Mexico: Limitation on deductibility of net interest held valid (court decision)

A court decision concerning imitation on deductibility of net interest

A court decision concerning imitation on deductibility of net interest

The First Chamber of the Supreme Court (Suprema Corte de Justicia de la Nación) held (381/2021) that the limitation on the deductibility of net interest in excess of 30% of tax profit does not violate the principles of equity, proportionality, tax legality and legal certainty.

Part of the court ’s reasoning in validating the limitation on the deductibility of net interest was that the provision is consistent with the OECD’s base erosion and profit shifting (BEPS) project.

Read a December 2022 report (Spanish) prepared by the KPMG member firm in Mexico

 

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