law on Income Tax (Ley del Impuesto sobre la Renta) and treaties to avoid double taxation signed by Mexico.

    •  

  • Involve the transfer of a fully or partially depreciated asset that allows its depreciation by another related party.

    •  

  • When it involves a hybrid mechanism defined in accordance with section XXIII of article 28 of the Law on Income Tax (Ley del Impuesto sobre la Renta).

    •  

  • Avoid identifying the beneficial owner of income or assets, including through the use of foreign entities or legal figures whose beneficiaries are not designated or identified at the time of their constitution or at some later time.

    •  

  • When there are tax losses whose deadline for making their tax profit decrease is about to end in accordance with the Law on Income Tax (Ley del Impuesto sobre la Renta) and operations are carried out to obtain tax profits to which said tax losses are reduced and said operations generate an authorized deduction to the taxpayer that generated the losses or to a related party.

    •  

  • Avoid applying the additional 10% rate provided for in articles 140, second paragraph; 142, second paragraph of section V; and 164 of the Law on Income Tax (Ley del Impuesto sobre la Renta).

    •  

  • In which the use or temporary enjoyment of a good is granted and the lessee in turn grants the use or temporary enjoyment of the same good to the lessor or a related part of the latter.

    •  

  • Involve operations whose accounting and tax records present differences greater than 20%, except those that arise due to differences in the calculation of depreciation.

    •  

    For the purposes of this Chapter, any plan, project, proposal, advice, instruction, or recommendation expressed expressly or tacitly in order to materialize a series of legal acts is considered as a scheme. It is not considered a scheme, the realization of a procedure before the taxpayer's authority or defense in tax disputes.

    Generalized reportable schemes are understood as those that seek to be commercialized in a massive way to all types of taxpayers or to a specific group of them, and although they require minimal or no adaptation to adapt to the specific circumstances of the taxpayer, the way to obtain the tax benefit is the same. Custom reportable schemes are understood as those that are designed, marketed, organized, implemented, or managed to adapt to the particular circumstances of a specific taxpayer.

    The Service Tax Administration (Servicio de Administración Tributaria) will issue general rules for the application of the preceding paragraphs. The Secretary of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) through a secretarial agreement shall issue the parameters on minimum amounts for which the provisions of this Chapter shall not apply.

    For the purposes of this Chapter, the monetary value derived from any of the assumptions indicated in the fifth paragraph of article 5o-A (CFF: Art. 5A) is considered a tax benefit of this Code.

    Additionally, any mechanism that avoids the application of the previous paragraphs of this article will be reportable, in the same terms indicated in this Chapter.