Mexico: Tax Reform 2021

published on 18 December 2020 | reading time approx. 2 minutes

On December 8th, the decree in which some dispositions of the Mexican Income Tax Law, Value Added Tax Law and the Federal Tax Code were modified was published on the Official Gazette. These modifications will enter into force on January 1st, 2021.

The main changes to the aforementioned laws are the following:

 
In the Income Tax Law, provisions related to the Title III were modified to establish that civil societies and associations that perform certain type of activities, can only be treated as “nonprofit entities” for tax purposes if they have the authorization from the tax authorities to receive deductible donations. Furthermore, there are included additional requirements for companies to be granted with the authorization to receive deductible donations and new assumptions on which those civil societies and associations can lose the corresponding authorization.

 
Additional modifications to the provisions corresponding to the tax regime of  “assimilated to salaries” and income received by  individuals by digital platforms were also added.

 
Regarding the Value Added Tax Law, there are modifications on the provisions related to medical services rendered by private institutions as well as applicable sanctions to foreign residents that render digital services in Mexico and that have not been registered before Mexican tax authorities or have not been complying with its tax obligations.

 
In the Federal Tax Code, there are several modifications on the provisions regarding “business reason”, consequences on the spin-off of companies, the process to clarify the causes of the suspension of electronic certificates, on tax refunds, on joint liability, on obligations regarding to the registration before tax authorities and the cancelation of the registry, the documentation that should be kept as part of the accounting and the time for which it has to be kept, the securement of goods in a review from the authorities, on the review of the tax report issued by a certified public accountant and the tax losses.