Professional Documents
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DECREE THAT AMENDS, ENACTS AND REPEALS VARIOUS PROVISIONS OF THE VALUE ADDED
TAX LAW, THE SPECIAL TAX ON PRODUCTION AND SERVICES LAW, THE FEDERAL FEES LAW;
ENACTS THE INCOME TAX LAW; AND REPEALS THE SINGLE RATE BUSINESS TAX LAW AND
THE CASH DEPOSITS TAX LAW
Article Seventh. The Income Tax Law is issued:
INCOME TAX LAW
(Published in the Federal Register in December 11, 2013)
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FOREIGN RESIDENTS PERFOMING ENTREPRENEURIAL ACTIVITIES THROUGH TRUSTS
If a foreign resident conducts entrepreneurial activities in Mexico through a trust, the place where the
trustee conducts such activities and complies on behalf of the foreign resident with the tax obligations
derived from these activities shall be considered the place of business of that foreign resident.
FOREIGN RESIDENT INSURANCE COMPANIES
A foreign resident insurance company shall be considered to have a permanent establishment whenever it
receives income from premiums collected within Mexico or issues insurances on risks located within Mexico
through a person other than an independent agent, except in the case of reinsurance.
FOREIGN RESIDENTS ACTING THROUGH INDEPENDENT AGENTS
A foreign resident shall also be considered to have a permanent establishment in Mexico whenever he acts
within the Mexican territory through an individual or legal entity that is an independent agent, provided that
said agent does not act within the scope of its ordinary activities. For such purposes, an independent agent
shall not be considered to act within the scope of its ordinary activities whenever:
I. The independent agent has stocks of goods or merchandise with which it makes deliveries on behalf of
the foreign resident.
II. The independent agent assumes risks for the foreign resident.
III. The independent agent acts pursuant to detailed instructions from or under the general control of the
foreign resident.
IV. The independent agent conducts activities that, from an economic standpoint, correspond to the foreign
resident and not to the agents own activities.
V. The independent agent receives compensation regardless of the result of the agents activities.
VI. The independent agent conducts transactions with the foreign resident using consideration amounts or
prices other than those that would have been agreed by independent parties in comparable transactions.
CONSTRUCTION, DEMOLITION AND INSTALLATION SERVICES
In the case of services related to construction works, demolition, installation, maintenance, or assembly on
real estate, or projection, inspection, or supervision activities related to the above services, a permanent
establishment shall be considered to exist only when such services or activities last more than 183 calendar
days, whether consecutive or otherwise, in a twelve-month period.
SUBCONTRACTING CONSTRUCTION-RELATED SERVICES
For the purposes of the preceding paragraph, when a foreign resident subcontracts other enterprises to
conduct services related to construction works, demolition, installation, maintenance, or assembly on real
estate, or projection, inspection, or supervision activities related thereto, any days employed by the
subcontractors to carry out these activities shall be added to the calculation of the aforementioned term.
INCOME ATTRIBUTABLE TO A PERMANENT ESTABLISHMENT
Income earned by a persons central office, by any other establishment of such person or directly by the
foreign resident, as the case may be, from entrepreneurial activities, independent personal services, or
transfers of property of merchandise or real estate within the national territory shall be deemed to be income
attributable to a permanent establishment located in Mexico. Such income shall be subject to tax in
accordance with Titles II or IV of this Law, as applicable.
Income earned by the entitys central office or any of its foreign establishments shall also be considered
income attributable to a permanent establishment located in Mexico, in the ratio in which such permanent
establishment had participated in the expenses incurred to earn such income.
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I. Using or maintaining facilities for the sole purpose of storing or exhibiting goods or merchandise
belonging to the foreign resident.
II. Keeping stocks of goods or merchandise that belong to the foreign resident for the sole purpose of
storing or exhibiting said goods or merchandise or having them processed by another party.
III. Using a place of business for the sole purpose of purchasing goods or merchandise for the foreign
resident.
IV. Using a place of business for the sole purpose of conducting activities that are preliminary or ancillary to
those carried out by the foreign resident, whether such activities consist of advertising, supplying
information, conducting scientific research, preparing for the placement of loans, or other similar activities.
V. The bonded storage of the goods or merchandise of a foreign resident in a bonded warehouse or the
delivery of such goods or merchandise for their importation into Mexico.
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corporate income tax paid by the foreign resident legal entity corresponding to the dividends or profits
received by the Mexican resident, even if the credit of the proportional amount of the tax is limited under the
provisions of the seventh paragraph of this article, in addition to the dividends or profits received,
undiminished by any amount of income tax paid or withheld upon distribution thereof. The credit referred to
in this paragraph shall only apply when the Mexican resident legal entity owns at least ten percent of the
capital stock of the foreign resident legal entity for at least six months prior to the date on which the
dividends or profits in question are paid.
CALCULATION OF THE PROPORTIONAL AMOUNT OF INCOME TAX PAID ABROAD
For the purposes of the preceding paragraph, the proportional amount of income tax paid abroad by the
legal entity residing in another country that corresponds to the dividend or profit received by the legal entity
residing in Mexico shall be calculated in accordance with the following formula:
Where:
MPI: Proportional amount of income tax paid abroad by the legal entity residing abroad at the first corporate
level that distributes dividends or profits directly to the legal entity residing in Mexico.
D: Dividend or profit distributed by the legal entity residing abroad to the legal entity residing in Mexico,
undiminished by income tax paid or withheld upon distribution.
U: Profit used as basis to distribute dividends, after payment of income tax at the first corporate level,
earned by the legal entity residing abroad that distributes dividends to the legal entity residing in Mexico.
IC: Corporate income tax paid abroad by the legal entity residing abroad that distributed dividends to the
legal entity residing in Mexico.
CREDIT FOR PROPORTIONAL AMOUNT OF INCOME TAX PAID ABROAD
In addition to the provisions of the preceding paragraphs, the proportional amount of income tax paid by a
foreign resident legal entity that distributes dividends to another legal entity residing abroad may be
credited, if the latter, in turn, distributes said dividends to a Mexican resident legal entity. Those claiming the
credit referred to in this paragraph shall consider as an item of gross income the proportional amount of
corporate income tax corresponding to the dividends or profits received indirectly for which the credit is to
be taken, even if the credit of the proportional amount of the tax is limited under the provisions of the
seventh paragraph of this article, in addition to the dividends or profits received directly by the legal entity
residing in Mexico, undiminished by any amount of income tax paid or withheld upon distribution thereof.
Where:
MPI2: Proportional amount of income tax paid abroad by the legal entity residing abroad at the second
corporate level that distributes dividends or profits to another legal entity residing abroad at the first
corporate level, which in turn distributes dividends or profits to a legal entity residing in Mexico.
D: Dividend or profit distributed by the legal entity residing abroad to the legal entity residing in Mexico,
undiminished by income tax paid or withheld upon distribution.
U: Profit used as basis to distribute dividends, after payment of income tax at the first corporate level,
earned by the legal entity residing abroad that distributes dividends to the legal entity residing in Mexico.
D2: Dividend or profit distributed by the legal entity residing abroad to the legal entity residing abroad that
distributes dividends to the legal entity residing in Mexico, undiminished by income tax paid or withheld
upon the first distribution.
U2: Profit used as basis to distribute dividends, after payment of income tax at the second corporate level,
earned by the legal entity residing abroad that distributes dividends to another legal entity residing abroad
that distributes dividends to the legal entity residing in Mexico.
IC2: Corporate income tax paid abroad by the legal entity residing abroad that distributes dividends to
another legal entity residing abroad that distributes dividends to the legal entity residing in Mexico.
The tax credit described in the preceding paragraph shall only be available when the legal entity residing
abroad that paid the income tax to be credited is found at the second corporate level. To take such credit,
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the legal entity residing in Mexico must have a direct participation in the capital stock of the legal entity
residing abroad that distributes the dividends of at least ten percent. This last entity must hold at least ten
percent of the capital stock of the legal entity residing abroad in which the legal entity residing in Mexico has
an indirect participation, and this last participation must be of at least five percent of the capital stock. The
percentages of participation in the capital stock described in this paragraph must be maintained at least
during the six months prior to the date when the relevant dividend or profit is paid. In addition, to take the
credit described in the preceding paragraph, the legal entity residing abroad in which the legal entity
residing in Mexico has an indirect participation must be resident of a country that has entered into a broad
agreement for the exchange of information with Mexico.
LIMIT TO THE INCOME TAX CREDIT FOR LEGAL ENTITIES
In the case of legal entities, the amount of income tax creditable under the first paragraph of this article shall
not exceed the amount resulting from applying the rate described in article 9 of this statute to the tax profit
determined under the provisions of this Law to income received from foreign sources of wealth. For these
purposes, the deductions attributable exclusively to income from foreign sources of wealth shall be
considered at a hundred percent; deductions attributable exclusively to income from Mexican sources of
wealth shall not be considered at all; and the deductions attributable to income from Mexican sources of
wealth and partially to foreign sources of wealth shall be considered in the same ratio that represents the
relevant income coming from abroad, with regard to the taxpayers overall income for the year. The limit to
the tax credit referred to in this paragraph shall be calculated per country or territory.
CALCULATION OF THE LIMIT TO THE INCOME TAX CREDIT FOR LEGAL ENTITIES
In addition, in cases of legal entities, the sum of the proportional amounts of the taxes paid abroad that may
be credited in accordance with paragraphs two and four of this article shall not exceed the tax credit limit.
The tax credit limit shall be calculated pursuant to the following formula:
LA = [(D + MPI + MPI2)(T)] - ID
Where:
LA: Limit to the credit for corporate income taxes paid broad at the first and second corporate levels.
D: Dividend or profit distributed by the legal entity residing abroad to the legal entity residing in Mexico,
undiminished by income tax paid or withheld upon distribution.
MPI: Proportional amount of corporate income tax paid abroad, described in the third paragraph of this
article.
MPI2: Proportional amount of corporate income tax paid abroad, described in the fourth paragraph of this
article.
T: Rate described in article 9 of the Law.
ID: Creditable tax described in the first and sixth paragraphs of this article, corresponding to the dividend or
profit received by the legal entity residing in Mexico.
CREDIT IN CASES OF SPIN OFFS
When a legal entity is entitled to credit the income tax paid abroad, in accordance with the preceding
paragraphs, spins off, the right to claim the tax credit shall correspond exclusively to the original company.
If the original company ceases to exist by reason of the spin-off, it may transfer this right to the legal entities
that are spun off, in proportion to the division of the capital stock by reason of the spin-off.
LIMIT TO INCOME TAX CREDIT FOR INDIVIDUALS
In the case of individuals, the amount of the creditable tax referred to in paragraph one of this article shall
not exceed the amount resulting from applying the provisions of Title IV, Chapter XI, of this Law to income
received during the fiscal year from sources of wealth located abroad, once the deductions authorized for
said income have been taken, in accordance with the relevant chapter of the aforementioned Title IV. For
this purpose, deductions not attributable exclusively to income from a source of wealth located abroad must
be taken into account in the aforementioned proportion.
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INDIVIDUALS WITH ENTREPRENEURIAL ACTIVITIES
In the case of individuals who determine the tax on their income from entrepreneurial activities in
accordance with Title IV, Chapter XI, of this Law, the amount of creditable tax referred to in paragraph one
of this article shall not exceed the amount resulting from applying the tax rate schedule established in article
152 of this Law to their total income received from abroad. For this purpose, deductions not attributable
exclusively to income from a source of wealth located abroad must be taken into account in the
aforementioned proportion. For purposes of this and the preceding paragraphs, the limits to the tax credit
shall be calculated per country or territory.
FOREIGN INDIVIDUALS RESIDING IN MEXICO
Foreign individuals residing in Mexico required to pay tax abroad because of their nationality or citizenship,
may claim the credit referred to in this article for up to an amount equivalent to the tax that they would have
paid abroad, if they had not had such citizenship or nationality.
TERM TO CLAIM THE CREDIT
When the creditable tax is within the limits referred to in the preceding paragraphs and it cannot be totally or
partially credited, the credit may be claimed during the following ten years until exhausted. For the purposes
of this credit, the relevant provisions on losses of Title II, Chapter V, of this Law shall be applied.
Any portion of the tax paid abroad that may not be credited under this article may not be deducted for
purposes of this Law.
APPLICABLE EXCHANGE RATE
To calculate the amount of tax paid abroad that can be credited under the second and fourth paragraphs of
this article, a currency conversion must be made, applying the last exchange rate published in the Federal
Register, prior to the last day of the year that corresponds to the profit from which the dividend or profit
received by the Mexican resident is paid. In any other case described in this article, for purposes of
determining the tax paid abroad that may be credited, the currency conversion shall be made considering
the monthly average of the daily exchange rates published in the Federal Register, for the calendar month
in which the tax is paid abroad directly or through withholding.
TAX TREATIES
Taxpayers who have paid abroad an amount of income tax which exceeds that provided for in any treaty to
avoid double taxation, applicable to the item of income in question, may credit the excess amount under the
terms of this article only after the dispute resolution procedure contained in said treaty has been completed.
CASES IN WHICH FOREIGN TAXES MAY NOT BE CREDITED
Tax paid abroad may not be credited when the withholding or payment thereof is contingent upon being
creditable under the terms of this Law.
SUPPORTING DOCUMENTATION
In all cases, taxpayers must have supporting documentation evidencing payment of the tax. In the case of
taxes withheld in countries with which Mexico has entered into broad agreements for the exchange of
information, a withholding certificate shall suffice.
MEXICAN RESIDENT ENTITIES RECEIVING DIVIDENDS OR PROFITS
Mexican resident legal entities earning income from dividends or profits distributed by legal entities residing
abroad shall calculate the proportional amount of taxes and the limit described in the seventh paragraph of
this article for each fiscal year in which dividends are distributed. For these purposes, legal entities residing
in Mexico shall be required to keep a record that allows to identify the year to which the dividends or profits
distributed by a legal entity residing abroad correspond. When a Mexican resident legal entity does not
have elements to identify the fiscal year to which the distributed dividends or profits correspond, the record
referred to in this paragraph shall describe that the first profits generated by such entity are the first to be
distributed. Taxpayers shall keep all the documentation supporting the information described in the record
referred to in this paragraph. Mexican residents that fail to keep such record or documentation or that no
make the calculation as described above, shall not be entitled to credit the tax mentioned in the second and
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fourth paragraphs of this article. The record described herein shall be kept as of the first acquisition of
shares, but it shall include information concerning profits from which dividends or profits are distributed,
even if they correspond to prior years.
INCOME ATTRIBUTABLE TO A PERMANENT ESTABLISHMENT
When a foreign resident has a permanent establishment in Mexico and income from foreign sources of
wealth is attributable to such establishment, the credit described in this article may be taken only with
regard to attributable income, subject to withholding.
TAX PAID ABROAD
A tax paid abroad shall be considered to have the nature of an income tax, whenever it complies with the
general rules issued by the Tax Administration Service. A tax paid abroad shall be considered to have the
nature of an income tax when such tax is a tax covered by a treaty to avoid double taxation entered into by
Mexico.
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COMPOSITION OF THE FINANCIAL SYSTEM
For the purposes of this Law, the financial system is composed of Mexicos Central Bank [Banco de
Mxico]; banking, insurance, and bonding institutions; holding companies of financial groups; general
bonded warehouses; retirement fund management companies; financial leasing companies; credit unions;
community finance companies; capitals market securities mutual funds; debt securities mutual funds;
financial factoring companies; brokerage houses; currency exchange firms; and non-bank banks, whether
they reside in Mexico or abroad. The following shall also be considered members of the financial system:
multiple purpose financial institutions referred to in the General Law of Credit Organizations and Ancillary
Activities [Ley General de Organizaciones y Actividades Auxiliares del Crdito] that have accounts and
notes receivable stemming from the activities which constitute their main corporate purpose, in accordance
with the provisions of said statute, representing at least seventy percent of their total assets, or that have
income derived from said activities and from the transfer or administration of credits granted by them,
representing at least seventy percent of their total income. To determine if the seventy percent threshold is
met, assets or income stemming from credit sales of goods or services belonging to the companies
themselves; and the sales made by the companies chargeable to credit cards, or financed by third parties
shall not be taken into account.
NEWLY INCORPORATED MULTIPLE PURPOSE COMPANIES
In the case of newly incorporated multiple purpose companies, the Tax Administration Service [Servicio de
Administracin Tributaria] (SAT), through a letter ruling, considering the fulfillment program submitted for
this purpose by the taxpayer, may, for the first three years of existence of said companies, establish a
percentage lower than that indicated in the preceding paragraph, so that said companies to be considered
members of the financial system under this Law.
CONCEPT OF SOCIAL BENEFITS
For the purposes of this Law, social benefits are considered to be expenses intended to aid in facing
present or future contingencies or needs, as well as to grant benefits in favor of employees, partners or
members of cooperatives, for their physical, social, economic, or cultural advancement, allowing them to
improve their quality of life and that of their families. In no case shall social benefits include expenses in
favor of persons that do not qualify as employees or partners, member of cooperatives.
CONCEPT OF CUSTODIANS OF SECURITIES
For the purposes of this Law, custodians of securities means banking institutions, managing companies of
mutual funds, distributing companies of mutual-fund shares, brokerage houses, and institutions for the
deposit of securities in the country, licensed by the Federal Government under the Stock Exchange Act [Ley
del Mercado de Valores] to provide the service of safekeeping and administration of negotiable instruments.
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ASSIGNMENT OF RIGHTS UPON INCOME FROM GRANTING THE TEMPORARY USE AND
ENJOYMENT OF IMMOVABLE PROPERTY
The assignment of rights on income for granting the temporary use or enjoyment of real estate shall be
considered a financing transaction. The amount earned from the assignment shall be treated as a loan, and
the rental payments accrued in accordance with the agreement must be included in gross income, even
when said rents are collected by the acquirer of the rights. The consideration paid for the assignment shall
be treated as a credit or debt, as appropriate, and the difference vis--vis the rents shall be treated as
interest. The amount of the credit or debt shall yield an inflation adjustment under Title II, Chapter III, of this
Law. This adjustment shall be included in or deductible from gross income, as the case may be. To
calculate such adjustment, the discount rate used for the assignment of the right, the sum of the rents of
which the assignment is composed, the value paid for said rents, and the term stipulated in the agreement
shall be considered, as set forth in the Regulations of this Law.
ADJUSTMENTS THROUGH INDEXES, FACTORS, INVESTMENT UNITS, ETC
Whenever credits, debts, transactions, or the amount of payments from financial leasing agreements are
adjusted through the use of indexes or factors or in any other way, including through the use of investment
units [unidades de inversin], the adjustment shall be considered part of the interest.
ACCRUED EXCHANGE GAINS OR LOSSES
The treatment that this Law sets forth for interest shall be applied to exchange gains or losses accrued from
foreign-currency fluctuations, associated to principal and interest. Exchange losses may not exceed the
amount which would result from using the exchange rate to settle foreign-currency obligations payable in
the Mexican Republic established for such purpose by Mexicos Central Bank and published in the Federal
Register, corresponding to the day on which the loss is sustained.
GAINS FROM DISPOSITIONS OF SHARES OF DEBT SECURITIES MUTUAL FUNDS
The treatment that this statute sets forth for interest shall be applied to gains from selling the shares of the
debt securities mutual funds referred to in the Mutual Funds Law [Ley de Sociedades de Inversin]
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from previous years shall not be reduced.
In order to determine taxable profit, for purposes of the employees profit-sharing, taxpayers shall subtract
from gross income, the non-deductible items, described in article 28(XXX) of this statute.
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Legal entities that distribute dividends or profits referred to in article 140(I) and (II) of this statute shall
calculate the tax on such dividends or profits by applying to them the rate set forth in article 9 of this Law.
This tax shall be definitive.
Artculo 12. ESTIMATED PAYMENTS AND FINAL TAX RETURN IN CASES OF LIQUIDATION
Within the month following the date on which the liquidation of a legal entity is completed, the liquidator
must submit the final tax return for the liquidation year. The liquidator must also submit monthly payments of
estimated income tax on account of the tax for the liquidation year no later than the seventeenth day of the
month immediately following that to which the relevant payment corresponds, in accordance with article 14
of this Law, while the liquidation of assets is being performed. Said payments of estimated income tax shall
not take into account the assets of establishments located abroad. Following the end of each calendar year,
the liquidator must file a return no later than on the seventeenth day of January of the following year. In this
return, the tax for the period encompassing from the beginning of the liquidation up to the last month of the
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year in question shall be declared and paid, and the monthly and annual payments of income tax made
previously for the aforementioned period shall be credited. The final return shall be for the liquidation year.
It shall include the assets of establishments located abroad, and must be filed no later than in the month
following that in which the liquidation ends, even if less than twelve months have elapsed since the last
return.
EXIT TAX
For the purposes of this Law, a Mexican resident legal entity shall be deemed to be liquidated when it
ceases to reside in Mexico under the Federal Fiscal Code or in accordance with a treaty to avoid double
taxation to which Mexico is a party. For this purpose, all the assets that the legal entity holds in Mexico and
abroad shall be considered disposed of and their value shall be considered to be the market value thereof
as of the date of the change of residence; when this value is not known, an appraisal conducted for such
purpose by a person authorized by the tax authorities shall be used. The resulting tax must be paid within
15 days following the day on which the change of residence for tax purposes takes place.
APPOINTMENT OF LEGAL REPRESENTATIVE
For the purposes of the preceding paragraph, a legal representative meeting the requirements set forth in
article 174 of this Law shall be appointed. This representative shall keep available to the tax authorities the
documentation evidencing payment of the tax on the taxpayers behalf for the term set forth in the Federal
Fiscal Code, counted as of the day following that on which the tax return is filed.
JOINT AND SEVERAL LIABILITY FOR THE LEGAL REPRESENTATIVE
The legal representative designated in accordance with this article shall be jointly and severally liable for the
taxes that the legal entity residing in Mexico that liquidates is required to pay.
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DELIVERY OF CASH OR GOODS TO THE BENEFICIARIES
Cash or assets from the trust delivered by the trustee to the trust beneficiaries shall be considered
reimbursements of contributed capital until said capital has been recovered. In addition, these deliveries
shall reduce the balance of each of the individual Capital Contributions Accounts, maintained by the trustee
for each beneficiary until the balance of each of such accounts has been exhausted.
DEDUCTION OF SETTLORS CONTRIBUTIONS
For the purpose of determining the years tax profit or loss stemming from the entrepreneurial activities
conducted through the trust, the deductions shall include the deduction of goods contributed to the trust by
the settlor when the settlor is also a trust beneficiary and receives no consideration at all in cash or in kind
for said goods. The acquisition cost of the goods so contributed shall be the original amount of the
investment, updated for inflation, pending to be deducted or the average per-share cost, depending on the
good in question, that the settlor has at the time the settlor makes the contribution to the trust, and that
same acquisition cost must be recorded in the accounting records of the trust and in the Capital
Contributions Account of the party in question. A settlor who contributes the goods referred to in this
paragraph may not deduct said goods when calculating tax profits or losses derived from other activities.
When the goods contributed to a trust referred to in the preceding paragraph, are returned to the settlors
who contributed them, the goods shall be considered to have been returned at the tax value they have in the
accounting records of the trust at the moment of their return, and they shall be considered reacquired at that
same value by the persons who contributed them.
ESTIMATED PAYMENTS
Payments of estimated income tax on entrepreneurial activities conducted through the trust shall be
calculated in accordance with article 14 of this Law. In the first calendar year of operations of the trust or
when, in accordance with the foregoing, there is no profit quotient for purposes of the payment of estimated
income tax, the profit quotient calculated under article 58 of the Federal Fiscal Code for the principal activity
conducted through the trust shall be used. For such purpose, the trustee shall submit one return for the
trustees own activities and another one for each trust.
BENEFICIARIES THAT ARE INDIVIDUALS RESIDING IN MEXICO
When a trust beneficiary is an individual residing in Mexico, the portion of taxable income or tax profit
stemming from the entrepreneurial activities conducted through the trust, corresponding to that individual in
accordance with the agreement shall be considered by such individual as income from entrepreneurial
activities.
BENEFICIARIES THAT ARE FOREIGN RESIDENTS
Trust beneficiaries residing abroad shall be deemed to have a permanent establishment in Mexico for the
entrepreneurial activities conducted in the country through the trust; and they shall file annual income tax
returns for the portion of the taxable income or tax profit, derived from said activities, that corresponds to
them for the year.
TRUSTS WITH NO BENEFICIARIES
In cases in which no trust beneficiaries have been named or the beneficiaries cannot be identified, the
entrepreneurial activities conducted through the trust shall be understood to be carried out by the settlor.
OBLIGATIONS OF THE SETTLORS OR THE BENEFICIARIES
The trust beneficiaries or, as applicable, the settlor, shall be liable for the trustees failure to fulfill obligations
on behalf of the trust beneficiaries or the settlor.
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PROFIT QUOTIENT
I. The profit quotient for the last twelve-month year for which a tax return was or should have been filed shall
be calculated. To this end, the tax profit for such year shall be divided by nominal income for the same year.
PRODUCTION COOPERATIVES AND PARTNERSHIPS AND ASSOCIATIONS GOVERNED BY CIVIL
LAW
Legal entities that distribute advance payments or yields pursuant to article 94(II) of this Law, shall add to
the tax profit or subtract from the tax loss, as appropriate, the amount of any advance payments and yields,
if any, that they have distributed to their members in accordance with the aforementioned provision in the
year for which the quotient is being calculated.
