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Mexico: Tax offset rules for 2019

Mexico: Tax offset rules for 2019

Mexico’s executive administration in late 2018 presented to the Congress an economic package for the fiscal year 2019 that included certain initiatives, but did not propose new taxes or any tax rate increases, but did provide for adjustments to current tax standards.


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The legislative package was approved in late December 2018 by the Chamber of Deputies and the Senate. 

The tax provisions in the legislation provided that effective 1 January 2019, taxpayers could offset certain tax balances related to the same type of tax. Concerning value added tax (VAT), the use of balances generally is limited to credit in subsequent months. This rule is effective for taxes imposed under the income tax law during 2019. 

In general, this measure will affect taxpayers that usually generate favorable tax balances. Taxpayers that typically have balances in their favor, for example concerning VAT, were required to use their own resources or seek financing to pay amounts of other taxes (such as provisional income tax (ISR) payments or the amounts that they would have withheld in the ISR from their employees or suppliers) prior to the offsetting measure. The new provision generally is expected to help the financial position and cash flow of eligible taxpayers.  The tax administration (SAT) also is to issue rules to allow greater flexibility with regards to refunds for those taxpayers that meet certain requirements.

Read a December 2018 report (Spanish) prepared by the KPMG member firm in Mexico

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