Mexico: Provisional payment issues for companies to consider

Mexico: Provisional payment issues for companies

Companies may face new challenges regarding the requirements for monthly income tax “provisional” payments.

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The tax law (Resolución Miscelánea Fiscal para 2021) (29 December 2020) includes measures providing for monthly provisional payments. It is contemplated that, as is the case with the annual declaration format, the monthly provisional payment will reflect “pre-loaded” information for the applicable period and from the annual declaration of the previous year.

However, issues related to the provisional payment requirements may arise when, for instance, transactions are not always reflected in the originating data or the amounts from the sale of a fixed asset do not necessarily reflect the gain realized. Timing differences may also cause issues (for instance when income for the period could be billed in a month or months following the month of the transaction or in instances when transactions are cancelled or there are transfer pricing adjustments).

These issues may be particularly complicated when the companies are in the maquiladora sector, since typically, the monthly income for maquila services is calculated once all the costs and expenses of the period have been accounted for and before the amount that is to be passed on to the client or parent company is determined.

Additionally, the provisional payment information will automatically contain the data of the previous provisional payments as well as information from the annual return of the previous year, without the possibility of modifying this information manually. Supplementary declarations may have to be used.

The preloaded system is not yet operative, but its implementation is imminent. One other important item is that an e-signature will be required to transmit the provisional payment declaration.

Read a March 2021 report (Spanish) prepared by the KPMG member firm in Mexico

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