FIRST ESTIMATED PAYMENT ON THE SECOND FISCAL YEAR
In the second fiscal year, the first payment of estimated income tax shall cover the first, second, and third
months of the year, and the profit quotient for the first year shall be used, even if said year did not have
twelve months.
YEAR IN WHICH THE QUOTIENT IS APPLIED
When in the last twelve-month year there is no profit quotient in accordance with this section, the profit
quotient of the last twelve-month year for which there is such a quotient shall be applied, provided that said
year is not more than five years prior to the year for which monthly estimated payments of income tax must
be made.
CALCULATION OF TAX PROFIT
II. The tax profit for the monthly estimated payments of income tax shall be calculated by multiplying the
profit quotient determined under the preceding section by the nominal income corresponding to the period
from the beginning of the fiscal year through the last day of the month to which the payment corresponds.
PRODUCTION COOPERATIVES AND PARTNERSHIPS AND ASSOCIATIONS GOVERNED BY CIVIL
LAW
Legal entities that distribute advance payments or yields pursuant to article 94(II) of this Law shall reduce
the tax profit for purposes of the monthly estimated payment of income tax obtained in accordance with the
preceding paragraph by the amount of the advance payments and yields that such legal entities distribute to
their members pursuant to the aforementioned article in the period from the beginning of the year until the
last day of the month to which the payment corresponds. A tax invoice describing the amount of the
advance payments and the yields distributed, as well as the tax withheld shall be issued.
TAX LOSS CARRYFORWARDS
The tax profit determined in accordance with this section shall be reduced, as applicable, by the tax loss
carryforwards from previous years pending to be used to offset tax profits, without prejudice to the right to
reduce said carryforwards from the tax profit for the year.
AMOUNT OF ESTIMATED PAYMENTS
III. The estimated payments of income tax shall be the amounts resulting from applying the rate set forth in
article 9 of this Law to the tax profit calculated pursuant to the preceding section. Estimated payments of
income tax made previously for the same year may be credited against the tax owed. Any amount withheld
from the taxpayer in the period in accordance with article 54 of this Law may also be credited against said
estimated payments of income tax.
YEAR OF LIQUIDATION
For the year of liquidation, to calculate the monthly estimated payments of income tax, the profit quotient
shall be the profit quotient corresponding to the last return that the liquidator filed or should have filed at the
end of each calendar year in accordance with article 12 of this Law or the profit quotient calculated in
accordance with the last paragraph of (I) of this article.
NOMINAL INCOME
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Nominal income referred to in this article shall be gross income, except for the annual adjustment for
inflation includible in gross income. In cases of credits or transactions denominated in investment units,
nominal income for purposes of this article shall be interest income when accrued, including the adjustment
corresponding to the principal for being credits or transactions denominated in said units.
BEGINNING OF OPERATIONS UPON MERGER
Taxpayers that begin operations as a result of a merger of companies from which a new company emerges,
shall, in such year, make estimated payments of income tax as of the month in which the merger takes
place. For these purposes, the profit quotient referred to in the first paragraph of (I) hereof shall be
calculated considering the tax profits or losses and the income of the merging companies altogether. If the
merging companies are in their first year of operations, the quotient shall be calculated on the basis of the
aforementioned items for said year. When there is no quotient in accordance with this paragraph, the last
paragraph of (I) hereof shall be applied, taking into account the provisions of this paragraph.
BEGINNING OF OPERATIONS UPON SPIN OFF
Taxpayers beginning operations as a result of a spin-off of companies shall make estimated payments of
income tax as of the month in which the spin-off takes place, considering for that year the profit quotient of
the original company for that same year. The quotient referred to in this paragraph shall also be used for the
purposes of last paragraph of (I) hereof. The original company shall consider all the estimated payments of
income tax that it made in the year in which the spin-off takes place as estimated payments of income tax
effectively paid before the spin-off, and these payments may not be allocated to the spun-off companies,
even if the original company ceases to exist.
CASES IN WHICH A TAX RETURN IS REQUIRED
Taxpayers shall file returns of estimated payments of income tax whenever there is a tax payable or a
favorable balance, as well as in the case of the first return on which no tax is due. Taxpayers shall not be
required to file returns of estimated payments of income tax: in the year of initiation of operations; when they
have submitted a notice of suspension of activities as set forth in the Regulations of the Federal Fiscal Code
[Reglamento del Cdigo Fiscal de la Federacin]; and when they have neither a tax liability nor a balance in
their favor and the return in question is not the first return having these characteristics.
RULES TO CALCULATE ESTIMATED PAYMENTS
Taxpayers shall comply with the following in order to determine the estimated payments of income tax
described in this article:
INCOME EXCLUDED
a) Income from foreign sources of wealth, subject to income tax withholding, and income attributable to
establishments located abroad subject to income tax in the country where such establishments are found
shall not be considered.
REDUCTION OF ESTIMATED PAYMENTS
b) Taxpayers who consider that the profit quotient that they are required to apply to determine the estimated
payments of income tax is higher than the profit quotient of the year to which such payments correspond
may, as of the second half of the year, request an authorization to reduce the amounts of the payments they
are required to make. When an authorization to reduce the estimated payments of income tax causes that
such payments be less than the amounts that the relevant taxpayer would have paid under this article, if the
information concerning the profit quotient of the annual tax return for the year in which the payments were
reduced had been used, interests shall be paid upon the difference between the authorized payments and
the payments that would have been due.
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year in which said creditors forgive the aforementioned debts. When the amount of the forgiven debts is
greater than the tax loss carryforwards, the resulting difference shall not be considered an item of gross
income, except when a forgiven debt derives from transactions entered into by and between related parties,
described in article 179 of this statute.
CHAPTER I. INCOME
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ELECTION IN CASES OF FINANCIAL LEASE
III. In cases of income from financial leasing agreements, taxpayers may elect to consider the entire price
agreed or the portion thereof that is due and payable during the year as income earned in the year.
ELECTION IN CASES OF SALES ON CREDIT
In the case of sales on credit in accordance with the Federal Fiscal Code, taxpayers shall consider the
entire price agreed, as income earned in the year.
SCOPE AND CHANGE OF THE ELECTION
The election referred to in the first paragraph of this section must be exercised for all the agreements. The
election may be changed without meeting any requirements on a single occasion. For the second and
subsequent changes, at least five years from the last change must elapse. When a change is to be made
before said term has elapsed, the requirements set forth in the Regulations of this Law must be complied
with.
When pursuant to the provisions of the first paragraph of this section, a taxpayer has elected to consider as
income earned in the year only the portion of the agreed price that is due and payable in such year, and the
taxpayer transfers the outstanding documents or uses them for an accord and settlement, such taxpayer
must consider the amount not yet included in gross income as income earned in the year in which such
transfer or accord and settlement is carried out.
INCOME IN CASES OF FAILURE TO COMPLY
In the event of a breach of financial leasing agreements regarding which a taxpayer has elected to consider
as income earned in the fiscal year only the portion of the price due and payable, the lessor shall consider,
as income earned in the year, the amounts due and payable in the same year by the lessee, reduced by the
amounts already repaid in accordance with the respective agreement.
INCOME FROM FINANCIAL LEASES
For financial leasing agreements, income derived from any of the options referred to in article 15 of the
Federal Fiscal Code shall be considered income earned in the year in which it becomes due and payable.
INCOME FROM UNPAID DEBTS
IV. Income derived from debts not paid by the taxpayer, in the month in which the statute of limitations
elapses or the month of expiration of the term referred to in the second paragraph of article 27(XV) of this
statute.
INCOME FROM REAL ESTATE WORK CONTRACTS
Taxpayers that enter into real estate work contracts shall consider that income from said agreements is
includible in gross income on the date on which the estimates of completed work are authorized or
approved for collection, provided that said estimates are paid within three months following their approval or
authorization. Otherwise, income from said contracts shall not be considered includible in gross income
until payment is effectively made. Taxpayers that enter into other work contracts in which they undertake to
execute said work in accordance with a blueprint, design, and budget shall consider that income is earned
on the date on which the estimates of completed work are authorized or approved for collection, provided
that said estimates are paid within three months following the approval or authorization. Otherwise, income
from said contracts shall not be considered includible in gross income until payment is effectively made. In
addition, in cases in which taxpayers are not required to submit estimates or the periodicity of submittal is at
intervals of more than three months, such taxpayers shall consider includible in gross income, the quarterly
progress in performing the work or manufacturing the goods referred to in the work agreement. Items
includible in gross income from work agreements referred to in this paragraph shall be reduced by the
portion of advance payments, deposits, guarantees, or payments for any other reason previously included
therein and amortized against the estimate or work progress.
Taxpayers referred to in the preceding paragraph shall consider as items includible in gross income, in
addition to the items described therein, any payment received in cash, in kind, or in services, whether as
advance payments, deposits, guarantees on the fulfillment of any obligation, or any other item.
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VIII. Amounts received to cover third-party expenses, except in cases where said -expenses are supported
with tax invoices at the name of the party on whose account the expense is made.
INTERESTS ACCRUED AND PAST-DUE INTERESTS
IX. Interests accrued in favor of the taxpayer in the year, with no adjustment at all. In the event of past-due
interest, as of the fourth month, only effectively collected interests shall be includible in gross income. For
such purposes, income on past-due interest received more than three months following the month in which
the debtor became delinquent shall be considered to cover, firstly, the past-due interest accrued in the three
months following the month in which the debtor became delinquent, until the amount received exceeds the
amount of the accrued past-due interests included in gross income, corresponding to the last period
referred to above.
For purposes of the preceding paragraph, past-due interests that are collected shall be included in gross
income until the moment when those effectively collected exceed the amount of past-due interests included
in gross income in the first three months and for up to the excess amount.
ANNUAL INFLATION ADJUSTMENT INCLUDIBLE IN GROSS INCOME
X. The annual inflation adjustment includible in gross income in accordance with article 44 of this Law.
LOANS, CAPITAL CONTRIBUTIONS AND CAPITAL INCREASES
XI. Amounts received in cash, either in Mexican or foreign currency, as loans, quasi-equity, or capital
increases greater than $600,000.00 when the provisions of article 76(XVI) of this Law are not complied with.
INTERESTS ACCRUED BY MEXICAN RESIDENTS OR FOREIGN RESIDENTS WITH A PERMANENT
ESTABLISHMENT
Interests accrued by Mexican residents or foreign residents with a permanent establishment in Mexico in
favor of foreign residents, the rights upon which are transferred to a Mexican resident or a foreign resident
with a permanent establishment in Mexico, shall be includible in gross income when the latter receive such
rights, except when there is proof that the foreign residents paid the tax described in article 166 of this Law.
Artculo 19. GAINS FROM DISPOSITIONS OF PIECES OF LAND, INSTRUMENTS, GOLD PIECES
AND SILVER PIECES
To calculate gains on transfers of property of land, securities representing the ownership of property except
for merchandise, as well as raw materials, finished or semi-finished products, and other securities whose
yields are not considered interest under article 8 of this Law, gold or silver pieces that have been used as
Mexican or foreign currency, and coins known as troy ounces, taxpayers shall subtract the original amount
of the investment from income earned from the transfer of property thereof. Such original amount of the
investment may be adjusted by multiplying it by the update factor for inflation corresponding to the period
from the month of acquisition until the month immediately preceding that of the transfer.
EXCEPTION FOR SHARES AND DEPOSIT CERTIFICATES
The adjustment referred to in the preceding paragraph shall not be applicable for calculating gains on
transfers of shares and certificates of deposit of goods or merchandise.
GOODS ACQUIRED THROUGH MERGERS OR SPIN OFFS
In the case of property acquired as a result of mergers or spin-offs of companies, the original amount of the
investment shall be the merged or original companys acquisition value, and the acquisition date shall be
the date that corresponded to the latter.
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TRANSACTIONS SETTLED IN CASH
I. When a transaction is settled in cash, the gain or loss, as appropriate, shall be the difference between the
final amount received or delivered as a result of the settlement or, as applicable, of the exercise of the rights
or obligations of which the transaction is composed and any amounts previously paid or received to execute
said transaction or to acquire the rights or obligations contained in said transaction, as the case may be.
TRANSACTIONS SETTLED IN KIND
II. When a transaction is settled in-kind with the delivery of merchandise, negotiable instruments, securities
or foreign currency, the goods covered by the transaction shall be considered transferred or acquired, as
appropriate, for the price received or delivered in the settlement, plus any initial amount paid or received to
execute said transaction or to subsequently acquire the rights or obligations set forth in the negotiable
instruments or contracts documenting the same, as the case may be.
DISPOSITIONS PRIOR TO THE EXPIRATION OF THE TRANSACTION
III. When the rights or obligations set forth in the negotiable instruments or agreements in which a derivative
is recorded are transferred before the maturity thereof, gain or loss, as appropriate, shall be the difference
between the amount received for the transfer and the initial amount, if any, paid for their acquisition.
RIGHTS NOT EXERCISED OR OBLIGATIONS NOT MET THROUGH MATURITY
IV. When the rights or obligations set forth in the negotiable instruments or contracts in which a derivative is
recorded are not exercised at the maturity thereof or during the term thereof, the gain or loss, as applicable,
shall be any initial amount received or paid to execute said transaction or to subsequently acquire the rights
and obligations contained in said transaction, as appropriate.
ACQUISITION OF THE RIGHT OR OBLIGATION TO EXECUTE A TRANSACTION
V. When the right or obligation to enter into a derivative is acquired, gain or loss shall be determined in
accordance with this article, on the date of settlement of the transaction upon which the right or obligation
was acquired; and, if applicable, the initial amount referred in to the preceding sections shall be added to
the amount paid or received for the acquisition of the right or obligation referred to in this section. When the
right or obligation to enter into the derivative in question is not exercised within the agreed term, the
provisions of the preceding section shall apply.
DELIVERY OF TREASURY SHARES
VI. When the holder of the right granted in the transaction exercises the right and the obligor delivers shares
issued by it that have not been subscribed (treasury shares), the obligor shall not include in gross income
the price or the premium received for executing the transaction nor the income received for exercising the
right granted, and the obligor shall consider both amounts to be capital contributions.
SETTLEMENT OF DIFFERENCES DURING THE VALIDITY OF A TRANSACTION
VII. When differences are settled during the term of derivatives, for each settlement payment, gain or loss,
as appropriate, shall be the amount of the difference paid. The amount received or paid for executing these
derivative transactions, for acquiring the rights or obligations set forth in them, or for acquiring the right or
the obligation to execute such transactions shall be added to or subtracted from the amount of the last
settlement to calculate the gain or loss associated to the same, updated for inflation for the period from the
month in which the payment is made or received through the month in which the payment on the last
settlement is made.
TRANSACTIONS REFERRED TO EXCHANGE RATES
VIII. The gains includible in or the losses deductible from gross income that stem from derivative
transactions that refer to the exchange rate of a currency shall be determined at the close of each year,
even if the transaction is not exercised because its maturity date falls in a subsequent year. For such
purposes, gain or loss shall be determined by using the exchange rate for the last day of the year that is
being declared, as published in the Federal Register.
The amounts included in or deducted from gross income under this section in years prior to that in which the
transaction in question expires shall be subtracted from or added to, as appropriate, the net result from the
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transaction on the expiration date. The result thus obtained shall be the gain includible in or the loss
deductible from gross income for the year in which the expiration occurs.
DELIVERY OF LIQUID RESOURCES TO THE PARTY THAT GUARANTEES THE REACQUISITION OF
GOODS
IX. In the case of derivative transactions through which one party delivers liquid resources to another, and
this party, in turn, guarantees the responsibility of reacquiring the merchandise, the negotiable instruments,
or the shares referred in the transaction for an amount equal to that delivered by the first party plus a
proportional charge, such proportional charge shall be considered interest payable or receivable, includible
in or deductible from gross income, as the case may be.
With the transactions referred to in the preceding paragraph, whether taken separately or jointly, as
appropriate, the merchandise, negotiable instruments, or shares in question shall not be considered
transferred or acquired provided that they are returned to the first party no later than on the expiration of the
aforementioned transactions.
The amounts paid or received for the transactions described in this section shall not be updated for inflation.
Amounts paid and received shall be considered credits or debts, as applicable, for the purposes of article 44
of this Law.
INITIAL AMOUNTS
For the purposes of this article, initial amounts are amounts paid in favor of the counterparty in the
derivative transaction for acquiring the right contained in the respective agreement that do not accrue any
interest for the party that pays it. Said amounts shall be updated for inflation for the period elapsed between
the month in which they are paid or received and the month in which the derivative transaction is settled or
expires; or the right or obligation set forth in it is exercised; or the instrument recording said transaction is
transferred, as appropriate. The amount paid or received for acquiring the right or obligation to carry out a
derivative transaction referred to in (V) above shall be updated for inflation for the period elapsed between
the month in which it is paid or received and the month in which the right or obligation set forth in the
transaction on which the right or obligation was acquired is settled or exercised.
DEPOSITS TO ENTER INTO TRANSACTIONS
The amounts that one party deposits to the other to enter into derivatives that represent an asset to the
former party and a liability to the latter, shall be subject to the annual inflation adjustment set forth in article
44 of this Law.
GAINS OR LOSSES FROM DEBT DERIVATIVES ARE DEEMED INTERESTS
Gains or losses on debt derivatives shall receive the treatment of interest set forth in this Law.
LIQUIDATION OF DIFFERENCES DURING THE VALIDITY OF A DEBT DERIVATIVE
When during the term of a debt derivative of the type referred to in article 16-A of the Federal Fiscal Code,
differences between the prices, of the National Consumer Price Index or any other index, or of the interest
rates referred to in said transactions, are settled, the amount of each difference shall be considered interest
payable or receivable, as applicable, and the differences shall be interest includible in or deductible from
gross income, respectively. When in these transactions an amount is received or paid for executing the
transaction or acquiring the right or obligation to take part in it, this amount shall be added to or subtracted
from, as applicable, the amount of the last settlement to calculate the interest payable or receivable,
corresponding to said settlement. Such amount shall be updated for inflation for the period elapsed
between the month in which payment is made and the month in which this last settlement occurs.
In debt derivatives in which differences are not paid off during their term, the interest includible in or
deductible from gross income shall be the gain or loss, in accordance with this Article.
TRANSACTIONS ON DEBT AND CAPITAL
For the purposes of this Law, when a single derivative covers several assets, negotiable instruments, or
indicators that make it a debt or capital derivative, the provisions of this Law on debt derivatives shall be
abided by, regarding all amounts paid or received for the financial transaction in question.
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Artculo 21. INCOME FROM DERIVATIVES REFERRED TO AN ASSET NOT LISTED IN A STOCK
EXCHANGE
Income earned from financial transactions referred to an underlying asset not listed on a recognized stock
exchange, in accordance with article 16-C of the Federal Fiscal Code, as well as the initial amounts
received, shall be included in gross income when such items are due and payable or when the option is
exercised, whichever occurs first. Amounts spent directly related to said transactions may only be deducted
when the net result of the transaction is known at the time of the liquidation or maturity thereof, regardless of
whether or not the rights or obligations set forth in the contracts executed for the purposes of this type of
transactions are exercised.
GAIN OR LOSS
At the time of settlement or maturity of each transaction, expenses authorized in this Law and referred to in
the preceding paragraph shall be deducted; and the gains includible in or the losses deductible from gross
income must be determined, as applicable, regardless of the moment when the income referred to in the
aforementioned paragraph is included in gross income. When, pursuant to the preceding paragraph, the
amounts spent exceed the income received, the result shall be a deductible loss. The result of subtracting
the expenses set forth in the preceding paragraph from income received shall be the gain includible in gross
income.
DEDUCTION OF
TRANSACTIONS
LOSSES
SUSTAINED
BY
LEGAL
ENTITIES
FROM
RELATED
PARTY
Legal entities sustaining a loss in accordance with the preceding paragraph and that are related to the entity
that earned a gain in the same transaction may only deduct said loss for up to an amount not to exceed any
gains that the same taxpayer that sustained the loss earned on other derivatives whose underlying asset is
not listed on a recognized stock exchange in the same year or in the following five years. The portion of the
loss not deducted in a year shall be updated for inflation for the period from the last month of the year in
which the loss was sustained through the last month of the year immediately preceding the year in which it
will be deducted. The portion of the updated loss not deducted in the year in question shall be updated for
inflation for the period from the month in which it was updated for the last time through the last month of the
year immediately preceding that in which it will be deducted. When in a given year the taxpayer fails to
deduct the loss referred to in this article, even though the taxpayer could have done so in accordance with
this article, the taxpayer shall forfeit the right to do so in subsequent years, for up to the amount that could
have been deducted.
LOSSES SUSTAINED BY INDIVIDUALS
Individuals who sustain losses on derivatives whose underlying asset is not listed on a recognized stock
exchange shall abide by the last paragraph of Article 146 of this Law.
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legal entity has on the date of the transfer of the shares, pursuant to article 77 of this statute, and the
balance that said account had on the acquisition date, provided that the first of these balances is greater, in
the portion to the shares held by the taxpayer that were acquired on the same date.
To calculate the difference referred to in the preceding paragraph, the balances of the net tax profit account
that the legal entity issuing the shares being transferred had on the dates of acquisition and transfer of the
shares shall be updated for inflation for the period from the month of the last update prior to the date of the
acquisition or transfer, as applicable, through the month in which the shares are transferred.
b) The result obtained in accordance with (a) above shall be reduced by the tax loss carryforwards, the
capital reimbursements paid, as well as the difference referred to in the fifth paragraph of article 77 of this
Law corresponding to the legal entity issuing the shares that are being transferred, updated for inflation.
The tax loss carryforwards referred to in the preceding paragraph shall be those which the legal entity has
on the date of the transfer, corresponding to the number of shares held by the taxpayer on said date. Said
losses shall be updated for inflation for the period from the month in which the last update was carried out
through the month in which the transfer in question is made.
The tax loss carryforwards referred to in the preceding paragraph shall not be reduced by the amount
thereof used by the legal entity for purposes of the monthly estimated payments of income tax related to the
months of the year in question.
The capital reimbursements paid by the legal entity in question shall be those that correspond to the
number of shares held by the taxpayer in the month in which the transfer is made.
The difference referred to in the fifth paragraph of article 77 of this Law shall be that which the issuing entity
has not reduced up until the date of the transfer, corresponding to the number of shares held by the
taxpayer in the month in which the transfer is made.
The tax loss carryforwards, the capital reimbursements, and the difference referred to in this subsection for
the legal entity in question shall be allocated to the taxpayer in the same proportion as the proportion
between, on the one hand, the number of shares that the taxpayer has on the date of transfer of the shares
of said legal entity corresponding to the year in which loss was sustained, the capital reimbursement is paid,
or the aforementioned difference is determined, as applicable, and, on the other, the total outstanding
shares that the aforementioned legal entity had in the fiscal year in question.
The tax loss carryforwards, the capital reimbursements paid, and the difference referred to in this
subsection that are obtained, paid, or determined, respectively, shall only be considered for the period from
the month of acquisition of the shares through the date on which they are transferred.
ADDITION OF TAX LOSSES
III. The result obtained under the preceding section shall be added to the amount of tax losses that the legal
entity issuing the shares had sustained in years prior to the date on which the taxpayer acquired the shares
in question and which said legal entity carried forward to offset tax profit during the period from the month in
which the taxpayer acquired said shares through the month in which the taxpayer transfers them.
The losses referred to in the preceding paragraph shall be allocated to the taxpayer in the same proportion
as the proportion between the number of shares of said legal entity held by the taxpayer on the date of the
transfer, corresponding to the fiscal year in which the aforementioned legal entity carried forward said
losses, and the total outstanding shares that the aforementioned legal entity had in the year in question.
When the balance of the net tax profit account on the date of acquisition, plus the amount of the capital
reimbursements paid, the difference referred to in the fifth paragraph of article 77 of this Law pending to be
subtracted, and the tax loss carryforwards, described in (II)(b) hereof, exceed the sum of the balance of the
net tax profit account through the date of the transfer, and the losses carried forward, described in the first
paragraph of this section, such excess shall be subtracted from the verified acquisition cost. If said excess
is greater than the verified acquisition cost, the shares in question shall not have an average per-share cost
for the purposes of this article; and the excess determined in accordance with this paragraph, considered
on a per-share basis, shall be deducted from the verified acquisition cost determined under this article for
the next transfer of shares or in the transfer or transfers of shares following thereafter, even if the issuers of
the shares are not the same. In these cases, the excess shall be updated for inflation from the month in
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which the transfer took place through the month in which the excess is deducted.
UPDATE PERIODS
IV. The verified acquisition cost of the shares shall be updated for inflation for the period from the month of
their acquisition through the month in which they are transferred. The losses and the difference carried
forward referred to in the fifth paragraph of article 77 of this Law shall be updated for inflation starting in the
month in which they were last updated for inflation through the month in which the shares are transferred.
Capital reimbursements paid shall be updated for inflation for the period from the month in which they are
paid through the month in which the shares are transferred.
GAINS ON DISPOSITIONS OF SHARES HELD UP TO 12 MONTHS
To calculate gains on transfers of shares held for twelve months or less, taxpayers may elect to consider
that the adjusted original amount of the shares is the verified acquisition cost of the shares, reduced by
capital reimbursements and dividends or profits paid by the legal entity issuing the shares for the period
during which the shares in question are held, updated for inflation pursuant to (IV) of this article. Dividends
or profits paid shall be updated for inflation for the period from the month in which said dividends or profits
are paid through the month in which the shares in question are transferred.
SHARES ISSUED BY FOREIGN RESIDENTS
In the case of shares issued by foreign resident legal entities, to determine the average per-share cost
referred to in this article, the adjusted original amount of the shares shall be the verified acquisition cost
thereof, reduced by capital reimbursements paid. All of these items shall be updated for inflation pursuant to
(IV) of this article.
VARIATIONS IN THE NUMBER OF OUTSTANDING SHARES
When the number of outstanding shares of the issuing legal entity in question varies and the amount of the
capital stock remains unchanged, taxpayers shall abide by the provisions of this article when the shares in
question are transferred, provided that the total cost of the shares received is equal to the cost that the block
of shares being replaced had.
NET TAX PROFIT ACCOUNT, REIMBURSEMENT, ETC IN CASES OF VARIATIONS IN THE NUMBER
OF SHARES OF THE ISSUER
In cases where the number of shares of the issuing legal entity has varied during the period between the
acquisition and transfer dates of the shares owned by the taxpayers, taxpayers shall determine the
differences between: the balances of the net tax profit account of the issuing legal entity, the losses, the
capital reimbursements, and the unreduced difference referred to in the fifth paragraph of article 77 of this
Law, for each period elapsed between the acquisition and transfer dates of the shares in which the number
of shares has remained unchanged. In the case of a difference in the balances of the net tax profit account,
the balance at the end of the period shall be subtracted from the balance at the beginning of the period, with
both balances being updated for inflation on the date of transfer of the shares.
The difference in the balances of the net tax profit account referred to in the preceding paragraph, as well as
the tax losses, the capital reimbursements paid, the unreduced difference referred to in the fifth paragraph
of article 77 of this Law, for each period, shall be divided by the number of shares of the legal entity in the
same period, and the quotient thus obtained shall be multiplied by the number of shares owned by the
taxpayer in said period. The results thus obtained shall be added or subtracted, as appropriate.
ISSUANCE OF CERTIFICATES BY THE ENTITIES
Issuing entities shall provide a certificate with the information needed to calculate the adjustments referred
to in this article to any shareholder requesting one. Such certificate shall include the information described
in the tax invoice issued for that end. In the case of shares registered in the National Registry of Securities
and Intermediaries [Registro Nacional de Valores e Intermediarios], the issuing entity of the shares, apart
from its obligation to provide certificates to shareholders, must submit this information to the National
Banking and Securities Commission [Comisin Nacional Bancaria y de Valores] in the manner and
according to the terms indicated by the tax authorities. The accounting records and documentation
corresponding to this information must be kept for the term set forth in Article 30 of the Federal Fiscal Code,
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starting on the date on which such certificate is issued.
LEGAL ENTITIES ACQUIRING SHARES FROM INDIVIDUALS OR FOREIGN RESIDENTS
When a legal entity acquires shares of another issuing entity from an individual or a foreign resident, the
shareholders of the acquiring legal entity shall not consider within the verified acquisition cost, the amount
of dividends or profits generated prior to the acquisition date and that, directly or indirectly, have already
been considered as part of the verified acquisition cost of the shares acquired from the individual or foreign
resident. For the purposes of the information that the acquiring legal entity is required to give to its
shareholders under this article, such legal entity shall reduce said profits or dividends, updated for inflation,
from the balance of the net tax profit account that the legal entity has on the date of transfer of its shares.
The profits or dividends shall be updated for inflation starting in the month in which they were added to the
net tax profit account through the month in which the transfer in question is made.
REFERENCES TO REIMBURSEMENTS PAID
Where this article refers to capital reimbursements paid, the amortizations and reductions of capital referred
to in article 78 of this Law shall be understood to be included. In such cases, taxpayers shall only consider
the amortizations, reimbursements, or reductions of capital corresponding to the shares that have not been
canceled as a result of said transactions.
DISPOSITION OF INTERESTS IN PARTNERSHIPS
The provisions of this article shall also apply when the interest -regardless of the name given to it- in a
partnership is transferred, if entrepreneurial activities are conducted through said partnership. In such a
case, the verified acquisition cost shall be the value updated for inflation of the contribution made by the
transferor to said partnership or the amount that the transferor paid for its interest. For such purposes, the
difference of the balances of the net tax profit account referred to in (II)(a) hereof, the tax loss carryforwards,
the capital reimbursements paid, and the difference referred to in the fifth paragraph of article 77 of this Law
-all of which are referred to in (II)(b) hereof shall be considered in the same proportion as that of the
distribution of profits agreed on the relevant agreement.
Artculo 23. VERIFIED ACQUISITION COST OF SHARES FOR WHICH THE AVERAGE COST HAS
BEEN CALCULATED ALREADY
Shares owned by a taxpayer for which the average cost has been calculated before, shall have as verified
acquisition cost for subsequent transfers, the average per-share cost determined in accordance with the
calculation made in the immediately preceding transfer of shares of the same legal entity. In this case, the
acquisition date of the shares, for the purpose of determining the items to be added and subtracted in
accordance with article 22 (II) and (III) of this Law, as well as for updating said items for inflation, shall be the
month in which the immediately preceding transfer of shares of the same legal entity was made. To
calculate the difference between the balances of the net tax profit account referred to in (II)(a) of the
aforementioned article, the balance of the aforementioned account through the date of acquisition shall be
the balance of the net tax profit account through the date of the immediately preceding transfer of the
shares of the same legal entity.
VERIFIED ACQUISITION COST OF SHARES ISSUED BY SPUN-OFF COMPANIES
For the purposes of article 2 of this Law, the verified acquisition cost of shares issued by spun-off
companies shall be that obtained by calculating the average per-share cost of the exchanged shares of the
original company corresponding to each shareholder through the date of said transaction, in accordance
with the preceding article, and the acquisition date shall be the date of the exchange.
VERIFIED ACQUISITION COST OF SHARES ISSUED BY MERGING COMPANY
The verified acquisition cost of the shares issued by the surviving entity or the company that emerges as a
result of a merger shall be obtained by calculating the average per-share cost of each shareholders shares
that were exchanged, in accordance with the preceding article, and the acquisition date shall be the date of
the exchange.
VERIFIED ACQUISITION COST OF SHARES ACQUIRED BY MERGING COMPANIES OR SPUN-OFF
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COMPANIES
In the case of company mergers or spin-offs, the verified acquisition cost of the shares acquired by the
spun-off or merging entities, as part of the transferred assets, shall be the average per-share cost that they
had in the merged or original companies at the time of the merger or spin-off.
SHARES FROM CAPITALIZATIONS OR PROFIT REINVESTMENTS
Shares obtained by taxpayers from capitalizations of profits or other items that make up the shareholders
equity or from dividends or profit reinvestments carried out within 30 calendar days of their distribution shall
have no verified acquisition cost.
SHARES FROM CAPITALIZATIONS OR PROFIT REINVESTMENTS ACQUIRED PRIOR TO 1989
The provisions of the preceding paragraph shall not apply to shares acquired by taxpayers before 1 January
1989, if the share that originates such shares was transferred prior to this date. In this case the nominal
value of the shares in question may be considered to be the verified acquisition cost.
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VI. The increase in the capital stock registered by the company acquiring the shares being transferred must
be for an amount representing the tax cost of the shares being transferred.
ACCOUNTANTS REPORT IN CONNECTION WITH THE COST OF SHARES
VII. A report by a public accountant registered with the tax authorities must be submitted, indicating the
adjusted verified acquisition cost of said shares, in accordance with articles 22 and 23 of this Law, through
the acquisition date.
DISTRIBUTION OF THE ADJUSTED ORIGINAL AMOUNT OF THE TRANSFERRED SHARES
VIII. The adjusted original amount of all of the transferred shares, determined in accordance with (VII) of this
article at the time of said transfer, must be distributed in proportion to the shares received, pursuant to (III)
of the same Article.
ACCOUNTANTS REPORT OR INFORMATION RETURN OF THE ENTITIES PARTICIPATING IN THE
REORGANIZATION
IX. The companies participating in the reorganization must be audited pursuant to article 32-A of the
Federal Fiscal Code or they must file an information return concerning their tax situation, pursuant to article
32-H of such statute, when required to do so, for the year when said reorganization takes place.
PERCENTAGE PARTICIPATION IN THE CAPITAL OF THE ISSUERS
X. It must be demonstrated that the participation in the capital stock of the companies issuing the shares
being transferred is maintained at the same percentage by the company that controls the group or by the
company, as applicable, incorporated for such purpose.
INCOME TAX PAYMENT IN CASES OF BREACH
In the event of noncompliance with any of the requirements referred to in this article, the tax on the transfer
of shares must be paid, based either on the price at which said shares would have been transferred
between independent parties in comparable transactions or on the value determined through an appraisal
prepared by a person authorized by the tax authorities. The transferor shall pay the tax thus determined,
updated from the date on which the transfer was conducted through the date on which it is paid.
CONCEPT OF GROUP
For the purposes of this article, a group is considered to be a group of companies in which at least 51% of
their voting shares representing their capital stock are directly or indirectly owned by the same individuals or
entities. For such purposes, shares considered placed among the general investing public in accordance
with the rules issued by the Tax Administration Service shall not be counted, provided that said shares have
in fact been offered to and placed among the general investing public. Shares repurchased by the issuer
shall not be considered to have been placed among the general investing public.
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NET EXPENSES
III. Expenses net of discounts, rebates or returns.
INVESTMENTS
IV. Investments.
NONPERFORMING CREDITS AND LOSSES
V. Nonperforming credits and losses due to acts of God or force majeure, or the transfer of goods other than
those referred to in (II) hereof.
SOCIAL SECURITY CONTRIBUTIONS AND UNEMPLOYMENT INSURANCE
VI. Employers contributions to the Mexican Social Security Institute [Instituto Mexicano del Seguro Social],
including those set forth in the Unemployment Insurance Law [Ley del Seguro de Desempleo]
ACCRUED INTERESTS AND PAST-DUE INTERESTS
VII. Interest accrued chargeable to the taxpayer in the year, with no adjustment at all. In the event of
past-due interest, as of the fourth month only effectively paid interest shall be deducted. For such purposes,
payments for past-due interest made more than three months after the month in which the delinquency
arose are considered to cover, firstly, past-due interest accrued in the three months following the month in
which the delinquency arose, until the amount paid exceeds the amount of the accrued past-due interest
deducted in the last period referred to above.
DEDUCTIBLE ANNUAL INFLATION ADJUSTMENT
VIII. The annual adjustment for inflation deductible in accordance with article 44 of this Law.
ADVANCE PAYMENTS TO MEMBERS OF ASSOCIATIONS AND PARTNERSHIPS GOVERNED BY
CIVIL LAW
IX. Advance payments made and yields paid by production cooperatives, as well as advance payments
made by partnerships and associations governed by civil law to their members, when distributed pursuant
to article 94(II) of this Law.
CONTRIBUTIONS TO PENSION AND RETIREMENT FUNDS
X. Contributions made to create or increase reserves for the staffs pension and retirement fund,
supplemental to those set forth in the Social Security Law [Ley del Seguro Social] and for seniority bonuses,
created under this Law. The amount of the deduction referred to in this section shall not exceed in any case
the amount resulting from applying the 0.47 factor to the contribution made in the relevant year. The factor
referred to in this paragraph shall be equal to 0.53 when the fringe benefits granted by taxpayers to their
employees that are items of income exempt from tax to them in the relevant year are not reduced vis--vis
those granted in the immediately preceding fiscal year.
DEDUCTION OF ADVANCE PAYMENTS ON EXPENSES
When a taxpayer has made an advance payment on the expenses referred to in (III) of this article, such
payment shall be deductible, provided that the requirements set forth in article 27(XVIII) of this Law are
complied with.
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treaty to avoid double taxation, the expenses that are prorated with the main office or the entitys
establishments may be deducted. For these deductions to be claimed, both the main office and the
establishment in which the expense is made must also reside in a country with which Mexico has a treaty to
avoid double taxation in force and a broad agreement for the exchange of information, and, in addition, the
relevant requirements set forth in the Regulations of this Law must be complied with.
PROHIBITION TO DEDUCT REMITTANCES TO HEAD OFFICES
Remittances made by the permanent establishment located in Mexico to the main office of the company or
to another establishment of the company abroad shall not be deductible, even if said remittances are made
as royalties, professional fees, or similar payments in exchange for the right to use patents or other rights,
or as commissions for specific services, or for carrying out certain activities, or for interest on money sent to
the permanent establishment.
AIR AND GROUND TRANSPORTATION COMPANIES
Permanent establishments of foreign resident enterprises engaged in international air or ground
transportation shall claim, in lieu of the deductions set forth in article 25 of this Law, the deduction of the
proportional share of the enterprises average expenses on its operations in the same year, including those
of the main office and all of its establishments. If the fiscal year of the foreign resident enterprise does not
coincide with the calendar year, the enterprise shall make the aforementioned deduction on the basis of the
last complete year of the enterprise.
For the purposes of the preceding paragraph, average expenses shall be determined by dividing the
enterprises profits before income tax in the year at all of its establishments by all income received in the
same year. The quotient thus obtained shall be subtracted from one and the result shall be the expense
factor applicable to income attributable to the establishment in Mexico. If in the year all of the enterprises
income is less than all of the expenses of all of its establishments, the expense factor applicable to income
shall be equal to 1.00.
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DONATIONS TO EDUCATIONAL INSTITUTIONS
Donations to educational institutions authorized to receive donations under Title III of this statute shall be
deductible, provided that such institutions are public establishments or privately owned, with either an
authorization or recognition of official validity of studies pursued therein, under the General Law of
Education [Ley General de Educacin]. In addition, the donations must be used in the acquisition of
investments, for scientific research, for technological development, or for administrative expenses for up to
the amount indicated in the Regulations of this Law, in the last case. All such donations shall not be onerous
or remunerative; and said institutions may not have distributed remainders to their partners or members for
the last five years.
AMOUNT OF DONATIONS THAT MAY BE DEDUCTED
The amount of the donations referred to in this section shall be deductible for up to a maximum of 7% of the
tax profit earned by the taxpayer in the year immediately preceding that in which the deduction is taken. In
cases of donations in favor of the federal government, the states, the municipalities or their decentralized
entities, the deductible amount thereof shall not exceed 4% of the tax profit described in this paragraph; and
in no case the threshold of the overall deduction, considering these donations and those made in favor of
other authorized donees shall exceed said 7%.
DEDUCTION OF INVESTMENTS
II. Where this Law allows for the deduction of investments, the terms of Section II of this Chapter shall be
abided by.
COMPLIANT DOCUMENTATION, PAYMENT BY CHECK, CARD OR E-WALLET
III. Deductions must be supported by tax invoices; and payments for more than $2,000.00 must be made by
wire transfer of funds from a taxpayers account open in a member institution of the financial system and the
entities authorized for that purpose by Mexicos Central Bank; a check from the taxpayers account with a
specified payee; by credit, debit, or service card; or through an electronic wallet authorized by the Tax
Administration Service.
PURCHASE OF FUEL FOR VEHICLES
Payment for fuel for maritime, air, and land vehicles must be made in the manner referred to in the
preceding paragraph, even when the purchase does not exceed $2,000.00.
RURAL ZONES WITH NO FINANCIAL SERVICES
The tax authorities may waive the requirement for expenses to be paid with the means described in the first
paragraph of this section, when such expenses are incurred in localities or rural areas without financial
services.
REQUIREMENTS FOR CHECKS WITH SPECIFIED PAYEE
When a payment is made by a check issued to a specified payee, the check shall bear the issuers Federal
Taxpayer Identification Number [clave del Registro Federal de Contribuyentes] and, on the front side, the
words to be credited to the account of the payee [para abono en cuenta del beneficiario]
ACCOUNTING ENTRY
IV. Deductions must be duly entered in accounting records, and may be claimed only once.
PAYMENTS TO THIRD PARTIES AND TO FOREIGNERS
V. The obligations set forth in this Law regarding withholding and payment of taxes on account of third
parties must be complied with, or, as applicable, a copy of the documents evidencing payment of said taxes
must be obtained from such third parties. Payments made abroad may only be deducted if the taxpayer
provides the information required under article 76 of this Law.
DEDUCTION OF PAID SALARIES
Payments that are also income under Title IV, Chapter I, of this Law may be deducted provided that the
expenses representing payment, the applicable withholdings and the deductions for the state tax on
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salaries and, in general, for the provision of independent personal services, are described in tax invoices
issued pursuant to the Federal Fiscal Code; the obligations set forth in article 99(I), (II), (III) and (V) of this
statute are complied with, as well as any applicable provisions on the employment subsidy; and the
taxpayer duly registers its employees in the Mexican Social Security Institute when so required under the
terms of the laws governing social security.
VAT CHARGE
VI. In cases of payments made to taxpayers subject to Value Added Tax [Impuesto al Valor Agregado],
such tax must be expressly and separately charged in the corresponding tax invoice.
LABELS PLACED ON CONTAINERS
Where tax provisions require tax stamps or seals to be affixed or placed on containers of the products being
acquired, the deduction referred to in article 25(II) of this Law may only be claimed if said products have the
corresponding tax stamp or seal affixed to or placed on them.
INTERESTS
VII. In the case of interest on borrowed capital, the capital must have been invested for the attainment of the
purposes of the business. When a taxpayer extends loans to third parties, to its employees or officers, to its
partners or shareholders, a deduction shall only be allowed upon interest accrued on borrowed capital for
up to the amount of the lowest interest rate set forth in the loans to third parties, to the taxpayers workers,
partners or shareholders on the portion of the loan made to the latter parties, provided that a tax invoice is
issued and delivered to those who extended the loan, which may be used as receipt. If any of those
transactions bears no interests, the proportional amount of the loans extended to the aforementioned
persons may not be deducted. These limitations shall not apply to banking institutions, non-bank banks, or
ancillary credit organizations regarding transactions that are inherent to their purpose.
In the case of capital borrowed for investments or expenses or when the investments or the expenses are
made on credit and, for the purposes of this Law, said investments or expenses are not deductible or are
only partially deductible, the interest on the capital borrowed or the credit transactions shall only be
deductible in the same proportion as the investments or expenses are deductible.
INTERESTS ON LOANS EXTENDED TO MEXICAN RESIDENTS
Interests on loans referred to in article 143(III) of this statute may be deducted when paid in cash, in kind, or
with services.
PAYMENTS EFFECTIVELY MADE
VIII. Payments that are also income for individual taxpayers, taxpayers referred to in articles 72 and 73 of
this statute, as well as payments made to the taxpayers referred to in the last paragraph of Article 17(I) of
this Law, and donations, may only be deducted when they have been effectively made in the year in
question. Effectively made shall be understood to mean paid in cash, through wire transfers from the
taxpayers accounts in member institutions of the financial system or entities authorized for that purpose by
Mexicos Central Bank, or with assets other than negotiable instruments. Payments by check shall be
considered effectively made on the date on which the check is cashed or when the taxpayer assigns it to a
third party, except when said assignment is carried out solely for collection purposes. Payments are also
understood to be effectively made when the creditors interest is fulfilled through any form of discharge of
obligations.
PAYMENT WITH CHECK
When the payments referred to in the preceding paragraph are made by check, the deduction shall be
made in the year in which the check is cashed, provided that not more than four months have elapsed
between the date indicated on the tax invoice issued in connection therewith and the date on which the
check is effectively cashed, except when both dates correspond to the same year.
PAYMENTS TO MANAGERS, STATUTORY AUDITORS, ETC.
IX. Fees or bonuses to managers, statutory auditors, directors, general managers, or members of the board
of directors or the statutory auditing committee or advisory or any other body, determined as a whole and
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monthly payment or per assistance, must affect the taxpayers results in the same way. In addition, they
must comply with the following requirements:
a) The annual amount established for each person may not exceed the annual salary earned by the highest
officer in the company.
b) The total amount of fees or bonuses may not exceed the annual salaries and wages earned by the
taxpayers employees.
c) These items may not represent more than 10% of the total amount of the other deductions for the year.
TECHNICAL ASSISTANCE, TECHNOLOGY TRANSFER AND ROYALTIES
X. For technical assistance, technology transfers or royalties, it must be demonstrated to the tax authorities
that the person providing the knowledge has the technical wherewithal of his own to do so; such services
must be provided directly and not through third parties, except when the payments are made to Mexican
residents and the agreement stipulates that the service will be provided by an authorized third party; and the
service must not consist of the simple possibility of obtaining the knowledge, but of services that are
effectively provided.
SOCIAL BENEFITS AND FOOD VOUCHERS
XI. In the case of expenses for social benefits, the corresponding benefits must be given across-the-board
to all employees. Food vouchers granted to employees shall be deductible, provided that the delivery
thereof is made through electronic wallets authorized by the Tax Administration Service.
UNIONIZED WORKERS
For purposes of the preceding paragraph, in the case of unionized employees, social benefits are
considered to be granted across-the-board when they are set forth in collective bargaining agreements or
industry-wide labor agreements.
When a legal entity has two or more unions, social benefits shall be considered to be across-the-board
provided they are granted in accordance with collective bargaining agreements or industry-wide labor
agreements and are the same for all employees in the same union, even if they are different from those
granted to the employees in other unions of the same legal entity in accordance with these employees
collective bargaining agreements or industry-wide labor agreements.
NONUNIONIZED EMPLOYEES
In the case of nonunionized employees, social benefits are considered to be across-the-board provided that
the same benefits are given to all nonunionized employees; and the arithmetic average of the deductible
expenses on these items, excluding Social Security contributions, for each nonunionized employee is equal
to or less than the deductible expense for the same item, excluding Social Security contributions, for each
unionized employee. In cases where there are no unionized employees, the provisions of this paragraph
are complied with if the terms of the last paragraph of this section are abided by.
CONTRIBUTIONS TO SAVINGS FUNDS
Contributions to savings funds shall be deductible only when, in addition to being across-the-board under
the terms of the three preceding paragraphs, the taxpayers contribution is equal to the amount contributed
by the employees; the taxpayers contribution does not account for more than thirteen percent of the
employees salary, and in no event is greater than 1.3 times the annual general minimum wage for the
geographic area corresponding to the employee; and any permanence requirements set forth in the
Regulations of this Law are complied with.
LIFE INSURANCE, MEDICAL INSURANCE AND DISABILITY INSURANCE PREMIUMS FOR THE
EMPLOYEES BENEFIT
Payments of premiums on employee life insurance policies shall be deductible only if the benefits of said
policies cover the death of the policyholder or the policyholders disablement or disability to render
dependent personal services, in accordance with the Social Security laws, and provided that the payments
are delivered as a lump sum or in installments as agreed by the parties. Likewise, payments of employee
medical insurance premiums by the taxpayer shall be deductible.
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The social benefits referred to in the preceding paragraph are considered to be granted across-the-board
when they are the same for all employees in the same union or for all nonunionized employees, even if said
benefits are given only to the unionized employees or only to the nonunionized employees. Similarly,
payments of life insurance and medical insurance premiums and contributions to savings funds and to the
pension and retirement funds that complement those established by the Social Security Law, referred to in
article 29 of this Law, shall not be used to determine the arithmetic average referred to in paragraph four of
this section.
LIMIT TO THE DEDUCTION OF SOCIAL BENEFITS PAID TO NONUNIONIZED EMPLOYEES
Deductible social benefits provided to nonunionized employees, excluding: Social Security contributions;
contributions to savings funds; contributions to the pension and retirement funds that complement those
established by the Social Security Law, referred to in article 29 of this Law; and payments of medical
expenditures and life insurance premiums, may not exceed ten times the annual general minimum wage for
the geographic area corresponding to the employees.
INSURANCE AND BOND PREMIUMS
XII. Premiums on insurance or bonds must be paid for in accordance with the relevant laws and correspond
to items that this statute renders deductible or that, in accordance with other laws, are required to be
contracted. In addition, in the case of insurance, during the term of the policy, the insurance company may
not grant any loans collateralized with the insured amounts, the premiums paid, or the actuarial reserves to
any person.
EMPLOYEES, TECHNICIANS AND LEADING STAFF
In cases in which the purpose of the insurance is to provide benefits to the employees, the provisions of the
preceding section shall be abided by. If the purpose of the insurance is to indemnify the taxpayer for a
possible decrease in productivity arising from death, injury, or illness of technicians or leading staff, the
premiums may be deducted provided that the insurance is part of a plan that includes a procedure for
determining the amount of the benefits, and the terms and requirements set forth in general provisions are
complied with.
ACQUISITION COST OR INTEREST
XIII. The declared acquisition cost or the interest on credits received by the taxpayer must be in line with the
market. If the cost or interest exceeds the market value, the excess shall not be deductible.
ACQUISITION OF IMPORTED MERCHANDISE
XIV. In the case of acquisition of imported merchandise, compliance with the legal requirements for
importing the merchandise must be demonstrated. The amount of the acquisition shall be considered to be
the amount declared by reason of the importation.
LOSSES FROM NONPERFORMING CREDITS
XV. Losses on nonperforming credits shall be deemed to be sustained in the month in which the statute of
limitations expires, or before if it is clear that there is no possibility of collecting the amount owed.
CLEAR IMPOSSIBILITY TO COLLECT
For the purposes of this article, it is considered that there is a clear impossibility of collecting an amount
owed in the following cases, among others:
a) In the case of credits the principal of which through the day of maturity does not exceed thirty thousand
investment units, when collection thereof has not been accomplished within one year after it becomes
delinquent. Such credits shall be considered nonperforming in the month in which the credit has been
delinquent for one year.
When two or more credits of the type indicated in the preceding paragraph are owed by a single legal entity
or individual, all of the credits extended must be added together to determine if the total thereof exceeds the
amount referred to in said paragraph.
Paragraph (a) of this section shall apply to credits extended to the general public, the principal of which
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through the day of maturity is between five thousand pesos and thirty thousand investment units, provided
that the taxpayer, in accordance with the general rules on the matter issued by the Tax Administration
Service, reports said credits to credit-reporting companies authorized by the Ministry of the Treasury and
Public Credit pursuant to the Law to Regulate Credit-Reporting Agencies [Ley para Regular las Sociedades
de Informacin Crediticia].
Paragraph (a) of this section shall also apply when the debtor of the credit in question is a taxpayer who
conducts entrepreneurial activities, and the creditor informs the debtor in writing that the former will deduct
the nonperforming credit, so that the debtor includes in gross income, income from the unpaid debt, under
the terms of this Law. No later than on 15 February of each year, taxpayers that apply the provisions of this
paragraph shall report the nonperforming credits that they deducted under the terms of this paragraph in the
immediately preceding calendar year.
b) In the case of credits the principal of which through day of maturity is more than thirty thousand
investment units, when the creditor has brought action before the judicial authorities for the payment of the
credit or the arbitral proceeding agreed on for collection has begun, and, in addition, the provisions of the
last paragraph of the preceding subsection have been complied with.
c) When it is proven that the debtor has been declared in bankruptcy or personal bankruptcy. In the case of
bankruptcy, there must be a judgment declaring the conclusion of the bankruptcy proceedings by virtue of
bankruptcy payment or lack of assets.
BANKING INSTITUTIONS
In cases of banking institutions, a clear impossibility of collecting an amount owed shall be deemed to exist
with respect to a portfolio of credits, when such portfolio is written-off in accordance with the provisions
issued by the National Banking and Securities Commission.
CANCELLATION MONTH FOR PURPOSES OF THE INFLATION ADJUSTMENT
For the purposes of article 44 of this Law, taxpayers that deduct nonperforming credits shall consider them
canceled in the last month of the first half of the year in which they are deducted.
ACCOUNTS RECEIVABLE SECURED BY MORTGAGE
In the case of accounts receivable backed by a mortgage security, only fifty percent of the amount shall be
deductible, when the tests described in paragraph (b) above are met. When a debtor pays the debt or the
proceeds from a judicial sale are used to cover the debt, the balance of the account receivable shall be
deducted, or, as applicable, the amount recovered shall be included in gross income.
WAGES AND COMMISSIONS CONTINGENT TO COLLECTION
XVI. Employee or third-party remunerations contingent on the collection of installment payments for sales
on credit or financial leasing agreements in which employees or third parties have participated shall be
deducted in the year in which said installments or income are collected, provided that the remaining
requirements of this Law are complied with.
PAYMENTS TO FOREIGN AGENTS AND MEDIATORS
XVII. In the case of payments to foreign resident mediators and commission agents, the requirements of
information and documentation set forth in the Regulations of this Law must be complied with.
TERM TO MEET REQUIREMENTS, DATE OF INVOICES AND INFORMATION RETURNS
XVIII. When transactions are conducted or no later than on the last day of the year, the requirements set
forth for each particular deduction in this Law are complied with. The tax invoice referred to in the first
paragraph of (III) hereof must be obtained no later than the day on which the taxpayer is required to file a
return. The requirements on supporting documentation regarding withholdings and payments referred to in
(V) and (VI) hereof, respectively, must be fulfilled within the periods of time set forth in the tax provisions,
and the supporting documentation must be obtained on said date. The information returns referred to in
articles 76 of this statute and 32(V) and (VIII) of the Value Added Tax Law must be filed within the periods of
time set forth in said article 76, and as of that date, the taxpayer must have the corresponding tax invoices.
In addition, the issuance date of a tax invoice must correspond to the year in which the deduction is claimed.
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ADVANCE PAYMENTS
Advance payments of the expenses referred to in article 25(III) of this Law shall be deductible in the year in
which they are made, provided that the taxpayer has a tax invoice evidencing the advance payment in the
same year in which the payment is made; and a tax invoice covering the entire transaction for which the
advance payment is made, no later than on the last day of the year following that in which the advance
payment is made. The deduction of the advance payment in the year in which it is made shall be for the
amount of said payment and, in the year in which the good is received or the service is provided, the
deduction shall be for the difference between the total amount indicated on the tax invoice and the amount
of the advance payment. In all events, for the purposes of this deduction, the remaining requirements set
forth in tax provisions must be complied with.
TERM TO FILE INFORMATION RETURNS
When a taxpayer files the information returns referred to in article 76 of this Law at the request of the tax
authority, the taxpayer shall not be deemed to have failed to comply with the requirement referred to in
paragraph one of this section, provided such the taxpayer files said returns within a maximum term of 60
days as of the date on which the notification of such request is made.
WAGES PAID TO EMPLOYEES ENTITLED TO EMPLOYMENT SUBSIDY
XIX. In the case of payments of salaries and in general of payments to employees providing a dependent
personal service and who are entitled to an employment subsidy, the amount of the subsidy corresponding
to the taxpayers employees must be effectively paid and the taxpayer must comply with the requirements
referred to in the provisions that govern the subsidy, unless otherwise indicated in the aforementioned
provisions.
MERCHANDISE, RAW MATERIALS, ETC. THAT LOST THEIR VALUE
XX. The amount of merchandise, raw materials, and finished or semi-finished products in stock that
because of impairment or other causes not attributable to the taxpayer lost their value, may be deducted
from inventories during the year in which this occurs, provided that the requirements set forth in the
Regulations of this Law are complied with.
BASIC GOODS FOR HUMAN SUBSISTENCE IN AREAS SUCH AS FOOD, HOUSING OR HEALTH
In the case of merchandise, raw materials, and finished or semi-finished products referred to in the
preceding paragraph and that are basic goods for human subsistence in areas such as food, clothing,
housing or health, the deduction thereof may claimed by taxpayers, provided that before the destruction of
such items, they are offered in donation to institutions authorized to receive tax-deductible donations in
accordance with this Law, engaged in meeting the basic subsistence needs in terms of food, clothing,
housing, or health of low-income persons, sectors, communities, or regions. In addition, the requirements
set forth for such purposes in the Regulations of this Law must be complied with.
GOODS THAT MAY NOT BE DONATED
Goods whose sale, supply or use is prohibited by other legal provisions governing the handling, care or
treatment thereof, as well as goods for which such legal provisions establish a different purpose, may not be
offered for donation.
EXPENSES OF THE SOCIAL BENEFITS FUND GRANTED TO COOPERATIVE PARTNERS
XXI. Expenses that in accordance with the General Law of Cooperatives [Ley General de Sociedades
Cooperativas] are generated as part of the social benefits fund set forth in article 58 of such law, and are
granted to cooperative partners, shall be deductible when resources from the relevant fund are used,
provided that the following requirements are complied with:
a) The social benefits fund from where the resources arise must be created with the annual contributions of
the percentage of net income, determined by the General Assembly.
b) The social benefits fund must be intended to cover the following reserves, in accordance with article 57 of
the General Law of Cooperatives:
1. To cover professional risks and diseases
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2. To create retirement funds for the partners
3. To create funds for seniority bonuses
4. To create funds with various purposes to cover: medical and funeral expenses, disability subsidies,
scholarships for partners and their children, day-care, cultural and sports activities, and other similar social
benefits.
To apply the deduction referred to in this section, the cooperative shall directly pay the service providers for
the social benefits, in favor of the cooperative partners, except in the case of disability subsidies; and the
cooperative shall also have the tax invoices issued at its name.
c) To demonstrate that at the beginning of each year, the General Assembly set the priorities to apply the
social benefits fund, in accordance with the economic perspectives of the cooperative.
VALUE OF GOODS RECEIVED BY PERMANENT ESTABLISHMENTS IN MEXICO
XXII. The value of goods received by permanent establishments located in Mexico from foreign resident
taxpayers, the head office or other establishments of the taxpayer located abroad may not exceed the
customs value of the relevant good.
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MEALS
Travel expenses for meals shall be deductible for an amount not to exceed $750.00 per day, per
beneficiary, when made in Mexico; or $1,500.00 when made abroad; and only if the taxpayer includes a tax
invoice or supporting documentation, covering lodging or transportation. If a taxpayer only encloses a tax
invoice covering transportation to the meal documentation, the deduction referred to in this paragraph shall
only be allowed if the payment is made with the credit card of the person who travels.
AUTO RENTALS
Travel expenses for the temporary use and enjoyment of automobiles and related expenses shall be
deductible for up to an amount not to exceed $850.00 per day, whether within Mexico or abroad; and only if
the taxpayer includes a tax invoice or supporting documentation covering lodging or transportation.
LODGING
Travel expenses for lodging shall be deductible for up to an amount of $3,850.00 per day, when incurred
abroad; and only if the taxpayer includes along with the supporting documentation for these expenses,
documentation covering transportation.
TRAVEL EXPENSES FOR SEMINARS AND CONVENTIONS
If all or a portion of the per-diem or travel expenses related to seminars or conventions, whether in Mexico
or abroad, are part of the cost recovery fee for that purpose, and the tax invoice or supporting
documentation for the expenses does not itemize the amount corresponding to the per-diem or travel
expenses, only a portion of that fee, not to exceed the daily allowance on travel expenses for meals referred
to in this section, may be deducted. No excess in accordance with this paragraph may be deductible.
PENALTIES AND INDEMNITIES
VI. Penalties, compensation for damages and lost profits or contractual penalties. Compensation for
damages and lost profits, as well as contractual penalties may be deducted when payment thereof is legally
required as a result of created risks, strict liability, acts of God, force majeure, or acts committed by third
parties, unless the damages and losses or the underlying cause of the contractual penalty are attributable
to the taxpayer.
CERTAIN INTERESTS
VII. Interest accrued from loans or the acquisition of securities issued by the Federal Government and
registered at the National Registry of Securities, as well as negotiable instruments or credits of the type
indicated in article 8 of this Law, when the loan or the acquisition is made from not-for-profit legal entities or
individuals.
The provisions of the preceding paragraph shall not apply to banking institutions and brokerage houses
residing in Mexico that pay interest on transactions involving the lending of securities or instruments of the
type mentioned in the preceding paragraph executed with individuals, provided that said transactions fulfill
the relevant requirements set forth by the Tax Administration Service through general rules.
PROVISIONS
VIII. Provisions to create or increase reserves supplementary to assets or debts charged against the years
acquisitions or expenses, except reserves related to employee bonuses for the year.
RESERVES FOR SEVERANCE PAYS AND SENIORITY BONUSES
IX. Reserves established for employee severance pay, seniority bonuses or any other similar
compensation, except for those established in accordance with this Law.
PREMIUMS FOR CAPITAL REIMBURSEMENTS
X. Premiums or surcharges on the nominal value that a taxpayer pays for the reimbursement of the shares
that it issues.
LOSSES OF GOODS WHOSE VALUE IS INCONSISTENT WITH THEIR MARKET VALUE
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XI. Losses due to acts of God, force majeure or the transfer of property of goods, when the acquisition price
does not correspond to the market value thereof at the time they were acquired by the seller.
GOODWILL
XII. Goodwill, even when acquired from third parties.
LEASE OF AIRPLANES, SHIPS AND HOUSES
XIII. Payments for the temporary use and enjoyment of airplanes and ships that do not have a permit or
concession from the Federal Government to be exploited commercially.
Payments for the temporary use and enjoyment of dwellings shall only be deductible when the
requirements set forth in the Regulations of this Law are met. In no event will recreation homes be
deductible.
AUTO RENTALS
Payments in exchange for the temporary use and enjoyment of automobiles shall be deductible for up to an
amount not to exceed $200.00 per day, per automobile, provided that the requirements on deductions for
automobiles set forth in article 36(II) of this Law are complied with; and the use of such automobiles is be
strictly necessary for the taxpayers activity. The provisions of this paragraph shall not apply to rental
companies, provided that they exclusively use the automobiles for rent during the entire period during which
they have the temporary use and enjoyment thereof.
LOSSES OF NONDEDUCTIBLE EXPENSES
XIV. Losses resulting from acts of God or force majeure affecting assets the investment on which is not
deductible under this Law, as well as losses derived from the transfer thereof.
AIRPLANES
Losses resulting from acts of God or force majeure affecting airplanes, as well as losses derived from the
transfer thereof, shall only be deductible in proportion to the amount of the original investment that qualified
for deduction. Losses shall be determined in accordance with article 31 of this Law.
VAT AND SPECIAL TAX ON PRODUCTION AND SERVICES
XV. Payments of value added tax or of the special tax on production and services that a taxpayer has made
or that have been charged to the taxpayer. The provisions of this section shall not apply when the taxpayer
is not entitled to credit the aforementioned taxes that have been charged to it or that such taxpayer paid on
the importation of goods or services, corresponding to expenses or investments that are deductible under
this Law.
Nor shall the value added tax or the special tax on production and services charged to or paid by the
taxpayer as a result of the importation of goods or services be deductible, if the expenditure for which the
charge or payment is made is not deductible under this Law.
LOSSES FROM CORPORATE MERGERS, LIQUIDATIONS OR CAPITAL REDUCTIONS
XVI. Losses sustained as a result of a merger, capital reduction, or liquidation of companies in which a
taxpayer has acquired shares, ownership interest, or estate contribution certificates from
government-controlled banks.
LOSSES FROM DISPOSITIONS OF SECURITES OR CAPITAL DERIVATIVES
XVII. Losses on transfers of shares and other securities whose yield does not constitute interest in
accordance with article 8 of this Law. Nor shall financial losses on capital derivatives referred to shares or
stock indexes be deductible.
DEDUCTION FOR THE YEAR
The losses referred to in the preceding paragraph may only be deducted from gains, if any, earned by the
same taxpayer in the year in question or in the following ten years from transfers of shares and other
securities whose yield does not constitute interest in accordance with article 8 of this Law, or on capital
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derivatives referred to shares or stock indexes. These losses may not exceed the amount of such gains.
UPDATE OF LOSSES
Losses shall be updated for inflation for the period from the month in which they are sustained through the
closing month of the same fiscal year. The portion of the losses not deducted in a year shall be updated for
the period from the closing month of the year in which the loss was last updated through the last month of
the year immediately preceding the year in which it will be deducted.
REQUIREMENTS TO DEDUCT LOSSES
To be entitled to deduct losses in accordance with this section, taxpayers must comply with the following:
PUBLICLY TRADED SHARES
a) In the case of shares placed among the general investing public, losses shall be determined by making
the adjustments referred to in article 22 of this Law and taking the following into account:
VERIFIED ACQUISITION COST
1. Verified acquisition cost: the price of the transaction, provided that the acquisition was made on a Stock
Exchange operating under concession, pursuant to the Stock Exchange Act [Ley del Mercado de Valores].
If the acquisition was made off of such a Stock Exchange, the cost shall be considered to be the lesser of
the transaction price and the average quote on said Stock Exchange on the day on which the shares were
acquired.
INCOME EARNED
2. Income earned: Income earned from the transaction, provided the shares are transferred on a Stock
Exchange operating under concession pursuant to the Stock Exchange Act. If the transfer is made off of
said Stock Exchange, income shall be the greater of the transaction price and the average quote on said
Stock Exchange on the day on which the shares were sold.
OWNERSHIP INTEREST AND OTHER STOCKS
b) In the case of ownership interest and shares other than those indicated in (a) above, the loss shall be
determined by making the adjustments referred to in article 22 of this Law, and considering as income
earned, the greater of the price agreed in the transaction in question and the sale price for the shares
determined in accordance with the methods set forth in articles 179 and 180 of this Law.
RELATED PARTY TRANSACTIONS
If a transaction is conducted with and among related parties, a study on the determination of the sale price
of the shares must be submitted in accordance with articles 179 and 180 of this Law, considering the items
described in article 179(I)(e) of this statute.
SHARES AND OWNERSHIP INTEREST
c) In the case of the securities referred to in the preceding subsections of this section, whenever securities
referred to in (a) above are acquired or transferred off of a Stock Exchange operating under concession
pursuant to the Stock Exchange Act, the acquirer, in all events, and the seller, when there is a loss, must file
a notice within ten days following the date of the transaction and, as applicable, submit a study on the sale
price of the shares referred to in the last paragraph of the preceding subsection.
OTHER SECURITIEES
d) In the case of securities other than those referred to in the preceding subsections of this Article, an
authorization must be requested from the corresponding tax authority to deduct a loss. The authorization
referred to in this subsection shall not be required in the case of institutions that are members of the
financial system.
PRORATED EXPENSES
XVIII. Expenses incurred abroad on a prorated basis with parties that are not income tax taxpayers under
Titles II or IV of this Law.
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LOSSES FROM DERIVATIVES EXECUTED BETWEEN RELATED PARTIES
XIX. Losses sustained from derivative transactions and transactions referred to in article 21 of this Law,
when such transactions are concluded with individuals or legal entities, either Mexican residents or foreign
residents, that are related parties under article 179 of this Law, when the agreed terms do not correspond to
those that would have been agreed by independent parties in comparable transactions.
RESTAURANTS AND BARS
XX. 91.5% of consumption in restaurants. For the difference to be deducted, payment must invariably be
made by credit, debit, or services cards or through an electronic wallet authorized for such purpose by the
Tax Administration Service. Consumption at restaurants meeting the requirements set forth in (V) of this
article shall be 100% deductible, provided that the limits set forth in said section are not exceeded. In no
event shall consumption in bars be deductible.
COMPANY CAFETERIAS
XXI. Expenses at company cafeterias that, by their very nature, are not available to all of the enterprises
employees; and even if such cafeterias are available to all employees, the expenses shall not be deductible
if they exceed an amount equivalent to one daily general minimum wage for the taxpayers geographic area
for each employee who uses the cafeterias and for each day on which the services are provided, added with
the cost recovery fees paid by employees for using such cafeterias.
EXPENSES ASSOCIATED TO COMPANY CAFETERIAS
The limit set forth in this section does not include expenses related to the provision of cafeteria service,
such as maintenance of laboratories or specialists analyzing the quality and suitability of the meals served
at the cafeterias referred to in the preceding paragraph.
PAYMENTS FOR CUSTOMS SERVICES
XXII. Payments for customs services other than the fees of customs brokers and the expenses incurred by
said brokers or the legal entities established by them pursuant to the Customs Law [Ley Aduanera]
PAYMENTS TO TAX HAVENS
XXIII. Payments to persons, entities, trusts, partnerships, investment funds, as well as any other legal
vehicle whose income is subject to a preferential tax regime, unless the taxpayer demonstrates that the
price or the amount of consideration is equal to the price or consideration that would have been agreed in
comparable transactions by independent parties, except for the provisions of (XXXI) hereof.
INITIAL PAYMENTS FOR GOODS NOT PUBLICLY TRADED
XXIV. Initial payments for the right to acquire or sell assets, currencies, shares or other securities not traded
on recognized markets, according to the provisions of article 16-C of the Federal Fiscal Code, when said
right has not been exercised, provided that the contracting parties are related to each other in accordance
with article 179 of this Law.
PECUNARY RIGHTS UPON BORROWED INSTRUMENTS
XXV. The reimbursement by the borrower of an amount equivalent to the pecuniary rights of the
instruments borrowed when such rights are collected by the borrowers of the instruments.
PROFIT SHARING
XXVI. Amounts that constitute a share in the taxpayers profits or that are contingent to earning such profits,
whether they correspond to employees, members of the Board of Directors, debenture holders, or others.
INTERESTS FROM DEBTS WITH RELATED PARTIES
XXVII. Interest on a taxpayers debts that exceed the equivalent of three times its shareholders equity, and
that comes from debts entered into with foreign resident related parties, pursuant to article 179 of the Law.
CALCULATION OF EXCESS DEBTS
To calculate the amount of the debts exceeding the threshold indicated in the preceding paragraph, the sum
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of the shareholders equity at the beginning and at the end of the year shall be divided by two. The quotient
thereof shall be then multiplied by three; and the result shall be finally subtracted from the annual average
balance of all the taxpayers interest-accruing debts.
CALCULATION OF NONDEDUCTIBLE INTERESTS FROM DEBTS WITH FOREIGN RELATED
PARTIES
If the annual average balance of the taxpayers debts entered into with foreign resident related parties is
lower than the excess amount of the debts referred to in the preceding paragraph, no interest accrued on
those debts may be deducted. If the annual average balance of the debts entered into with foreign resident
related parties is greater than the aforementioned excess, interest accrued from said debts entered into
with the foreign resident related parties shall not be deductible in an amount equal to the result of
multiplying said interest by the factor obtained by dividing the excess by said balance.
CALCULATION OF THE ANNUAL AVERAGE BALANCE OF INTEREST BEARING DEBTS
For the purposes of the two preceding paragraphs, the annual average balance of all the taxpayers
interest-accruing debts shall be calculated by dividing the sum of the balances of those debts through the
last day of each month in the year by the number of months in the year. The annual average balance of the
debts entered with foreign resident related parties shall be determined in the same manner, based on the
balances of these debts through the last day of each month in the year.
EQUITY FOR THE YEAR
To calculate the excess amount of debts, taxpayers may elect to consider as their shareholders equity for
the year the amount resulting from adding the initial and final balances for the year in question of their
Capital Contributions Account [Cuenta de Capital de Aportacin], net tax profit account [Cuenta de Utilidad
Fiscal Neta], and Reinvested net tax profit account [Cuenta de Utilidad Fiscal Neta Reinvertida]
(CUFINRE); and dividing the result thereof by two. Taxpayers electing this option must continue to apply it
for a period of not less than five years as of the year in which they elect it. Taxpayers that do not apply
financial information norms in determining their shareholders equity shall consider as shareholders equity
for the purposes of this section, the capital that is composed as described in this paragraph.
EXCLUDED DEBTS
Interest-accruing debts incurred by member institutions of the financial system in conducting transactions
inherent to their purpose and those incurred for constructing, operating, or maintaining production
infrastructure linked to strategic areas for the country, shall not be considered taxpayers interest-accruing
debts for purposes of calculating the amount thereof that exceeds the triple of the taxpayers shareholders
equity.
RAISING THE LIMIT BASED ON EQUITY
The threshold of three times the shareholders equity used to determine the excess amount of the debts
referred to in this section can be raised in cases in which taxpayers demonstrate that the activity they carry
on requires by itself greater leveraging; and obtain a ruling thereon in accordance with article 34-A of the
Federal Fiscal Code.
Notwithstanding the provisions of this section, articles 11 and 179 of this Law shall be abided by.
ADVANCE PAYMENTS OF MERCHANDISE, RAW MATERIALS, EXPENSES, ETC.
XXVIII. Advance payments on the acquisition of merchandise, raw materials, semi-finished and finished
products or on expenses directly or indirectly related to the production or provision of services referred to in
article 39 this Law. Nor shall said advance payments be part of the cost of goods sold referred to in article
25(II) of this Law.
For the purposes of this section, the total amount for acquisitions or expenses shall be deducted pursuant to
Title II, Section III, of this Law, provided that taxpayers have a tax invoice, covering the entire transaction for
which the advance payment is made.
PAYMENTS TO RELATED PARTIES
XXIX. Payments made by taxpayers when such payments are also deductible for a related party residing in
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Mexico or abroad.
The provisions of this section shall not apply when the related party that deducts the payment made by the
taxpayer includes in its gross income for the same year or the next, the item of income earned by such
taxpayer.
EXEMPT PAYMENTS TO EMPLOYEES
XXX. Payments that are, in turn, items of income exempt from taxation for employees, for up to an amount
resulting from applying the 0.53 factor to such payments. The factor described herein shall be 0.47, when
the benefits granted by a taxpayer to its employees that are, in turn, items of income exempt from taxation
for such employees for the relevant year, are not reduced with regard to those granted in the immediately
preceding fiscal year.
PAYMENTS TO FOREIGN ENTITIES
XXXI. Any payment falling within the scope of (a) that, in addition, is made for any of the items described in
(b), under any of the circumstances described in (c)
a) Payments made to a foreign entity that controls or is controlled by the taxpayer.
Control shall be deemed to exist whenever one of the parties has effective control over the other or control
over its administration, in such degree that it may decide upon the moment of allocation or distribution of
income, profits or dividends of the other, either directly or through third parties.
b) Payment is made for any of the following items.
1. Interests as defined in article 166 of this statute.
2. Royalties or technical assistance. Royalties shall also be deemed to be paid in connection with the
transfer of the goods or rights described in article 15-B of the Federal Fiscal Code, provided that such
transfer is conditioned to the use, disposal or productivity of such goods or rights.
c) Any of the following circumstances:
1. The foreign entity that receives payment is considered transparent under article 176 of this statute. This
provision shall not apply in the proportion that the shareholders or members of such foreign entity are
subject to income tax for income received through said foreign entity, and the payment made by the
taxpayer is the same that would have agreed independent parties in comparable transactions.
2. Payment is considered nonexistent for tax purposes of the country or territory where the foreign entity is
found.
3. Such foreign entity does not consider such payment as income subject to tax under applicable tax
provisions.
For purposes of (c) hereof, payment includes accrual of an amount in favor of any person and, when the
context so requires, any portion of a payment.
YEAR IN WHICH NONDEDUCTIBLE ITEMS MUST BE CONSIDERED
Nondeductible items described in this Law shall be considered for the year in which the expense is made
and not for the year in which they are part of the cost of goods sold.
Artculo 29. RULES FOR PENSION AND RETIREMENT FUNDS AND SENIORITY BONUSES
Reserves for employee pension or retirement funds that complement those set forth in the Social Security
Law and for seniority bonuses shall be subject to the following rules:
I. They shall be created and calculated under the terms and in accordance with the requirements set forth in
the Regulations of this Law, and distributed uniformly over ten years. This calculation shall be made each
year, in the month in which the reserve is established.
II. At least 30% of the reserve shall be invested in securities issued by the Federal Government registered
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at the National Registry of Securities or in shares of debt securities mutual funds. The difference shall be
invested in securities approved by the National Banking and Securities Commission [Comisin Nacional
Bancaria y de Valores] as investments of the technical reserves of insurance companies; or in the
acquisition or construction and sale of low-cost housing for the taxpayers employees; or in loans for the
same purposes, according to regulatory provisions; or in certificates of trust investment issued by
institutions acting as trustees with regard to the trusts referred to in article 118 of this Law, provided that the
total investment does not exceed 10% of the reserve referred to in this article.
Any investments made in securities issued by the same enterprise or by enterprises considered related
parties shall not exceed 10 percent of the total amount of the reserve, and provided that such securities are
approved by the National Banking and Securities Commission under the terms of the preceding paragraph.
For the purposes of the preceding paragraph, two or more parties are not related to each other when one
partys direct or indirect participation in the capital stock of the other does not exceed 10% of the total
subscribed capital and provided that the former does not participate, directly or indirectly, in the
administration or control of the latter.
III. The assets that compose the fund shall be placed in an irrevocable trust, in banking institutions
authorized to operate in Mexico, or be managed by mutual insurance companies or institutions, brokerage
houses, mutual-fund operators, or retirement fund management companies holding a concession or
authorization to operate in the country, in accordance with the general rules issued by the Tax
Administration Service. The yields earned from the investment shall become part of the fund and shall
remain in the irrevocable trust. The assets of and the yields from the investment may only be used for the
purposes for which the fund was created.
IV. The investments that compose the fund shall be valuated each year at market price, in the month in
which the reserve was established, except for loans for the acquisition or construction of low-income
housing, in which case the unpaid balance of the loans shall be considered.
V. Contributions may not be deducted when the value of the fund is sufficient to comply with the obligations
established in the retirement or pension plan.
VI. Taxpayers may dispose of the goods and securities referred to in (II) hereof solely to pay employee
pensions or retirements and seniority bonuses. If a taxpayer disposes of such goods or the yields thereon
for other purposes, it shall pay the respective tax at the rate set forth in article 9 of this Law.
FUNDS MANAGED BY A RETIREMENT FUND MANAGEMENT COMPANY RESOURCES INVESTED
IN A MUTUAL FUND SPECIALIZED IN RETIREMENT FUNDS
The provisions of (II) and (III) hereof shall not be applied if a fund is managed by a retirement fund
management company and the resources therefrom are invested in a mutual fund specialized in retirement
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deduction of investments or remunerations for the provision of dependent personal services directly related
to production or the provision of services, which shall be deducted in accordance with Section III of this
Chapter, nor the operating or financial expenses, which shall be deducted under the terms set forth in this
Law. Taxpayers that provide time-sharing tourist services may include the deduction of investments
corresponding to the real property used for the provision of said services in the estimate of direct and
indirect costs, in accordance with article 31 of this Law.
DEDUCTION FACTOR FOR EACH PROJECT OR PROPERTY
At the end of each year, taxpayers shall calculate the total deduction factor referred to in paragraph one of
this article for each project or each real property from which income for the provision of time-sharing
services is earned, as appropriate, using the information they have on said date. This factor shall be
compared at the end of each year with the factor used during that year and in previous years corresponding
to the project or the provision of the service in question. If the comparison indicates that the deduction factor
at the end of the year in question is less than that of any of the previous ones, the taxpayer shall submit
amended returns, using this lower deduction factor, and correct the amount of estimated expenses
deducted in each year in question.
INTERESTS
If the comparison referred to in the preceding paragraph indicates that the total deduction factor at the end
of the year is more than 5% lower than the factor determined during that year or in preceding years,
interests shall be paid, when applicable.
COMPARISION OF REAL COSTS AND ESTIMATED COSTS ONCE INCOME HAS BEEN FULLY
INCLUDED IN GROSS INCOME
In the year in which all income from the work or the service in question is finally included in gross income,
taxpayers shall compare: the expenditures corresponding to the direct and indirect costs referred to in
paragraph one of this article, excluding, as applicable, those indicated in paragraph two thereof, during the
period from the beginning of the work or of the provision of the service until the year in which all said income
is finally included in gross income; with the total of estimates deducted in the same period under the terms
of this article. In both cases, the items shall correspond to the same work or to the real property from which
income for the provision of the service stems. To make this comparison, taxpayers shall update for inflation
the estimated expenses and those actually incurred in each year, from the last month of the year in which
they were deducted or incurred, as appropriate, through the last month of the first half of the year in which
all of the income from the work or from the time-sharing tourist service is finally included in gross income.
Providers of time-sharing tourist services shall consider the expenditures for the investments corresponding
to the real property from which income for the provision of said services stems, to be the original amounts of
the investments, evidenced with documentation meeting the requirements set forth in the tax provisions.
INCLUSION IN GROSS INCOME OF EXCESS ESTIMATED DEDUCTIONS
If the comparison referred to in the preceding paragraph indicates that the deductions of total estimated
expenses, updated for inflation, exceed expenses actually incurred, also updated for inflation, the
difference shall be included in the taxpayers gross income for the year in which the income from the work or
the provision of the service is finally included in gross income.
For the purposes of the two preceding paragraphs, in the case of the provision of time-sharing tourist
services, the inclusion in gross income of income derived from the provision of the service shall be
considered to be finally made in the year in which any of the following situations takes place: the taxpayer
receives 90% of the agreed consideration or payment; or five years have elapsed since the beginning of the
work or the provision of the service referred to in this article.
If the comparison referred to in the fifth paragraph of this article indicates that the total deducted estimated
expenses exceed by more than 5% those actually incurred (updated for inflation, in both cases), interests
shall be calculated for the excess, starting on the day on which the return for the year in which the estimated
expenses were deducted was or should have been filed. These interests shall be paid at the same time as
the return in question is filed.
NOTICE CONCERNING THE ELECTION FOR EACH WORK OR PROPERTY USED IN TIME SHARES
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Taxpayers taking the election described in this article shall file a notice with the tax authorities stating that
they elect to abide by the provisions of this article, for each project or property from which income for the
provision of the service is derived, within fifteen days after the beginning of the projects or the execution of
the agreement, as applicable. Once this election has been taken, it may not be changed. In addition,
taxpayers shall submit the information required by the Tax Administration Service though general rules.
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year for which the deduction is claimed.
When the number of months of the period during which the good was used in the year is odd, the last month
of the first half of such period shall be the month immediately preceding the month to which the half of such
period corresponds.
GAINS FROM DISPOSITIONS OF NONDEDUCTIBLE OR PARTIALLY DEDUCTIBLE INVESTMENTS
To determine gain from the transfer of goods the investment on which is partially deductible, pursuant to
article 36(II) and (III) of this statute, the difference between the deductible original amount of the investment,
reduced by the deductions claimed over such amount, and the price at which such goods are transferred,
shall be considered.
In cases of transfers of goods the investment on which is not deductible, pursuant to article 36(II), (III) and
(IV) of this statute, gain shall be equal to the price at which such goods are transferred.
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IV. In the case of intangible assets that make it possible to exploit public property or provide a public service
under concession, the top percentage shall be calculated by dividing one by the number of years for which
the concession was granted. The quotient thereof shall be then multiplied by 100, and the product shall be
expressed as a percentage.
If the benefit of the investments referred to (II) and (III) of this article is materialized in the same year in
which the expense was made, the entire deduction may be claimed in that year.
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LIVESTOCK AND VEGETABLES
IX. 100% on livestock and vegetables.
TELEPHONE COMMUNICATIONS
X. In the case of telephone communications:
a) 5% on transmission towers and cables, except those made with optical fiber.
b) 8% on radio systems, including transmission and handling equipment using the radio spectrum, such as
those used for digital microwave or analog radio transmission, microwave towers, and waveguides.
c) 10% on transmission equipment, such as internal-plant circuits used for call switching and that serve
trunks routed into the telephone exchange, including multiplexers, hubs, and routers.
d) 25% on telephone-exchange equipment used for call switching based of technologies other than
electromechanical technology.
e) 10% on other items.
SATELLITE COMMUNICATIONS
XI. In the case of satellite communications:
a) 8% on the satellite segment in space, including the main body of the satellite, transponders, antennas for
transmitting and receiving digital and analog communications, and satellite-monitoring equipment.
b) 10% on land-based satellite equipment, including antennas for transmitting and receiving digital and
analog communications and satellite-monitoring equipment.
ADAPTATIONS TO EASE THE ACCESS AND USE OF FACILITIES FOR PERSONS WITH DIFFERENT
CAPACITIES
XII. 100% on adaptations made to facilities that result in additions or improvements to fixed assets, provided
that the purpose of such adaptations is to ease the access and use of the taxpayers facilities for persons
with different capacities, described in article 186 of this statute.
MACHINERY AND EQUIPMENT FOR ENERGY GENERATION FROM RENEWABLE SOURCES OR
COGENERATION SYSTEMS OF EFFICIENT ELECTRICITY
XIII. 100% on machinery and equipment for energy generation from renewable sources or cogeneration
systems of efficient electricity.
For the purposes of the preceding paragraph, renewable sources are those that, by their very nature or
when properly used, are considered inexhaustible, such as all forms of solar power; wind power;
hydropower, whether kinetic or potential, from any natural or man-made body of water; ocean energy in its
various forms; geothermal power; and energy from biomass or waste. Similarly, generation is the
successive conversion of energy from renewable sources into other forms of energy.
This section shall be applicable provided that the machinery and equipment are operated or used during a
minimum of five years immediately following the year in which the deduction is claimed, except in the cases
referred to in article 37 of this Law. Taxpayers that fail to comply with the minimum term set forth in this
paragraph shall pay, as applicable, the tax on the difference between the amount deducted in accordance
with this section and the amount that should have been deducted in each year in accordance with this
article or article 35 of this Law had the 100% deduction not been claimed. For such purposes, the taxpayer
shall file an amended tax return for each of the relevant years no later than in the month following the month
in which failure to comply with the term described in this section takes place. In addition, the taxpayer shall
pay interests and the update for inflation from the date on which the deduction was taken through the last
day in which the machinery and equipment was used or operated.
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shall be applied, in accordance with the activity for which they are used:
I. 5% for the generation, conduction, transformation, and distribution of electricity; for the milling of grains;
for the production of sugar and sugar byproducts; for the manufacture of edible oils; for sea, river, and lake
transportation.
II. 6% for the production of metal obtained in the first process; for the manufacture of tobacco products and
those obtained from unprocessed coal.
III. 7% for the manufacture of pulp, paper, and similar products; for the extraction and processing of crude
oil and natural gas.
IV. 8% for manufacturing of motor vehicles and parts thereof; for the construction of railways and ships; for
the manufacture of metal products, machinery, and professional and scientific instruments; for the
processing of food products and beverages, except grains, sugar, edible oils, and byproducts.
V. 9% for the tanning of leather and the manufacture of leather goods; for the processing of chemical,
petrochemical, and pharmacobiological products; for the manufacturing of rubber and plastic products; for
graphics publications and printing.
VI. 10% for electric transport.
VII. 11% for manufacturing, finishing, dyeing, and printing textile products as well as garments.
VIII. 12% for the mining industry; for aircraft construction and cargo and passenger ground transportation.
The provisions of this section shall not apply to the machinery and equipment indicated in (II) of this article.
IX. 16% for air transport; for the transmission of communications services provided by telegraphs and by
radio and television stations.
X. 20% for restaurants.
XI. 25% for the construction industry; for agriculture, livestock, forestry and fishing activities.
XII. 35% for machinery and equipment used directly for research on new products or developing technology
in Mexico.
XIII. 50% for the manufacture, assembly, and transformation of magnetic components for hard drives and
electronic cards for the computer industry.
XIV. 10% for other activities not specified in this Article.
When a taxpayer is engaged in two or more of the activities indicated in this article, the percentage
corresponding to the activity in which such taxpayer earned most of its income in the immediately preceding
year shall be applied.
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III. Investments in dwellings and cafeterias that, by their very nature, are not available to all of the
employees of the enterprise, as well as in airplanes and ships that do not have a concession or permit from
the Federal Government for commercial use, shall only be deductible in cases in which the requirements
set forth in the Regulations of this Law are complied with. The deduction for airplanes shall be calculated by
considering an amount equivalent to $8,600,000.00 as the top amount of the original investment.
LESSORS OF AIRPLANES AND AUTOMOBILES
Taxpayers whose principal activity is granting the temporary use and enjoyment of airplanes or automobiles
may deduct the entire amount of the original investment in the relevant airplanes or automobiles, except
when the taxpayer grants the temporary use and enjoyment of airplanes or automobiles to another
taxpayer, and one of those two parties, or their partners or shareholders, are in turn partners or
shareholders of the other, or there is, in fact, a relationship that allows one of them to exercise preponderant
influence over the operations of the other. In those cases, the deduction for airplanes shall be determined in
accordance with paragraph one of this section, and for automobiles, pursuant to (II) of this Article.
INVESTMENTS IN RECREATIONAL HOMES
In no event shall investments in recreational homes be deductible.
INVESTMENTS IN AIRPLANES WITH NO CONCESSION OR PERMIT FROM THE FEDERAL
GOVERNMENT
Legal entities that elected to be taxed under the provisions of Chapter VI of Title II of this statute shall not
claim the deduction described in this section with regard to investments in airplanes that do not have a
concession or permit from the Federal Government for commercial use.
GOODS ACQUIRED BY MERGER OR SPIN OFF
IV. In the case of goods acquired through mergers or spin-offs of companies, the values subject to
deduction may not be higher than the values whose deduction is pending by the merged or original
company, as applicable.
EXPENSES RELATED TO THE ISSUANCE OF DEBTURES AND OTHER INSTRUMENTS
V. Commissions and expenses related to the issuance of debentures or any other negotiable instrument
placed among the general investing public or any other of the negotiable instruments indicated in article 8 of
this Law shall be deducted yearly in proportion to the payments made in each year to redeem said
debentures or negotiable instruments. When the debentures and negotiable instruments referred to in this
section are redeemed through a single payment, the commissions and expenses shall be deducted in equal
shares during the years elapsed until payment is made.
IMPROVEMENTS FOR THE OWNERS BENEFIT
VI. Constructions carried out at, facilities added to, or permanent improvements made to tangible fixed
assets owned by third parties that, in accordance with the respective lease or concession agreement, will
benefit the owner thereof, and that have been carried out, added, or made as of the date of execution of the
aforementioned agreements shall be deducted under this Section. When the agreement terminates and the
deductible investments have not been redeemed for tax purposes, the value to be redeemed may be
deducted in the respective annual tax return.
ROYALTIES
VII. In the case of royalties, the deduction may be made pursuant to article 39 (III) of this Law only when the
royalties have effectively been paid.
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FIXED ASSETS THAT MAY NOT BE IDENTIFIED INDIVIDUALLY AND ARE LOST OR BECOME
USELESS
When fixed assets not individually identifiable are lost because of acts of God or force majeure or become
useless, the undeducted amount thereof shall be claimed, considering that the first assets acquired are the
first to be lost.
REINVESTMENTS IN GOODS SIMILAR TO LOST GOODS
If a taxpayer reinvests the recovered amount to acquire assets, similar to those that were lost, or to redeem
liabilities assumed for acquiring said assets, such taxpayer shall only include in gross income the portion of
the recovered amount not reinvested or not used to redeem liabilities. The reinvested amount that comes
from the recovery may only be deducted by applying the percentage authorized by this Law to the original
amount of the investment of the good that was lost; and only for up to the portion thereof pending to be
deducted through the date when the loss was sustained.
INVESTMENT OF ADDITIONAL AMOUNTS
If a taxpayer invests amounts in addition to those that were recovered, it shall consider them as a separate
investment.
The reinvestment referred to herein must be made within twelve months as of the date on which the
recovery is obtained. If the amounts recovered are not reinvested or used to redeem liabilities within the
same term, they shall be included in gross income earned in the year in which the term concludes.
Taxpayers may request authorization from the tax authorities, so that the term indicated in the preceding
paragraph may be extended for another period of the same length.
ADJUSTMENT OF RECOVERED AMOUNTS THAT ARE NOT REINVESTED
The amount recovered and not reinvested within the term indicated in fifth paragraph of this article shall be
adjusted for inflation. To this end, the amount shall be multiplied by the inflation update factor corresponding
to the period from the month in which the recovery was obtained through the month in which it is included in
gross income.
If a good has been used during an odd number of months in the year, the month immediately preceding the
month corresponding to the midpoint in the period shall be considered to be the last month of the first half of
said period.
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Artculo 41. METHODS OF INVENTORY VALUATION
Taxpayers may elect any of the methods of inventory valuation indicated below:
I. First-in, first-out (FIFO)
II. Identified cost
III. Average cost
IV. Retail method
REQUIREMENTS TO ELECT FIFO
When a taxpayer elects the method described in (I) hereof, that method must be adopted for each type of
merchandise individually, and it may not be applied in monetary terms. Under the conditions set forth in the
Regulations of this Law, facilitating measures may be established to avoid identifying percentages of cost
deductions from purchases for each type of merchandise individually.
TAXPAYERS THAT MAY ONLY USE THE IDENTIFIED COST METHOD
Taxpayers that transfer property of merchandise that can be identified by serial number and that costs more
than $50,000.00 shall only use the identified cost method.
VALUATION OF INVENTORIES WHEN THE RETAIL METHOD IS USED
Taxpayers that elect the retail method shall valuate their inventories at sale price, reduced by the gross
profit margin they have in the year, in accordance with the procedure set forth in the Regulations of this
Law. The option referred to in this paragraph shall not release taxpayers from the obligation of using the
inventory control system, referred to in article 76(XIV) of this Law.
PERMANENCE OF THE VALUATION METHOD OF INVENTORIES
Once a method has been chosen in accordance with this article, it must be used for at least five years. A
taxpayer that for accounting purposes uses a method other than those indicated in this article may continue
to use that method to valuate its inventories for accounting purposes, provided that such taxpayer keeps a
record of any difference in the cost of merchandise under the valuation method used by the taxpayer for
accounting purposes and under the valuation method used pursuant to this Article. Any amount calculated
pursuant to this paragraph shall not be included in or deductible from gross income.
DEDUCTION IN CASES OF CHANGE OF VALUATION METHOD OF INVENTORIES
When a deduction arises as a result of a change in the inventory valuation method, the deduction shall be
claimed proportionately in the next five years.
Artculo 42. COST EXCEEDING THE MARKET VALUE OR THE REPLACEMENT VALUE
When the cost of merchandise exceeds its market or replacement price, any of the costs described below
may be considered:
I. Replacement cost by acquisition or production, which may not be higher than realization cost or lower
than net realization cost.
II. Realization cost, which is the regular sale price, reduced by direct sales expenses, provided that this cost
is lower than replacement cost.
III. Net realization cost, which is equivalent to regular sale price, reduced by direct sales expenses and the
profit margin normally earned from the realization thereof, if it is higher than replacement cost.
SALE OF MERCHANDISE TO A RELATED PARTY
When taxpayer transfer the property of merchandise to a related party in accordance with article 179 of this
Law, any of the methods described in article 180(I), (II) and (III) of the same statute shall be used.
TAXPAYERS OBLIGATION TO REPORT THE COST OF MERCHANDISE
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Taxpayers that elected to file audited financial statements for tax purposes, pursuant to article 32-A of the
Federal Fiscal Code, or that are required to submit the information return on their tax situation, pursuant to
article 32-H of such Code, shall report in the auditors report or in the information return, as applicable, the
cost of merchandise that they used in accordance with this article. Any other taxpayer shall report such cost
in its annual tax return.
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from a debtor, including, among others: credit rights acquired by financial factoring companies, investments
in shares of debt securities mutual funds, and derivatives referred to in article 20(IX) of this Law.
EXCLUDED CREDITS
For the purposes of the preceding article, the following shall not be considered credits:
I. Credits chargeable to individuals and that do not stem from entrepreneurial activities, provided that such
credits are: demand credits, credits with a term of less than one month, or credits with a longer term, if they
are collected in less than one month. Credits shall be considered to be for a term of more than one month if
they are collected after 30 calendar days as of the date on which the credit is arranged.
II. Credits chargeable to partners or shareholders, or managing partners or contributing partners in
partnerships, who are individuals or legal entities residing abroad, unless that in the last case, the credits
are denominated in a foreign currency and derive from the exportation of goods or services.
The concept of credits shall not include either the credits a trustee has against the settlors or beneficiaries in
a trust through which entrepreneurial activities are conducted, when such settlors or beneficiaries are
individuals or legal entities residing abroad, unless that in the last case, the credits are denominated in a
foreign currency and derive from the exportation of goods or services.
This section shall not apply to credits extended by credit unions to their members or shareholders, in cases
where the relevant credit union carries out activities solely with its partners or shareholders.
III. Credits chargeable to officers and employees, as well as loans made to third parties referred to in article
27(VII) of this Law.
IV. Estimated payments of taxes, as well as tax incentives.
V. Any item of income that may be included in gross income until it is effectively received. The provisions of
this section shall not apply to income from financial leasing agreements upon which the election described
in article 17(III) of this law is exercised.
VI. Shares, nonamortizable investment certificates, and certificates of deposit of property, and, in general,
negotiable instruments representing ownership of property, contributions to partnerships, as well as other
securities whose yields are not considered interest in accordance with article 8 of this Law.
VII. Cash on hand.
CREDITS DERIVED FROM GROSS INCOME, REDUCED BY DISCOUNTS AND REBATES
Credits derived from gross income, reduced by discounts and rebates thereon, shall be considered credits
for the purposes of this article as of the date on which the relevant items are included in gross income, and
through the date on which they are collected in cash, in kind, or in services, or until the date on which they
are canceled as uncollectible. If a transaction for which a credit was extended is canceled, the portion of the
annual adjustment for inflation corresponding to that credit shall also be canceled, according to provisions
set forth by the Regulations of this Law, provided that the credit in question was taken into account for said
adjustment.
FAVORABLE BALANCES OF TAXES
For the purposes of this article, favorable balances of taxes shall be considered credits only from the day
following that on which the relevant return is filed through the date on which they are offset or credited or a
refund thereof is received, as applicable.
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Liabilities and reserves of assets, liabilities or capital that are or have been deductible are also considered
debts. For such purposes, reserves are considered to be created or increased monthly, in proportion to the
ratio between income in the month and total income in the year.
DEBTS FROM NONDEDUCTIBLE ITEMS OR WITH RELATED PARTIES EXCEEDING THE DEBTORS
CAPITAL
Debts stemming from nondeductible items, pursuant to article 28(I), (VIII) and (IX) of this Law, shall not be
considered debts in any case; nor shall the amount of debts exceeding the limit referred to in the first
paragraph of (XXVII) thereof.
MOMENT IN WHICH A DEBT IS INCURRED
For purposes of article 44 of this Law, debts shall be deemed to be incurred to acquire goods and services;
to obtain the temporary use or enjoy property; or to borrow capital, in any of the following cases:
ACQUISITION OF GOODS, SERVICES AND THE TEMPORARY USE AND ENJOYMENT OF GOODS
I. In the case of the acquisition of goods or services as well as the temporary use or enjoyment of property,
when any of the events described in article 17 of this Law takes place, and the agreed consideration or price
is paid after the date on which such event occurs.
BORROWED CAPITAL
II. In the case of borrowed capital, when part or all of the capital is received.
CANCELLATION OF TRANSACTIONS FROM WHICH A DEBT ARISES
In the case of cancellation of a transaction for which a debt has been incurred, the portion of the annual
adjustment for inflation corresponding to said debt shall be canceled, according to provisions of the
Regulations of this Law, provided that the debt in question was taken into account for said adjustment.
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Banking institutions shall include the interest referred to in this article in their gross income. For the
purposes of the third paragraph of article 77 of this Law, said institutions shall not subtract the tax paid in
accordance with this article from taxable income.
When the party paying the interest pays, on behalf of the establishment, the tax corresponding to the
establishment, the amount of said tax shall be considered interest.
The tax referred to in this article shall not be charged on interest received by said establishments, if such
interest had been exempt from income tax under article 166 of this Law, if it were paid directly to a foreign
resident.
Artculo 49. BANKING INSTITUTIONS INCOME FROM AGREEMENT WITH THE MINISTRY OF
TREASURY AND PUBLIC CREDIT
Banking institutions may include in gross income the income derived from agreements with the Ministry of
the Treasury and Public Credit [Secretara de Hacienda y Crdito Pblico], pursuant to article 32 B(III) of
the Federal Fiscal Code, when they receive such income in cash or in kind. The amount to be included in
gross income shall be the amount effectively received once the reductions set forth in said agreements
have been made.
ANNUAL ADJUSTMENT FOR INFLATION INCLUDIBLE IN OR DEDUCTIBLE FROM GROSS INCOME
To calculate the annual adjustment for inflation includible in or deductible from gross income in accordance
with article 44 of this Law, banking institutions shall consider as credits, in addition to the credits indicated in
article 45 of the same statute, those referred to in (I) of said article.
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Artculo 53. GOODS OR RIGHTS ACQUIRED THROUGH ACCORD AND SETTLEMENT OR AWARD
Taxpayers shall not deduct, pursuant to article 25 of this Law, goods or rights that they have acquired
through accord and settlement or award, and that they are prevented by law from keeping. The taxpayer
shall calculate the profit or the loss realized from transferring the goods or rights, by subtracting the verified
acquisition cost from income earned on said transfer, in the year in which the good or right is transferred.
The verified acquisition cost may, in turn, be adjusted for inflation. To update this cost, it shall be multiplied
by the update factor corresponding to the period from the month in which the good or right was acquired by
accord and settlement or through an award until the month immediately preceding the date on which said
good or right is transferred to a third party by the party who received it as accord and settlement or award. In
the case of shares, the amount that shall be subtracted pursuant to this paragraph shall be the average
per-share cost determined in accordance with article 2 of this Law.
Artculo 54. INCOME TAX WITHHOLDING ON INTERESTS PAID BY THE FINANCIAL SYSTEM
(1) Member institutions of the financial system that make interest payments shall withhold and pay tax. The
tax is calculated by multiplying the rate set forth by Federal Congress for the year in question in the Federal
Revenue Law [Ley de Ingresos de la Federacin], by the amount of the capital on which the interest is paid.
The amount so withheld shall be an estimated payment. The withholding shall be paid at the authorized
offices no later than the seventeenth day of the month immediately following the month to which the
payment corresponds; and a tax invoice bearing the amount of interests and the tax withheld shall be
issued.
CASES IN WHICH NO WITHHOLDING IS APPLIED
The withholding referred to in the preceding paragraph shall not be applied in the following cases:
I. On interest paid to:
a) The Federal Government, State Governments, or municipalities.
b) Decentralized entities whose activities are not primarily entrepreneurial-related as well as those subject
to budget control pursuant to the Federal Law on Budget and Treasury Accountability [Ley Federal de
Presupuesto y Responsabilidad Hacendaria], as determined by the Tax Administration Service.
c) Legally recognized political associations or parties.
d) Legal entities authorized to receive tax-deductible donations under this Law.
e) Mutual funds that specialize in retirement funds; employee pension or retirement funds that complement
those established by the Social Security Law; retirement insurance companies authorized exclusively to
operate retirement insurance based on the Social Security laws and in the form of life annuities or survivors
insurance in accordance with said laws; as well as the investment channels or accounts implemented as a
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result of the personal retirement plans referred to in article 151(V) of this Law.
f) Foreign governments, in cases of reciprocity.
II. Interest paid between Mexicos Central Bank [Banco de Mxico], the member institutions of the financial
system, and mutual funds specializing in retirement funds. This section shall not apply to interest derived
from liabilities not to the account of said institutions or mutual funds, or to interest that accrues when said
institutions or mutual funds act on behalf of third parties.
III. Interest paid to Federal Government economic development trusts or funds.
IV. Interest paid by financial intermediaries to pension and seniority bonus funds established in accordance
with article 29 of this Law, as well as interest paid to debt securities mutual funds that exclusively manage
investments in said funds or whose pool of investors is composed exclusively of the Federal Government,
the States Governments, the municipalities, the decentralized entities whose activities are not primarily
entrepreneurial-related, and political parties and legally recognized political associations.
V. Interest paid to employee savings and loan associations and savings funds or legal entities incorporated
for the sole purpose of managing said savings and loan associations or savings funds.
The preceding paragraph shall apply only if the following requirements are met:
a) The savings funds and savings and loan associations referred to in this section shall fulfill the
requirements set forth in the Regulations of this Law, and the person who establishes the savings and loan
association or savings fund or the legal entity that is incorporated for the sole purpose of managing the
savings and loan association or savings fund keeps the documentation set forth in said Regulations
available to the tax authorities.
b) No later than 15 February of each year, the legal entities referred to in this section shall submit to the Tax
Administration Service information on the amount of the contributions made to the savings funds and
savings and loan associations that they manage as well as on the nominal and real interest paid in the year
in question.
This section shall not apply to interest paid to the legal entities referred to in this section for investments not
carried out with resources of the employee savings and loan associations and savings funds that they
manage.
VI. Interest paid to the mutual funds referred to in article 87 of this Law and to the capitals market securities
mutual funds referred to in article 88 of this Law.
VII. Gains from capital derivatives referred to the exchange rate of a currency, traded in recognized
markets, as defined in article 16-C(I) of the Federal Fiscal Code.
(1)During fiscal year 2015, the annual withholding rate will be 0.60%. FRL 2015 twenty first
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Administration Service shall be abided by.
II. To provide to the individuals or entities who receive payments from them, a certificate indicating the
nominal and real amount of interest paid or, as applicable, the loss determined in accordance with article
134 of this Law, as well as the withholdings made in the immediately preceding year, no later than 15
February of each year.
III. To keep, in accordance with the Federal Fiscal Code, information regarding income tax withholding and
tax invoices.
IV. To provide on an annual basis and no later than February 15, information on deposits made in cash to
the taxpayers accounts in member institutions of the financial system, when the monthly accumulated
amount of cash deposits in all the accounts the relevant taxpayer holds in the same member institution of
the financial system exceeds $15,000.00; and on all acquisitions in cash of cashiers checks, pursuant to
the general rules issued by the Tax Administration Service.
CONCEPT OF CASH DEPOSITS
For purposes of this article, cash deposits means deposits in domestic or foreign currencies made to any
type of account that individuals or legal entities hold in member institutions of the financial system, as well
as acquisitions in cash of cashiers checks. The concept of cash deposits shall not include those made in
favor of individuals or legal entities through wire transfers, account transfers, negotiable instruments or any
other document or system agreed with member institutions of the financial system, under the relevant legal
provisions, even when the deposits are chargeable to the same institution that receives them.
CHAPTER V. LOSSES
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by multiplying it by the update factor for the period from the first month of the second half of the year in
which the tax loss is sustained through the last month of the same year. The portion of the tax loss
carryforwards already updated for inflation but pending to be used to offset tax profits shall be updated, by
multiplying it by the update factor for inflation for the period from the month in which it was last updated
through the last month of the first half of the year in which it will be used.
For the purposes of the preceding paragraph, if a loss is sustained in a year with an odd number of months,
the first month of the second half shall be the month immediately following the month that is the midpoint in
the year.
RIGHT THAT MAY NOT BE TRANSFERRED
The right to carry tax losses forward pertains exclusively to the taxpayer who sustained the losses and may
not be transferred to any other party, even as the result of a merger.
CORPORATE SPIN OFFS
In the case of a spin-off of companies, if the original company primarily conducted commercial activities, the
tax loss carryforwards pending to be used to offset tax profits shall be divided between the original company
and the companies spun-off in proportion to the division of the total value of inventories and accounts
receivable related to the commercial activities of the original company. If the original company primarily
conducted other entrepreneurial activities, such tax loss carryforwards shall be divided between the original
company and the companies spun-off in the proportion to the division of the fixed assets. To calculate the
proportion referred to in this paragraph, investments in real property not related to the principal activity shall
be excluded.
Artculo 58. BUSINESS FOR PURPOSES OF CARRYING FORWARD LOSSES
In the event of a merger, the merging entity may use tax losses pending to be carried forward at the time of
the merger only to offset tax profits from the same business in which such losses were sustained.
CHANGE OF PARTNERS OR SHAREHOLDERS
When there is a change in the partners or shareholders that control a company that has tax loss
carryforwards pending to be used, and the sum of the companys income in the three last years is less than
the amount, updated for inflation, of those losses at the end of the last year before the change in partners or
shareholders, such company may carry forward losses only offset tax profits corresponding to the same
business lines in which the losses were sustained. For such purposes, income declared in the financial
statements for the period in question, approved by the shareholders meeting, shall be considered.
For the purposes of the preceding paragraph, a change of the partners or shareholders that control a
company shall be deemed to exist when direct or indirect holders of more than fifty percent of the voting
shares or ownership interest of the company in question have changed, in one or more acts carried out in a
period of three years. This paragraph shall not apply to changes of partners or shareholders as the result of
an inheritance, donation, corporate reorganization, or merger or spin-off not considered to be a transfer of
property in accordance with the Federal Fiscal Code, provided that, in the event of a reorganization,
merger, or spin-off, the direct or indirect partners or shareholders that controlled the company prior to said
acts continue to do so afterwards. In the event of a merger, the terms of paragraph one of this article shall
be abided by. For such purposes, shares placed among the general investing public shall not be included.
ACCOUNTING RECORDS
To carry tax losses forward, the companies referred to in the preceding paragraphs shall keep accounting
records so as to permit their tax loss carryforwards in each business line, as well as losses in any new
business lines that are added, to be tracked separately for each year. Unidentifiable expenses shall be
applied in the proportion that they represent with regard to income earned from the activity. For this
application, the same criteria shall be followed for each year.
LOSSES FROM CORPORATE MERGERS OR LIQUIDATIONS
Tax losses or portions thereof derived from mergers or liquidation of companies, in which the taxpayer
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participates as shareholder shall not be carried forward.
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Artculo 62. COMPANIES THAT CANNOT BE INTEGRATING OR INTEGRATED COMPANIES
The following companies shall be considered neither integrating nor integrated companies:
I. Those covered by Title III of this Law.
II. Those that under article 7, paragraph three, of this Law are members of the financial system as well as
capital mutual funds created under the relevant laws.
III. Foreign residents, even when they have permanent establishments in the country.
IV. Companies being liquidated.
V. Partnerships and associations governed by civil law, as well as cooperatives.
VI. Legal entities subject to taxation under articles 72 and 73 of this Law.
VII. The partnerships referred to in article 17-B of the Federal Fiscal Code.
VIII. Companies performing toll manufacturing [maquila] operations, described in article 182 of this statute.
IX. Those with tax loss carryforwards pending to be used, pursuant to article 57 of this statute, that were
sustained prior to the date in which they met the requirements described in articles 60 or 61 of this statute,
as applicable.
X. Enterprises providing public air transportation services.
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b) It shall subtract the tax losses sustained in the year by integrated companies, without the update for
inflation described in article 57 of this statute.
c) It shall add or subtract, as applicable, its own taxable income or tax loss for the relevant year. The tax
loss shall not be updated for inflation under article 57 of this statute.
The items described in the preceding subsections shall be added or subtracted in the integrable
participation.
FACTOR OF THE INTEGRATED TAXABLE INCOME
III. The integrating company shall calculate a factor of the integrated taxable income for the relevant year.
Such factor shall be obtained by dividing the integrated taxable income for the year by the sum of taxable
income earned in the year by the integrating company and the integrated companies, in the integrable
participation. This factor shall be calculated up to the ten-thousandth.
When integrated taxable income is negative, the factor of the integrated taxable income shall be zero.
ANNUAL TAX TO BE PAID
IV. The relevant company shall determine the annual tax to be paid. To this end, it shall add the amount of
the tax that corresponds to the integrable participation to the tax corresponding to the non-integrable
participation, pursuant to the following:
a) The amount corresponding to the integrable participation shall be determined by multiplying the tax that
would arise if the provisions of this Chapter were not applied, by the integrable participation for the year.
The result thereof shall be multiplied by the factor of integrated taxable income, described in (III) hereof.
b) The amount corresponding to the non-integrable participation shall be determined by multiplying the tax
that would arise if the provisions of this Chapter were not applied, by the non-integrable participation for the
year.
c) The sum of the amounts obtained under the preceding subsections shall be the tax to be paid along with
the return for the relevant fiscal year.
DEFERRED ANNUAL TAX
V. The difference between the tax associated to the integrable participation and the tax obtained in
accordance with (IV)(a) hereof shall be the tax for the year that may be deferred for a term of three years, at
the end of which the tax shall be paid in accordance with the provisions of paragraph one of article 67 of this
statute.
INTEGRABLE PARTICIPATION
For purposes of this Chapter, integrable participation means the equity participation of an integrating
company in the capital stock of an integrated company during the fiscal year of the latter, either directly or
indirectly. For these purposes, the daily average participation for that year shall be considered.
The integrable participation of an integrating company shall be 100%.
NON-INTEGRABLE PARTICIPATION
Non-integrable participation means the equity participation that an integrating company does not have in
the capital stock of an integrated company, either directly or indirectly.
INVESTMENTS IN TAX HAVENS
When integrated companies or integrating companies have investments described in article 176 of this
statute, the integrating company or its integrated companies shall not consider income subject to tax, tax
profit or taxable income earned from such investments to determine their taxable income or tax loss; and
the provisions of article 177 of this statute shall be abided by.
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Integrating and integrated companies shall keep a net tax profit account, pursuant to the provisions of
article 77 of this Law, during the period in which they pay income tax in accordance with this Chapter. To
this end, they shall abide by the following provisions of this article, concerning the years net tax profit:
NET TAX PROFIT
I. In each year, they shall identify the amount of net tax profit corresponding to:
a) The integrable participation. This item shall be equal to the net tax profit, multiplied by the integrable
participation of the entity concerned.
b) The integrable participation for which the annual tax was paid. This item shall be equal to the amount
resulting under the provisions of the preceding subsection, multiplied by the factor referred to in article
64(III) of this Law.
c) The integrable participation for which the annual tax was deferred. This item shall be equal to the amount
obtained under (a) above, reduced by the amount obtained under (b) above.
d) The non-integrable participation. This item shall be equal to the net tax profit, multiplied by the
non-integrable participation.
II. For purposes of the provisions of the first paragraph of article 77 of this Law, only the portion of the net tax
profit for the year, determined pursuant to (I)(b) and (d) of this article shall be added to the net tax profit
account.
III. When the deferred tax, described in article 64 of this Law, is paid, the company in question may increase
the balance of its net tax profit account for the year in which such payment is made, by the net tax profit
described in (I)(c) of this article that is attributable to it. Likewise, when the deferred tax is paid early, the
balance of the net tax profit account for the year in which payment is made may be increased by the net tax
profit that corresponds to such payment.
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CASES IN WHICH THE OPTIONAL REGIME MAY NO LONGER BE APPLIED
If an integrating company fails to include a company that should be considered an integrated company, the
group shall stop abiding by the election described in this Chapter, and the integrating company and the
integrated companies shall pay the deferred tax, updated for inflation, along with interests, calculated from
the date in which the tax should have been paid by each company if the provisions of this Chapter had not
been applied through the moment in which such payment is made. These provisions shall apply as well in
cases where a company that does not qualify as an integrated company under article 62 of this statute is
included within the group.
Artculo 69. INTEGRATING COMPANIES THAT STOP APPLYING THE OPTIONAL REGIME
When an integrating company stops abiding by the election described in this Chapter; may no longer be
considered an integrating company; or stops meeting the requirements to be considered an integrating
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company, each company shall be excluded as of the date in which such situation takes place, and each
company shall pay the tax deferred during the period in which the provisions of this Chapter were applied,
within the next month.
PAYMENT OF UPDATED, DEFERRED INCOME TAX
The deferred tax to be paid shall be updated for inflation from the month in which the tax for each year
should have been paid if the election described in this Chapter had not been made through the date in
which payment is made.
When an integrating company falls within the scope of the first paragraph of this article, the companies that
compose the group shall not be able to make the election described in this Chapter during the three years
following the year in which such situation takes place.
CORPORATE MERGER
In the cases of mergers of companies, when the company that disappears by reason of the merger is an
integrating company, the merging company and the integrated companies shall be required to pay the
deferred tax, pursuant to the provisions of the first and second paragraphs of this article.
PARTIAL SPIN OFF
In cases of partial spin offs of integrating companies, the original company shall pay all the tax that it
deferred prior to said reorganization, pursuant to the first and second paragraphs of this article, within the
month following the month in which the spin off becomes effective.
FULL SPIN OFF
In cases of full spin off of integrating companies, the spun-off company, appointed under the provisions of
article 14-B(II)(b) of the Federal fiscal Code, and the integrated companies shall abide by the provisions of
the first and second paragraphs of this article.
NOTICE TO THE TAX AUTHORITIES
When a group falls within the scope of this article, the integrating company, the merging company, the
original company or the spun off company described in the preceding paragraph, as the case may be, shall
file the notice described in the last paragraph of article 68 of this statute for each company of the group,
including itself, with the Tax Administration Service within fifteen days following the date in which such
situation takes place, along with the information set forth by the Tax Administration Service in general rules.
PAYMENT OF DEFERRED TAX
When a company stops being an integrated or integrating company pursuant to the provisions of this
Chapter, or when such companies stop meeting the requirements set forth therein and the relevant
company continues abiding by this election, the group shall be required to pay the deferred tax, pursuant to
the provisions of the first and second paragraphs of this article, along with interests, calculated from the
month in which the tax for each year should have been paid if the election had not been made through the
date in which payment is made.
Artculo 70. INTEGRATING AND INTEGRATED COMPANIES OBLIGATIONS
Companies making the election described in this Chapter shall comply with the following obligations, in
addition to those established in other articles of this statute:
RECORDS OF INTEGRATING AND INTEGRATED COMPANIES
I. The integrating company and the integrated companies shall keep the records described below:
a) Those allowing the determination of the net tax profit account described in article 65 of this statute.
b) Those on the dividends or profits received or distributed, including those that do not derive from the net
tax profit account, pursuant to the general rules issued by the Tax Administration Service.
INFORMATION RETURNS
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II. The integrating company and the integrated companies shall enclose to the information return on their
tax situation that they are required to file, pursuant to the provisions of article 32-H of the Federal Fiscal
Code, a copy of the opinion letters on tax matters that they received from third parties, and whose effect is
a reduction of taxable income or an increase in tax loss for the year.
INTEGRATING COMPANIES RECORDS
III. The integrating company shall keep the records described below:
a) A record showing the calculation of integrated taxable income and the factor of integrated taxable income
for the year.
b) A record of the integrable participation that the integrating company had in each of the integrated
companies in the year.
The records described in this article shall be kept for as long as the tax effects thereof endure, in
accordance with relevant tax provisions.
ANNUAL TAX RETURN
IV. Integrating companies shall be required to file an annual tax return within the three months following the
closing of every year, which shall describe the factor of the integrated taxable income.
INFORMATION ON THE ANNUAL TAX
Integrating companies shall also make public, on May of the relevant year, the information concerning the
tax deferred pursuant to this Chapter, using their webpage or the means described by the Tax
Administration Service in general rules.
INTEGRATED COMPANIES RECORDS
V. Integrated companies shall:
a) Report to the integrating companies the taxable income or the tax loss that corresponded to them, within
the three months following end date of the year.
b) To file an annual tax return within the three months following the closing the relevant year.
c) Make public, on May of the relevant year, the information concerning the tax deferred pursuant to this
Chapter, using their webpage or the means described by the Tax Administration Service in general rules.
AMENDED TAX RETURNS
In cases where any of the integrated companies requires to amend its taxable income or tax loss for the
year, it shall file an amended tax return with regard to the return described in (b) above. In such cases, the
integrating company shall be required to file an amended annual tax return, describing the factor of the
integrated taxable income.
When the tax authorities modify the taxable income or the tax loss of one or more integrated companies or
of the integrating company, while exercising their review powers; and the integrated taxable income is
modified as a result thereof, the integrating company and the integrated companies shall file amended tax
returns, as described in the preceding paragraph.
PAYMENT OF UPDATED TAX AND INTERESTS
Whenever a tax is payable by an integrating company or any of its integrated companies, as a result of the
provisions of any of the two preceding paragraphs, such entities shall be required to pay such tax, updated
for inflation, along with interests, calculated from the date in which the tax should have been paid and the
date when such tax is paid, by filing an amended tax return.
MODIFICATIONS TO THE FACTOR OF INTEGRATED TAXABLE INCOME
When the situation described in the preceding paragraph stems from a modification to the factor of the
integrated taxable income, the integrating company may file an amended tax return, correcting such factor,
no later than the last month of the first or second half of the year corresponding to that in which the tax
return that caused said difference was filed or, that in which the tax authority had modified the taxable
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income or the tax loss of any of the companies of the group.
MODIFICATION OF TAXABLE INCOME OR TAX LOSS FOR THE YEAR
In cases where an integrating company or any of its integrated companies modifies its taxable income or tax
loss for the year; or when the tax authorities modify the taxable income or the tax loss of an integrating
company or any of its integrated companies, as result of the exercise of their review powers, and such
situation takes place after the tax deferred in accordance with article 64(V) of this statute is paid, such
integrating company or integrated company, as applicable, shall pay the tax deficiency, the inflation update
and the interests generated as consequence of such modification, without need to recalculate the
integrated taxable income or the factor of the integrated taxable income. Likewise, when the irregularity is a
declared tax loss, greater than the tax loss actually sustained, the integrating company shall modify the
integrated taxable income and the factor of the integrated taxable income; and the companies that had a tax
liability shall pay inflation update and interests on the difference between the tax paid and the tax that
should have been paid, for the period encompassing the month in which the tax should had been paid if
such election had not been made and the date in which payment is made.
DISPOSITIONS ON PIECES OF LAND, INVESTMENTS, SHARES, OWNERSHIP INTEREST AND
OTHERS
VI. When an integrating company or an integrated company enters into transactions with another company
of the group whereby it transfers pieces of land, investments, shares, ownership interests, among others,
the provisions of article 179 of this statute shall be abided by.
FAILURE TO MEET OBLIGATIONS
Integrated companies that fail to comply with any of the obligations set forth in this article shall abide by the
provisions of article 68 of this statute; and they shall pay all the income tax deferred during the period in
which the election was applied, along with interests from the month in which the tax should have been paid
in each year if the election had not been made until such payment is made.
In cases where an integrating company fails to comply with an of the obligations set forth in this article, the
group shall stop applying the election described in this Chapter; each company shall pay all the income tax
deferred during the period in which the election was applied, along with interests from the month in which
the tax should have been paid in each year if the election had not been made until such payment is made;
and the provisions of the last paragraph of article 69 of this statute shall be abided by.
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election. In this case, the first estimated payment of the year shall encompass the first, the second and the
third months of such year.
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IV. Coordination entities shall keep a separate record of income, expenses and investments associated to
the transactions they execute on account of each of their members. To this end, the provisions of this
statute and those set forth in the Federal Fiscal Code shall be abided by. In the case of liquidations issued
in accordance with the sixth paragraph of article 73 of this statute, such record shall be made globally.
TAX INVOICES
V. Coordination entities shall issue and obtain tax invoices on income earned and expenses incurred in
connection with the transactions they execute on account of each of their members. To this end, the
provisions of this statute and any other tax provision shall be abided by.
CERTIFICATION OF INCOME AND EXPENSES
VI. Coordination entities shall provide to their members certifications of income and expenses, as well as on
the tax they paid on account of the member, no later than the 31st of January of every year.
For purposes of this article, coordination entities shall comply with their own tax obligations, and they shall
do so simultaneously for their members, when applicable. Likewise, the tax they determine for each of their
members shall be paid jointly in a single tax return.
JOINT AND SEVERAL LIABILITY
For purposes of this statute, coordination entities shall be liable for complying with the tax obligation of their
members, with regard to the transactions executed through the relevant coordination entity; and the
members thereof shall be jointly and severally liable for such compliance, in the portion that corresponds to
them.
RELATED PARTIES
For purposes of this article, two or more parties shall not be considered related to each other when the
cargo and passenger ground transportation services are provided to parties with whom the taxpayers are
interrelated with respect to administration, control or equity participation, provided that the ultimate cargo
and passenger ground transportation services are provided to third parties with whom there is no
interrelation with respect to administration, control or equity participation, and such service is not provided
in conjunction with a transfer of goods. The parties shall not be considered related to each other when
transportation services are provided between coordination entities or members thereof.
JOINT OWNERSHIP
When individuals perform activities in joint ownership and elect to be taxed through coordination entities
pursuant to this Chapter, such coordination entities shall comply with the tax obligations of the joint
ownership and shall be considered representatives thereof.
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vehicles that correspond to them, or they had contributed such vehicles to the relevant legal entities.
TAX PAYMENT
When they elect to pay the tax individually, they shall give notice to the tax authorities, and communicate
this situation to the relevant legal entity in writing, no later than on the date in which the first estimated
payment of income tax for the year in question is due.
DEDUCTION OF EXPENSES
Individuals electing to pay the tax individually, may deduct the expenses incurred during the year,
associated to the vehicle they manage, even if the corresponding tax invoices are issued at the name of the
coordination entity, provided that such documentation meets the requirements of the tax provisions and
identifies the relevant vehicle.
LIQUIDATION OF INCOME AND EXPENSES
Legal entities shall not consider income corresponding to their members who paid individually or the
deductions corresponding to them. Such legal entities shall deliver to the individuals and legal entities
paying the tax individually, the assessment of income and expenses. The former legal entities shall keep a
copy of such assessment and of the invoices of the expenses incurred in the year, associated to the vehicle
managed by said individuals, during the term described in article 30 of the Federal Fiscal Code.
Legal entities described in article 72 of this statute shall abide by the provisions of article 12 thereof, when
they enter into liquidation, and they shall meet the relevant requirements set forth in the Regulations of this
law.
LEGAL ENTITIES NOT ENGAGED IN ENTREPRENEURIAL ACTIVITIES
Legal entities that do not perform entrepreneurial activities on account of their members shall comply with
the obligations set forth in this article and in articles 72, 76, 102 and 105 of this statute.
DEDUCTION OF JOINT EXPENSES
When the members of the legal entities described in this Chapter group together to make the expenses
necessary to perform the activities described therein as well, may individually claim the deduction of the
proportional amount of the expense, even if the tax invoices are issued at the name of other member,
provided that such invoices meet the other requirements set forth in tax provisions.
CHAPTER VIII. REGIME FOR AGRICULTURAL, LIVESTOCK, FORESTRY AND FISHING ACTIVITIES
Artculo 74. TAXPAYERS OBLIGATIONS
The following taxpayers shall meet their income tax obligations in accordance with the provisions of this
Chapter:
I. Legal entities governed by agrarian law engaged exclusively in agricultural, livestock, or forestry activities,
as well as production cooperatives and other legal entities engaged exclusively in said activities.
II. Legal entities engaged exclusively in fishing activities, as well as production cooperatives engaged
exclusively in said activities.
III. Individuals engaged exclusively in agricultural, livestock, forestry or fishing activities.
The provisions of this Chapter shall not apply to legal entities subject to tax pursuant to Title II, Chapter VI of
this statute.
JOINT OWNERSHIP
When individuals perform activities in joint ownership and elect to be taxed through legal entities pursuant
to this Chapter, such legal entities shall comply with the tax obligations of the joint ownership and shall be
considered representatives thereof.
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LIABILITY OF LEGAL ENTITIES AND THEIR MEMBERS
For purposes of this statute, when legal entities comply with the provisions of this Chapter on account of
their members, such legal entities shall be liable for complying with the tax obligations of their members,
with regard to the transactions executed through the relevant legal entity; and the members thereof shall be
jointly and severally liable for such compliance, in the portion that corresponds to them.
Legal entities described in this Chapter shall abide by the provisions of article 12 of this statute when
liquidated.
EXCLUSIVE ACTIVITY
Taxpayers exclusively engaged in agricultural, livestock, fishing, or forestry activities shall be those whose
income from such activities represents at least 90% of their total income, excluding income from transfers of
fixed assets or fixed assets and pieces of land that they own and use in their activity.
OBLIGATIONS FOR LEGAL ENTITIES SUBJECT TO THE REGIME FOR AGRICULTURAL,
LIVESTOCK, FORESTRY AND FISHING ACTIVITIES
Legal entities described in this Chapter shall comply with the obligations set forth in this Law, in accordance
with the provisions of Title IV, Chapter II, Section I of this statute, pursuant to the following:
MEMBERS ESTIMATED PAYMENTS
I. Legal entities shall calculate and pay estimated taxes in accordance with article 106 of this Law for each
of their members. The result obtained in accordance with this section shall be subject to the tax rate
schedule set forth in the aforementioned article, in cases of individuals; and in the case of legal entities,
such result shall be subject to rate set forth in article 9 of this law.
ANNUAL INCOME TAX
II. To calculate and pay the annual tax of each one of their members, legal entities shall calculate the
taxable profit for the year in accordance with the provisions of article 109 of this Law. In the case of
individuals, the taxable profit determined in accordance with this section shall be subject to the tax rate
schedule set forth in article 152 of this Law. In the case of legal entities, such taxable profit shall be subject
to the rate set forth 9 of this law.
The estimated tax payments made by a legal entity may be credited against the tax payable under the terms
of the preceding paragraph.
Legal entities shall pay the annual tax by filing a tax return at the authorized offices in March of the following
year, except in the case of legal entities that fulfill tax obligations of members that are solely individuals, in
which case the return shall be submitted in April of the following year.
Taxpayers described in the twelfth and thirteenth paragraphs of this article shall deduct as expenses the
expenditures effectively made in the year for the acquisition of fixed assets, deferred charges or deferred
expenses. Taxpayers described in the fourteenth paragraph of this article shall abide by the provisions of
Title II, Chapter II, Section II of this statute.
OTHER OBLIGATIONS
III. Legal entities shall comply with formal obligations, and withhold and pay taxes, as required by tax
provisions.
LEGAL ENTITIES OBLIGATIONS
For purposes of this article, legal entities shall comply with their own tax obligations, and they shall do so
simultaneously for their members, when applicable. Likewise, the tax they determine for each of their
members shall be paid jointly in a single tax return.
LEGAL ENTITIES NOT PERFORMING ENTREPRENEURIAL ACTIVITIES ON THEIR MEMBERS
ACCOUNT
Legal entities that do not perform entrepreneurial activities on account of their members shall comply with
the obligations set forth in this Title and in articles 102 and 105 of this statute.
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ANNUAL INFLATION ADJUSTMENT NOT REQUIRED
Legal entities described in this Chapter shall not be required to calculate the annual inflation adjustment
referred to in Title II, Chapter III of this statute, at the closing of the year.
EXEMPT INCOME FOR AGRICULTURAL, LIVESTOCK, FORESTRY AND FISHING ACTIVITIES
Taxpayers exclusively engaged in agricultural, livestock, fishing, or forestry activities shall not pay income
tax in connection with income from such activities for up to an amount in the year equal to 20 times the
annual general minimum wage for the taxpayers geographic area, for each member or partner, provided
that such amount does not exceed in total 200 times the annual general minimum wage for Mexico City.
Individuals shall not pay income tax in connection with income from such activities for up to an amount in
the year equal to 40 times the annual general minimum wage for the taxpayers geographic area. Legal
entities referred to in this paragraph may add to the balance of the net tax profit account for the relevant
year, the profit associated to the exempt income. To determine such profit, the amount of exempt income
corresponding to the taxpayer shall be multiplied by the profit quotient for the year, calculated in accordance
with the provisions of article 14 of this statute.
Individuals and legal entities exclusively engaged in agricultural, livestock, fishing, or forestry activities,
whose income for the year exceeds 20 or 40 times the annual general minimum wage for the taxpayers
geographic area, as applicable, but does not exceed 423 times the annual general minimum wage for the
taxpayers geographic area, may abide by the provisions of the preceding paragraph. Any excess shall be
subject to tax, pursuant to the seventh paragraph of this article, and the tax determined in accordance with
(II) of such paragraph shall be reduced in 40%, in the case of individuals, and in 30%, in the case of legal
entities. Legal entities described in this paragraph may add to the balance of the net tax profit account for
the relevant year, the profit associated to the exempt income. To determine such profit, the amount of
exempt income corresponding to the taxpayer shall be multiplied by the profit quotient for the year,
calculated in accordance with the provisions of article 14 of this statute.
PRODUCERS COMPANIES OR ASSOCIATIONS
Producers companies or associations, exclusively engaged in agricultural, livestock, fishing, or forestry
activities; incorporated exclusively by shareholders or members who are individuals; whose shareholders
or members earn income for the year exceeding 20 times the annual general minimum wage for the
taxpayers geographic area, but does not exceed 423 times the annual general minimum wage for the
taxpayers geographic area; and whose annual income does not exceed 4230 times the annual general
minimum wage for the taxpayers geographic area, may abide by the provisions of the eleventh paragraph.
Any excess shall be subject to tax, pursuant to the seventh paragraph of this article, and the tax determined
in accordance with (II) of such paragraph shall be reduced in 30%.
Individuals and legal entities exclusively engaged in agricultural, livestock, fishing, or forestry activities,
whose income for the year exceeds the amounts described in the twelfth paragraph may benefit from the
exemption set forth in the eleventh paragraph of this article. Any excess shall be subject to tax pursuant to
the seventh paragraph of this article, and may benefit from the reduction described in the twelfth paragraph
of this article for up to the amounts described therein. Legal entities referred to in this paragraph may add to
the balance of the net tax profit account for the relevant year, the profit associated to the exempt income. To
determine such profit, the amount of exempt income corresponding to the taxpayer shall be multiplied by
the profit quotient for the year, calculated in accordance with the provisions of article 14 of this statute.
TAX ON DISTRIBUTED DIVIDENDS AND PROFITS
To calculate the tax on distributed profits or dividends, legal entities exclusively engaged in agricultural,
livestock, fishing, or forestry activities, instead of applying the provisions of the preceding paragraph, shall
multiply the distributed dividends or profits by the factor resulting from dividing one (1) by the factor obtained
from subtracting from one (1), the result obtained from dividing the income tax due pursuant to this article,
by the distributed profits or dividends.
Artculo 75. LEGAL ENTITIES THAT MEET TAX OBLIGATIONS ON BEHALF OF THEIR MEMBERS
Legal entities that comply tax obligations on account of their members pursuant to this Chapter, shall have
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the following obligations, in addition to those described in the preceding article:
WITHHOLDING, PAYMENT AND ISSUANCE OF CERTIFICATES
I. To withhold and pay taxes on account of their members, and to issue certifications in connection
therewith, when so required by tax provisions.
RECORD OF INCOME, EXPENSES AND INVESTMENTS
II. To keep a separate record of income, expenses and investments associated to the transactions they
execute on account of each of their members. To this end, the provisions of this statute and those set forth
in the Federal Fiscal Code shall be abided by.
TAX INVOICES
III. To issue and obtain supporting documentation concerning income and expenses in connection with the
transactions they execute on account of each of their members. To this end, the provisions of this statute
and any other tax provision shall be abided by.
ENROLLMENT AT THE FEDERAL TAXPAYERS REGISTRY
Legal entities described in this Chapter shall be enrolled at the Federal Taxpayers Registry.
Individuals falling within the scope of the second and fourteenth paragraphs of the preceding paragraph
shall be enrolled at the Federal Taxpayers Registry.
CHAPTER IX. LEGAL ENTITIES OBLIGATIONS
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on the official form approved for this purpose by said authorities:
a) The unpaid balance of loans extended to them or guaranteed by foreign residents through 31 December
of the preceding year; and
b) The type of financing, name of the effective beneficiary of the interest, type of currency, applicable
interest rate, and due dates of the principal and related charges for each financing operation referred to in
the preceding subsection.
SUBMISSION OF RETURNS USING ELECTRONIC MEANS
VII. To file the returns described in this article through electronic means at the e-mail address set forth by
the Tax Administration Service in general rules.
RECORD OF TRANSACTIONS WITH SECURITIES
VIII. To keep a record of transactions with securities issued in series.
DOCUMENTATION CONCERNING TRANSACTIONS WITH FOREIGN RELATED PARTIES
IX. When taxpayers enter into transactions with foreign resident related parties, they shall be required to
obtain and keep the supporting documentation, demonstrating that the amount of their income and
deductions were determined in accordance with the prices or amounts of consideration that would have
been used by independent parties in comparable transactions. Said documentation shall contain the
following information:
a) The names or legal names, addresses, and residencies for tax purposes of the related parties with whom
they enter into transactions, as well as documentation demonstrating the direct and indirect interest among
the related parties.
b) Information on the functions or activities performed by, assets used by, and risks assumed by the
taxpayer for each type of transaction.
c) Information and documentation on transactions with related parties and the amounts thereof, for each
related party and for each type of transaction, in accordance with the classification and with the information
set forth in article 179 of this Law.
d) The method applied in accordance with article 180 of this Law, including the information and the
documentation on comparable enterprises or transactions, for each type of transaction.
Taxpayers conducting entrepreneurial activities, whose income in the immediately preceding fiscal year did
not exceed $13,000,000.00, as well as taxpayers whose income from the provision of professional services
did not exceed $3,000,000.00 in said year, shall not be required to comply with the obligation set forth in this
section, except taxpayers falling within the scope of the second to last paragraph of article 179 of this Law.
The review powers regarding the obligation set forth in this section may only be exercised with regard to
ended years.
The documentation and information referred to in this section shall be recorded in accounting records, and
transactions with foreign resident related parties must be identified therein.
INFORMATION CONCERNING TRANSACTIONS WITH FOREIGN RELATED PARTIES
X. In conjunction with their annual return, taxpayers are required to submit the information regarding
transactions entered into with foreign resident related parties throughout the immediately preceding
calendar year, described in the official forms approved for such purpose by the tax authorities.
LEGAL ENTITIES PAYING DIVIDENDS OR PROFITS
XI. Legal entities that pay dividends or profits to individuals or legal entities are required to:
a) Make such payments through nonnegotiable checks issued by the taxpayer at the name of the
shareholder or through wire transfers regulated by Mexicos Central Bank [Banco de Mxico] to the
shareholders account.
b) Provide the persons to whom they make payments for the items referred to in this section, tax invoices
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indicating the amounts thereof, the amount of income tax withheld pursuant to articles 140 and 164 of this
statute, and whether said payments were drawn on accounts referred to in articles 77 and 85 of this Law, as
applicable, or if they correspond to the dividends or profits referred to in paragraph one of article 10 thereof.
These tax invoices shall be delivered at the same time as the dividends or profits are paid.
PRICES IN TRANSACTIONS WITH RELATED PARTIES ENTERED INTO BY LEGAL ENTITIES
XII. When legal entities enter into transactions with related parties, they shall calculate their income
includible in gross income and their authorized deductions using the prices and consideration amounts that
would have been used by independent parties in comparable transactions. For such purposes, they shall
apply the methods set forth in article 180 of this Law, in the order indicated therein.
ANNUAL INFORMATION ON TRANSACTIONS THROUGH TRUSTS
XII. To file a return at the authorized offices reporting transactions entered into in the preceding calendar
year by means of trusts through which entrepreneurial activities are carried out, no later than 15 February of
each year.
INVENTORY CONTROL OF MERCHANDISE, RAW MATERIALS, WORK-IN-PROCESS, AND
FINISHED GOODS
XIV. To keep inventory control of merchandise, raw materials, work-in-process, and finished goods, as
applicable, based on a perpetual inventory system. Taxpayers may modify the system described in this
section, provided that they comply with the requirements set forth through general rules.
Taxpayers that elect to valuate their inventories in accordance with article 41, paragraph four, of this Law,
shall maintain a record of the factors used to determine the gross profit margins used to calculate the cost of
goods sold during the year, identifying homogenous items by groups or departments along with the profit
margins applicable to each of them. The record referred to in this paragraph shall be available to the tax
authorities for the term set forth in article 30 of the Federal Fiscal Code.
REPORT ON AMOUNTS COLLECTED IN CASH, GOLD OR SILVER EXCEEDING ONE HUNDRED
THOUSAND PESOS
XV. To inform the tax authorities, using the electronic forms and means set forth by the Tax Administration
Service through general rules, of considerations paid in cash, whether in Mexican or foreign currency, as
well as in gold or silver pieces, for more than one hundred thousand pesos, no later than the seventeenth
day of the month immediately subsequent to that in which the transaction is carried out. The
aforementioned general rules may set forth cases in which it is not necessary to submit the information
referred to in this section.
The information referred to in this section shall be available to the Ministry of the Treasury and Public Credit,
in accordance with article 69 of the Federal Fiscal Code.
INFORMATION ON LOANS, CAPITAL CONTRIBUTIONS AND CAPITAL INCREASES
XVI. To inform the tax authorities, using the electronic forms and means set forth by the Tax Administration
Service through general rules, of loans, contributions for future capital increases, or contributions for capital
increases that they receive in cash, whether in Mexican or foreign currency, greater than $600,000.00,
within fifteen days of the receipt of the corresponding amounts.
OBLIGATIONS OF MEXICAN RESIDENTS WITH ESTABLISHMENTS ABROAD
XVII. Taxpayers residing in Mexico and having establishments abroad shall have, in addition to the
obligations set forth in other articles of this Law, the following obligations:
ACCOUNTING RECORDS OF THE ESTABLISHMENT ABROAD
a) To keep accounting ledgers and records corresponding to the establishment abroad in accordance with
the provisions of this Law and its Regulations. The corresponding entries may be recorded as follows:
1. In Spanish or in the official language of the country where the establishments are located. In the case that
the entries are recorded in a language other than Spanish, an authorized translation shall be provided to the
tax authorities when the latter so require in exercising their review authorities.
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2. Transactions are to be recorded in Mexican currency or in the currency of the country where the
establishments are located. Entries recorded in a currency other than that of Mexico shall be converted, at
the taxpayers election, per transaction, or with the exchange rate of the foreign currency in Mexico through
the last day of each calendar month.
TO KEEP ACCOUNTING RECORDS AND INVOICES
b) To keep the ledgers, records and supporting documentation of the respective entries and the proofs of
compliance with their tax obligations, only pertaining to the establishments abroad, during the term
described in this statute and the Federal Fiscal Code. Such documentation may be kept at the
establishment, provided that the requirements and conditions set forth in the Regulations of this Law are
complied with.
ISSUANCE OF INVOICES FOR ADVANCE PAYMENTS AND YIELDS
XVIII. Legal entities distributing advances or yields, pursuant to article 94(II) of this statute shall issue tax
invoices, evidencing the amount of distributed advances and yields, and the tax withheld.
REPORT OF THE TAX SITUATION TO GENERAL SHAREHOLDERS MEETING
XIX. Taxpayers that elected to have accountants reports of financial statements, pursuant to article 32-A of
the Federal Fiscal Code, shall issue a report for the Ordinary General Shareholders Meeting on their
compliance with their tax obligations in the year covered by the accountants report.
The obligation set forth in the preceding paragraph shall be deemed complied with if the review report on
the taxpayers tax situation referred to in article 52(III) of the Federal Fiscal Code is distributed and read to
the shareholders at the aforementioned Meeting.
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MRU = (D + MPI+MPI2) DN - AC
Where:
MRU: Amount to be reduced from the amount obtained pursuant to the third paragraph of this article.
D: Dividend or profit distributed by the company residing abroad to the legal entity residing in Mexico,
without reducing the income tax withheld or paid, if any, in connection with the distribution thereof.
MPI: Proportional amount of income tax paid abroad at the first corporate level, described in the second and
third paragraphs of article 5 of this statute.
MPI2: Proportional amount of income tax paid abroad at the second corporate level, described in the fourth
and fifth paragraphs of article 5 of this statute.
DN: Dividend or profit distributed by the company residing abroad to the legal entity residing in Mexico,
reduced by the income tax withheld or paid, if any, in connection with the distribution thereof.
AC: Taxes that may be credited, pursuant to the first, second and fourth paragraphs of article 5 of this
statute that correspond to income included in gross income for both the dividend received and the
proportional amounts thereof.
SUM OF INCOME TAX, NONDEDUCTIBLE ITEMS, EMPLOYEES PROFIT SHARING GREATER THAN
TAXABLE INCOME
When the sum of income tax paid in accordance with article 9 of this Law; the non-deductible items for
income tax purposes, except those indicated in article 28(VIII) and (IX), of this Law; the employee
profit-sharing of the companies referred to in article 9(I) thereof; and the amount calculated pursuant to the
preceding paragraph, is greater than taxable income for the year, the difference shall be subtracted from
the balance of the net tax profits account at the end of the fiscal year or, as applicable, from the net tax profit
determined in the following years, until it is depleted. In the latter case, the amount that subtracted shall be
updated for inflation from the last month of the year in which it was determined through the last month of the
year in which it is subtracted.
MODIFICATION TO A YEARS TAXABLE INCOME
When taxable income of a year changes, reducing the net tax profit that had been calculated, the amount of
the reduction, updated for inflation, shall be subtracted from the balance of the net tax profit account that the
legal entity has on the date on which the amended tax return is filed. When the updated amount of the
reduction is greater than the balance of the account through the filing date of the aforementioned return, the
same return shall include the corresponding income tax. To obtain this tax, the difference between the
reduction and the balance of the aforementioned account shall be added to the income tax on the
difference, and the result thereof shall be multiplied by the rate referred to in article 9 of this Law. To
calculate the amount of the tax to be added, the aforementioned difference shall be multiplied by 1.4286,
and the result shall be multiplied by the rate set forth in article 9 of this Law. The amount of the reduction
shall be updated for inflation for the same periods in which the net tax profit for the year in question was
updated for inflation.
TRANSFER OF THE BALANCE DUE TO MERGER OR SPIN OFF
The balance of the net tax profit account shall be transferred to another company or companies in the event
of a merger or spin-off. In the latter case, the balance shall be divided among the original company and the
spun-off companies in the same ratio as the shareholders equity is divided among them, in accordance
with the statement of financial position approved by the shareholders meeting and which served as the
basis for the spin-off.
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CALCULATION OF DISTRIBUTED PROFITS
Distributed profits shall be calculated by multiplying the number of shares being reimbursed or those that
have been considered for the capital reduction in question, as applicable, by the result obtained in
accordance with preceding paragraph.
PROFITS DISTRIBUTED FROM NET TAX PROFIT ACCOUNT
The taxable distributed profits calculated in accordance with the preceding paragraph may derive from the
net tax profit account for up the pro-rata share of the balance of said account corresponding to the number
of shares to be reimbursed. The amount from the net tax profit account corresponding to the
aforementioned shares shall be subtracted from the balance of said account on the date on which the
capital reimbursement is paid.
CALCULATION AND PAYMENT OF INCOME TAX
When the taxable distributed profits referred to in this section do not derive from the net tax profit account,
legal entities shall calculate and pay the corresponding tax by multiplying said profits by the rate set forth in
article 9 of this Law. For such purposes, the amount of distributed profits shall include the corresponding
income tax. The tax corresponding to the distributed profits shall be calculated by multiplying said profits by
1.4286, and then multiplying the resulting amount by the rate set forth in article 9 of this Law.
REDUCTION OF THE BALANCE OF THE CAPITAL CONTRIBUTION ACCOUNT
The per-share balance of the Capital Contribution Account used to calculate the distributed profits shall be
multiplied by the number of shares reimbursed or those that have been taken into account for the capital
reduction in question. The result thus obtained shall be subtracted from the balance of said account through
the date on which the capital reimbursement is paid.
PER-SHARE BALANCE OF THE CAPITAL CONTRIBUTION ACCOUNT
To calculate the per-share balance of the Capital Contribution Account, the balance of said account through
the date on which the capital reimbursement is paid, exclusive of the reimbursement, shall be divided by the
total number of shares issued by the same legal entity through the same date, including those
corresponding to profit capitalization or reinvestment or any other item included in the shareholders equity
of the legal entity that issues the shares.
II. Legal entities that reduce their capital shall also consider said reduction to be distributed profits for up to
the amount obtained by subtracting, from the shareholders equity as per the statement of financial position
approved by the shareholders meeting for the purposes of said decrease, the balance of the Capital
Contribution Account through the date on which the aforementioned reduction is carried out-provided that
this balance is smaller.
The amount obtained in accordance with the preceding paragraph shall be reduced by distributed profits
determined under (I), paragraph two, of this article. The result shall be taxable distributed profits for the
purposes of this section.
When the taxable distributed profits referred to in the preceding paragraph do not derive from the net tax
profit account, legal entities shall calculate and pay the tax corresponding to said profits by multiplying them
by the rate set forth in article 9 of this Law. For such purposes, the amount of taxable distributed profits shall
include the corresponding income tax. The tax corresponding to the distributed profits shall be calculated by
multiplying said profits by 1.4286, and then the resulting amount shall be multiplied by the rate set forth in
article 9 of this Law. When taxable distributed profits derive from the aforementioned net tax profit account,
the provisions of the third paragraph of article 10 of this Law shall be abided by; and said profits shall be
subtracted from the balance of the aforementioned account. For subsequent capital reductions, profits
calculated in accordance with this section shall be considered to be a capital contribution in accordance
with this article.
UPDATE OF SHAREHOLDERS EQUITY
Shareholders equity shall be updated in accordance financial information norms, when the legal entity
follows said principles to keep its accounting. Otherwise, the shareholders equity shall be updated for
inflation in accordance with the pertinent general rules issued by the Tax Administration Service.
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PAYMENT OF INCOME TAX
Along with any tax due on profits or dividends pursuant to (I) of this article, the legal entities referred to in
this article shall pay the amount of tax that they calculate in accordance with (II) thereof.
LIQUIDATION OF LEGAL ENTITIES
The provisions of this article shall also apply in the event of a liquidation of a legal entity.
CORPORATE SPIN OFF
In the event of a spin-off, the provisions of this article shall not apply, except as indicated in paragraph ten
thereof, provided that the sum of the capital of the original company, if it survives, and of the spun-off
companies is equal to the amount that the original company held and the shares issued as a result of said
transactions are given in exchange to the same shareholders, in the same shareholding ratio that they had
in the original company.
BUYBACK OF SHARES
The provisions of this article shall apply to share purchases by the issuing entity against its own capital
stock or buyback reserve. Buybacks of shares by the issuing entity that, when added to any shares that they
had previously purchased, do not exceed 5% of all their fully paid-up shares, shall not be considered
distributed profits under this article, provided that the shares are reissued within no more than one year as
of the day of the buyback. If the share buyback referred to in this paragraph is carried out with resources
obtained through the issuance of convertible debentures, the term shall be that of said issuance. The Tax
Administration Service may issue general rules to facilitate compliance with the provisions of this
paragraph. This paragraph shall not apply in the case of capitals market securities mutual funds that
purchase shares from their members or shareholders.
For the purposes of the preceding paragraph, the amount of distributed profits shall be equal to the amount
paid for the purchase of each share, reduced by the per-share balance of the Capital Contribution Account
through date on which the shares are purchased, and the result thereof shall be multiplied by the number of
shares purchased. Profits distributed under this paragraph may, if applicable, be reduced by the balance of
the issuing entitys net tax profit account. The amount of the balance of the net tax profit account and the
amount of the balance of the Capital Contribution Account that were reduced under this paragraph shall be
subtracted from the balances of the aforementioned accounts through the date of the purchase of shares by
the issuing entity.
When distributed profits, calculated in accordance with the preceding paragraph, do not derive from the net
tax profit account, the issuing entity shall calculate and pay the tax in accordance with the third paragraph of
(II) hereof.
ACQUISITION OF SHARES OF THE HOLDING COMPANY OF THE ACQUIRER
A legal entitys acquisition of shares issued by another legal entity that in turn is a direct or indirect holder of
the shares of the acquiring legal entity shall also be considered a capital reduction in accordance with this
article. When such an acquisition occurs, the legal entity that reduces its capital is considered to be the
issuing entity of the shares that are acquired. For such purposes, the amount of the capital reimbursement
shall be the amount paid to acquire the share.
TRANSFER OF MONETARY ASSETS IN CASES OF SPIN OFF
In the case of a spin-off, it shall be considered that a capital reduction takes place whenever monetary
assets are transferred to the spun-off companies and these monetary assets represent more than 51% of
the total assets of the spun-off companies. A capital reduction shall also be considered to have taken place
when the original company keeps monetary assets in cases of spin-offs and such assets represent more
than 51% of its total assets. For the purposes of this paragraph, the capital reduction shall be considered
equal to the value of the monetary assets transferred. This paragraph shall not apply in the event of the
spin-off of companies that are members of the financial system in accordance with article 7 of this Law. For
future capital reductions, the amount of the capital reduction calculated in accordance with this paragraph
shall be considered a capital contribution in accordance with this article, provided that no capital
reimbursement is made at the time of the spin-off.
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CAPITAL CONTRIBUTION ACCOUNT
To determine the updated contributed capital, legal entities shall keep a capital contribution account, to
which capital contributions and net premiums on stock subscriptions by the partners or shareholders shall
be added, and from which capital reductions shall be subtracted. For the purposes of this paragraph,
contributed capital shall not include the reinvestment or capitalization of profits or any other item that is part
of the legal entitys shareholders equity, nor any items derived from reinvestments of dividends or profits
intended to increase the capital of entities that distribute said dividends or profits when such reinvestments
occur within thirty days of their distribution. The items corresponding to the capital increases referred to in
this paragraph shall be added to the capital contribution account when they are paid, and the items related
to capital reductions shall be subtracted from the aforementioned account when the capital reimbursement
is paid.
UPDATE OF THE CAPITAL CONTRIBUTION ACCOUNT
The balance of the account set forth in the preceding paragraph through the closing date of each year shall
be updated for inflation for the period from the month of the last update until the closing month of the year in
question. When capital increases or reductions are carried out subsequent to the update set forth in this
paragraph, the balance of the account on that date shall be updated for inflation from the month of the last
update through the month in which the capital contribution or reimbursement is paid, as the case may be.
TRANSFER OF THE BALANCE OF THE CAPITAL CONTRIBUTION ACCOUNT IN CASES OF SPIN
OFFS OR MERGERS
In the event of a merger or spin-off, the balance of the Capital Contribution Account shall be transferred to
the surviving or new companies, as the case may be. In the case of a merger, the balance of the Capital
Contribution Account of the merged companies shall be disregarded, in the same ratio of the shares of said
companies owned by the surviving companies at the time of the merger with respect to all of their shares. In
the event of a spin-off, the balance shall be divided between the original company and the spun-off
companies, in the same ratio as the division among them of shareholders equity as indicated in the
statement of financial position approved by the shareholders meeting and which served as the basis for the
spin-off.
BALANCE OF THE CAPITAL CONTRIBUTION ACCOUNT OF THE ENTITY SURVIVING A MERGER
In the event of a merger, when the surviving company is a shareholder of the company that disappears, the
balance of the surviving companys Capital Contribution Account shall be equal to the sum of the balance of
that account that the surviving company had prior to the merger and the balance of the capital contribution
account that corresponds to the shareholders of the company that disappears through the same date, other
than the merging company.
If the surviving companys shares were held by a merged company, the amount of the surviving companys
Capital Contribution Account shall be equal to the balance of that account that the merged company had
before the merger plus the product of the balance of the Capital Contribution Account held by the surviving
company before the merger multiplied by the equity interest held in said company, on the same date, by
shareholders other than the merged company.
CAPITAL INCREASE FOLLOWED BY CAPITAL REDUCTION WITHIN TWO YEARS
Whenever a legal entity had increased its capital in less than two years prior to the date of a capital
reduction, and the latter gives rise to the cancellation of shares or the decrease in the value of the shares,
the legal entity shall calculate the gains that would have corresponded to the shareholders had they sold the
shares, in accordance with article 22 of this Law. For such purposes, the per-share capital reimbursements
shall be considered per-share income. If a legal entity merges within the aforementioned two-year term, and
the legal entity that survives or emerges from the merger subsequently reduces its capital, giving rise to a
cancellation of shares or a decrease in the value of the shares, such entity shall calculate the gain that
would have corresponded to the holders of the shares had they sold them, in accordance with the
aforementioned article. If this gain is greater than the distributed profits calculated in accordance with (I)
and (II) of this Article, the gain shall be considered distributed profits for the purposes of this article.
APPLICATION OF REIMBURSEMENT, AMORTIZATION, OR REDUCTION OF CAPITAL
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The provisions of this article shall apply indistinctly to the reimbursement, amortization, or reduction of
capital, whether or not there has been a cancellation of shares.
PARTNERSHIPS
The provisions of this article shall also apply to partnerships that carry out capital reimbursements or capital
reductions for the account of their members.
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pursuant to this statute.
XI. Associations and partnerships governed by civil law involved in scientific or technological research and
that are enrolled at the National Registry of Technological and Scientific Institutions [Registro Nacional de
Instituciones Cientficas y Tecnolgicas].
XII. Not-for-profit associations and partnerships governed by civil law authorized to receive donations and
are involved in the following activities:
a) Promoting and disseminating music, plastic and dramatic arts, dance, literature, architecture and
cinematography, in accordance with the Law Creating the National Institute of Fine Arts and Literature [Ley
que crea al Instituto Nacional de Bellas Artes y Literatura] as well as the Federal Law on Cinematography
[Ley Federal de Cinematografa].
b) Supporting education and research activities related to the arts in accordance with the preceding
subsection.
c) Protecting, preserving, restoring and recovering the cultural heritage of the nation, pursuant to the
Federal Law on Monuments and Archeological, Artistic and Historic Zones and the General Law on
National Goods [Ley General de Bienes Nacionales]; as well any form of art in indigenous communities
involving the use of these communities original languages, practices and customs, handcrafts and
traditions reflecting Mexicos multiethnic makeup.
d) Establishing and inaugurating libraries that are part of the National Network of Public Libraries, in
accordance with the General Libraries Law.
e) Supporting the activities and objectives of museums dependent of the National Council for Culture and
the Arts.
XIII. institutions and partnerships governed by civil law, established with the sole purpose of managing
savings and loan associations or savings funds, including those referred to in labor laws, as well as the
savings and loan cooperatives referred to in the Law to regulate the activities of Savings and Loan
Cooperatives
XIV. Parent associations established and registered in accordance with of the Regulations of Parent
Associations, under the General Law of Education.
XV. Companies of collective management established in accordance with the Federal Copyright Law.
XVI. Associations and partnerships governed by civil law, organized for political purposes or religious
associations, incorporated pursuant to the Law on Religious Associations and Public Cult.
XVII. Associations and partnerships governed by civil law referred to in article 83 of this Law that grant
scholarships.
XVIII. Neighbors associations governed by civil law and other civil law associations whose sole objective is
to manage real estate under condominium ownership.
XIX. Not-for-profit associations and partnerships governed by civil law that work exclusively to carry out
activities related to research on or the conservation of aquatic or terrestrial flora or fauna within the
geographic areas indicated by the Tax Administration Service through general rules. Also included are such
partnerships or associations that work with the population exclusively to promote the prevention and control
of water, air, and soil pollution, protect the environment, and to restore ecological equilibrium.
XX. Not-for-profit associations and partnerships governed by civil law that demonstrate that they work
exclusively to encourage the reproduction of protected and endangered species and the conservation of
those species habitats. These organizations and partnerships must comply with the general rules issued by
the Tax Administration Service and secure a prior opinion from the Ministry of the Environment and Natural
Resources [Secretara del Medio Ambiente y Recursos Naturales]
XXI. Mutual funds that specialize in retirement funds
XXII. Legally recognized political parties and associations.
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XXIII. The Federal government, the states, the municipalities and the institutions required to deliver the
Federal Government the full amount of their operational surplus.
XXIV. Decentralized entities not subject to tax pursuant to Title II of this statute.
XXV. Not-for-profit charity or aid institutions authorized by the pertinent laws, and not-for-profit associations
and partnerships governed by civil law that are authorized to receive donations, involved in the following
activities:
a) Promotion of the populations organized participation in actions aimed to improve their own sustenance
conditions for the benefit of the community or in the promotion of actions concerning citizens safety.
b) Support in the defense and promotion of human rights.
c) Civic activities, aimed to promote citizens participation in matters of public interest.
d) Promotion of gender equality.
e) Support of the efficient use of natural resources, environmental protection, flora and fauna protection,
preservation and restoration of ecological equilibrium, as well as the promotion of sustainable development
at the regional and community levels in urban and rural zones.
f) Educational, cultural, artistic, scientific and technological promotion and encouragement.
g) Participation in civil protection activities.
h) Provision of services to support the creation and strengthening of organizations that perform activities to
be encouraged, pursuant to the Federal Law on Encouragement of Activities, Performed by Organizations
from the Civil Society.
XXVI. Sports associations, recognized by the National Sports Commission, provided that they are members
of the National System for Sports, pursuant to the General Law on Physical Culture and Sports.
ITEMS THAT ARE DISTRIBUTABLE BALANCE
Legal entities referred to in (V), (VI), (VII), (IX), (X), (XI), (XIII), (XVI), (XVII), (XVIII), (XIX, (XX), (XXIV) and
(XXV) of this article, as well as the legal entities and trusts authorized to receive tax deductible donations,
and the mutual funds referred to in this Title, shall consider as their distributable balance, even if not
delivered in cash or in kind to their members or partners, the following items: unreported income or
purchases not made and unduly recorded; expenses incurred that are not deductible in accordance with
Title IV of this Law, except if they are not deductible because they do not meet the requirements of article
147(IV) thereof; loans made to their partners or members or to the spouses or lineal ascendants or
descendants of said partners or members, except in the case of loans to partners or members of savings
and loan cooperatives referred to in (XIII) of this article. The amount of loans that under this paragraph are
considered distributable balance shall be subtracted from the distributable balances that the legal entity
distributes to its partners or members.
INCOME TAX ON DISTRIBUTABLE BALANCE
Whenever a distributable balance is determined pursuant to the preceding paragraph, the legal entity
concerned shall pay the tax resulting from multiplying said distributable balance by the top rate applicable to
the excess over the lower limit set forth in the tax rate schedule contained in article 152 of this Law. This tax
shall be considered definitive and it shall be paid no later than in February of the year following that in which
any of the conditions referred to in said paragraph arise.
Artculo 80. MEMBERS DISTRIBUTABLE BALANCE
Legal entities referred to in the preceding article shall calculate the distributable balance of a calendar year
corresponding to their members or shareholders by subtracting authorized deductions from income earned
in that period, except for income described in article 93 of this Law and income on which definitive tax has
been paid, in accordance with Title IV of this Law.
CALCULATION OF DISTRIBUTABLE BALANCE ACCORDING TO THE MEMBERS OF THE LEGAL
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ENTITY
When a majority of members or shareholders of said legal entities are taxpayers under Title II of this Law,
the distributable balance shall be calculated by adding income and subtracting the corresponding
deductions in accordance with said Title. When a majority of members of said legal entities are taxpayers
under Title IV, Chapter II, Section I of this Law, distributable balance shall be calculated by adding income
and subtracting the corresponding deductions in accordance with said Section.
Members or shareholders of the legal entities referred to in article 79 of this statute shall consider as
distributable balance only the income delivered to them by said legal entities in cash or in kind.
MUTUAL FUNDS
The provisions of this Title shall apply to mutual funds described in the Mutual Funds Law, except to
Venture Capital Securities Mutual Funds. Members or shareholders of mutual funds referred to in this
paragraph shall be taxpayers pursuant to the provisions of this statute.
REIMBURSEMENT OF CONTRIBUTIONS
Members or shareholders of legal entities referred to in this title shall not consider as an item of income the
reimbursements made by such legal entities of the contributions they have made. For these purposes, the
provisions of article 78 of this statute shall be abided by.
INCOME FROM SERVICES OR DISPOSITION OF PROPERTY
In cases where the legal entities referred to in this Title transfer property other than fixed assets or provide
services to individuals or entities other than their members or shareholders, they shall calculate the tax
upon the profit derived from the income stemming from these activities, in accordance with Title II of this
Law, at the rate set forth in article 9 thereof, provided that said income exceeds 5% of the legal entitys total
income in the year in question.
ELECTION AVAILABLE TO DONEES OF EARNING INCOME FROM ACTIVITIES OTHER THOSE
AUTHORIZED
Legal entities and trusts authorized to receive tax deductible donations may earn income from activities
other than those related to the purposes for which they were authorized to receive such donations, provided
that such income does not exceed 10% of their total income in the relevant year. The following shall not be
considered items of income from activities other than those related to the above-mentioned purposes:
donations, support or incentives granted by the Federal Government, the states or the municipalities;
income from the transfer of fixed assets or intangibles; membership dues; interests; economic rights over
intellectual property; income for granting the temporary use and enjoyment of immovable property; and
income from shares or negotiable instruments, placed among the general investing public, in accordance
with the general rules issued by the Tax Administration Service. In case income from activities not related to
the purposes for which an entity is authorized to receive such donations exceed the limit set forth herein, the
entity concerned shall determine the tax for such excess, in accordance with the provisions of the preceding
paragraph.
Artculo 81. CASES IN WHICH THEY ARE NOT INCOME TAX TAXPAYERS
Legal entities referred to in this Title -except those indicated in article 86 of this Law, mutual funds
specializing in retirement funds, and legal entities authorized to receive tax-deductible donations pursuant
to said Law- shall be income tax taxpayers when they receive income of the type referred to in Chapters IV,
VI and VII of Title IV of this Law. In the case of the items of income referred to in Chapter VI, this shall apply
even if income is received in foreign currency. For such purposes, the provisions of said Title shall apply
and any withholding made shall be a definitive payment.
DEBT SECURITIES AND CAPITALS MARKET SECURITIES MUTUAL FUNDS
Debt securities and capitals market securities mutual funds referred to in article 87 of this Law shall not be
income tax taxpayers when they receive income of the types indicated in Title IV, Chapter VI, of this Law,
and both they and their members or shareholders shall abide by articles 87, 88 and 89 thereof.
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them under this Law.
The requirements referred to in (IV) and (V) of this article shall be set forth in the charter of the legal entity in
question and shall be irrevocable.
In all events, authorized donees shall comply with the administrative-control and transparency
requirements set forth for such purpose by the Regulations of this Law and the general rules issued by the
Tax Administration Service.
REVOCATION OR NOT RENEWAL OF THE AUTHORIZATION TO RECEIVE DONATIONS
The Tax Administration Service may, through a resolution notified personally, revoke or refrain from
renewing authorizations to receive tax-deductible donations under this Law in the case of entities that fail to
comply with the requirements or obligations with which, as authorized donees, they are required to comply
under the tax provisions. This agency shall publish relevant information regarding such entities in the
Federal Register and on its webpage.
For purposes of the preceding paragraph, the persons referred to in articles 79(VI), (X), (XII)and (XXXV)
and 84 of this Law, excepting charity or aid institutions authorized by the relevant laws, whose authorization
is revoked or not renewed may make donations to authorized donees, without the limitation set forth in
article 27(I), last paragraph, of this Law during the year in which their authorization is revoked or not
renewed, as of the effective date of the notification of the relevant resolution, and as a result thereof.
ENTITIES SUPPORTING AUTHORIZED DONEES
Foundations, patrons and other entities whose purpose is to economically support activities of legal entities
authorized to receive tax-deductible donations, pursuant to this statute, may obtain deductible donations,
provided that the following requirements are met:
a) To use all their income to pursue the purposes for which they were created.
b) To comply with the requirements set forth in this article, except for (I) thereof.
The requirement described in (a) above shall be described in the charter of the relevant legal entity and
shall be irrevocable.
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to be included in the company educational programs.
AUTHORIZATION TO RECEIVE DEDUCTIBLE DONATIONS
The company educational programs referred to in this article may receive authorization to receive
income-tax-deductible donations, provided that they comply with the requirements set forth in article 82 of
this Law, except for (I) thereof.
Artculo 85. CAPITALS MARKET SECURITIES MUTUAL FUNDS NET DIVIDENDS ACCOUNT
For the purposes of articles 79 and 88 of this Law, capitals market securities mutual funds that distribute
dividends received from other entities must maintain a net dividends account.
Dividends from other legal entities that are residents of Mexico shall be added to this account, and the
dividends paid to these mutual funds' members shall be deducted from it. For the purposes of this article,
stock dividends and dividends reinvested in a subscription or capital increase of the same legal entity that
distributed them within 30 days following their distribution shall be excluded. The balance of the account set
forth in this article shall be updated in accordance with article 77 of this Law.
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The persons referred to in article 79(V) through (XIX) and (XXV) of this Law, as well as the legal entities and
trusts authorized to receive tax deductible donations and the mutual funds referred to in this Title, shall
submit an annual report to the tax authorities, stating their income and expenses, no later than 15 February
of each year.
OBLIGATIONS OF POLITICAL PARTIES AND ASSOCIATIONS
Legally recognized political associations and parties shall withhold and pay income tax and request tax
invoices when they make payments to third parties and are so required by this Law. Likewise, they shall
keep accounting records in accordance with the Federal Fiscal Code and the Regulations thereof.
FEDERAL GOVERNMENT, STATES, MUNICIPALITIES AND INSTITUTIONS
The Federal Government, State Governments, the municipalities, and the institutions legally required to
deliver to the Federal Government their full operating balance shall only be required to withhold and pay
income tax and request tax invoices when they make payments to third parties and are so required by this
Law
DECENTRALIZED ENTITIES
Decentralized entities not subject to taxation in accordance with Title II of this Law shall only be required to
comply with the obligations described in the preceding paragraph.
OPERATING BALANCE
Legally recognized political associations and parties, the Federal Government, State Governments, the
municipalities, the institutions legally required to deliver to the Federal Government their full operating
balance, and the decentralized entities not subject to taxation in accordance with Title II of this Law shall be
required to issue and deliver tax invoices to the persons that receive salary payments and, in general,
payments in exchange for subordinated personal services, on the date when the relevant expense is made.
Such invoices may be used as receipt or evidence of payment for purposes of the labor laws, described in
articles 132(VII) and (VIII) and 804, first paragraph, (II) and (IV) of the Federal Labor Law.
LIQUIDATION OF NOT-FOR-PROFIT ENTITIES
When a legal entity of the type referred to in this title is dissolved, the obligations referred to in (III) and (IV)
of this article shall be complied with within three months after the dissolution.
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INCOME TAX WITHHELD FROM SHAREHOLDERS
No later than the seventeenth day of the month following the month in which interest accrues, the mutual
funds referred to in paragraph one of this article shall pay on a monthly basis the tax referred to in article 54
of this Law corresponding to their members or shareholders. Individuals or legal entities that pay interest to
said funds shall be released from the obligation to withhold pursuant to article 54 of this statute.
MONTHLY TAX
The monthly tax referred to in the preceding paragraph shall be the sum of the daily tax corresponding to
the mutual fund's taxable investment portfolio, and shall be calculated as follows: for negotiable instruments
whose yield is paid in full on the maturity date, the tax shall be the product of the number of taxed negotiable
instruments of each kind multiplied by the weighted average acquisition cost and by the rate set forth in the
article referred to in the preceding paragraph; and, in the case of other negotiable instruments referred to in
article 8 of this Law, the tax shall be obtained by multiplying the number of taxed negotiable instruments of
each kind by their nominal value and by the same rate.
INCOME TAX THAT MAY BE CREDITED BY SHAREHOLDERS
Mutual fund members or shareholders that are taxpayers under Title II and Title IV of this statute may credit
the tax paid by the mutual funds in accordance with the preceding paragraph against their estimated or
definitive tax payments, provided that they include the taxable interest accrued on their investments in said
mutual funds in their gross income for the year.
CALCULATION OF WITHHOLDING THAT MAY BE CREDITED
To calculate each member or shareholders creditable withholding taxes, debt securities mutual funds shall
divide the tax corresponding to the daily taxed accrued interest by the number of outstanding shares
through end of each day. The per-share daily tax shall be multiplied by the number of shares held by the
shareholder at the end of each day. For this purpose, the amount of the tax credit shall be recorded in or on
the account statement, certificate, slip or liquidation notification issued for such purpose.
CAPITALS MARKET SECURITIES MUTUAL FUNDS
Capitals market securities mutual funds referred to in the Mutual Funds Law shall not be income tax
taxpayers. Their members or shareholders shall apply to the yields earned by these companies the tax
treatment corresponding to interest, dividends, and gains on dispositions of shares of which the yields are
composed, in accordance with this article and the remaining applicable provisions of this Law.
INTERESTS INCLUDIBLE IN GROSS INCOME FOR MEMBERS THAT ARE INDIVIDUALS
Individuals who are members of the mutual funds referred to in the preceding paragraph, shall only include
in their gross income the amount of taxed real interest accrued in their favor by the same fund, derived from
the mutual funds portfolio, in proportion to each members investment in the fund.
CALCULATION OF SHAREHOLDERS REAL INTERESTS
The portion of real interest on daily income accrued in the year in favor of shareholders who are individuals
shall be calculated as follows: income calculated in accordance with article 88 of this Law shall be multiplied
by the factor obtained when the daily taxable interest accrued, earned by the mutual fund is divided by the
same fund's daily total income during the time that the shares are held by the shareholder. Total income
shall include the valuation of the shareholding of the fund's portfolio through the date of disposition of the
share issued by the same fund or through the last business day of the year in question, as applicable.
CALCULATION OF INTERESTS ACCRUED BY SHAREHOLDERS THAT ARE LEGAL ENTITIES
Legal entities that are members or shareholders of capitals market securities mutual funds shall calculate
their accrued interest income on their investments in said mutual funds by adding the gains on the
disposition of their shares to the increase in the valuation of their investments in the same fund, in nominal
terms, through the last business day of the year in question. They will calculate both types of income as set
forth in article 88 of this Law, and abide by Title II, Chapter III, thereof regarding investments in mutual
funds.
INCOME TAX WITHHOLDING
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Capitals market securities mutual funds shall withhold income tax each month, in accordance with article 54
of this Law, on total taxable interest accrued by them and shall pay this tax no later than the seventeenth
day of the month following that in which the interest is accrued. For such purposes, they shall abide by
paragraph six of this article. The withholding corresponding to each member of the fund shall be calculated
in accordance with paragraph eight of this article, and mutual fund members or shareholders that are
taxpayers under Title II and Title IV of the Law may credit it against their estimated or definitive tax
payments, provided that they include in their gross income for the year their taxable interest accrued on
their investments in said mutual funds. Individuals and legal entities that pay interest to said funds shall be
released from the obligation to withhold pursuant to article 54 of this statute.
DEDUCTION OF LOSSES BY SHAREHOLDERS THAT ARE INDIVIDUALS
Members or shareholders of the mutual funds referred to in this article and Article 88 of this statute who are
individuals may, as applicable, deduct the losses that they calculate in accordance with paragraph five of
article 134 of this Law, in accordance with said provision.
Artculo 88. INCOME INCLUDIBLE IN GROSS INCOME FOR INDIVIDUALS THAT ARE
SHAREHOLDERS OF DEBT SECURITIES MUTUAL FUNDS
Members or shareholders of debt securities mutual funds or capitals market securities mutual funds that are
individuals shall include in gross income for the year interest income earned from taxed instruments that are
part of the portfolio of such funds, pursuant to article 87 of this statute. Such income shall be calculated by
the operators, distributors or managers of such funds, as applicable.
GAINS FROM DISPOSITIONS OF SHARES OF CAPITALS MARKET SECURITIES MUTUAL FUNDS
Individuals that earn profits from the disposition of shares issued by capitals market securities mutual funds
whose purposes is the acquisition and sale of investment assets with resources obtained from placing
shares of their capital stock among the investing public, set forth in the Mutual Funds Law, shall calculate
adding or subtracting, as applicable, the gain obtained or loss sustained in the year from the disposition of
shares of each investment fund performed by such individuals. Said individuals shall apply the 10% rate to
the gain obtained in the year. The tax paid shall be considered definitive.
GAIN OR LOSS
A taxpayers gain or loss from the disposition of shares of each investment fund shall be determined by
subtracting from the price of the capitals market securities investment assets through the date of sale of the
shares of such investment fund, the price of the capitals market securities investment assets through the
date of acquisition, updated for inflation for the period between the acquisition and sale dates.
When the updated acquisition price of the capitals market securities investment assets is greater than the
price of the capitals market securities investment assets through date of sale, the difference shall be the
loss sustained in the relevant transaction.
MUTUAL FUNDS ISSUING SHARES
In the case of mutual funds that issue shares representing the securities described in the first paragraph of
article 129 of this statute and, in addition, other investment assets referred to currencies, rates, credits or
trade goods, among others, both the acquisition price of the capitals market securities investment assets
and the sale price thereof shall not include the portion of the gain from the disposition of shares
corresponding to such goods, which shall be governed by article 82 of this statute.
LOSS FOR THE YEAR
Taxpayers sustaining losses in the year from transfers of shares referred to in the second paragraph may
offset such losses only from the gains, if any, earned by the same taxpayer in the year or in the ten years
following the transfers referred to in the second paragraph of this article. The amount to be offset by reason
of the losses described in this paragraph shall not exceed the amount of gains.
For purposes of the preceding paragraph, losses shall be updated for inflation for the period between the
month in which they were sustained through the closing month of the same year. The portion of the loss that
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is not offset in a year shall be updated from the closing month of the year in which they were updated for the
last time through the last month of the year immediate preceding the year in which the loss will be offset.
When a taxpayer fails to offset a tax loss in a year despite being able to do so pursuant to this article, the
right to offset in subsequent years shall be forfeited for up to the amount that could have been offset.
PAYMENT OF THE TAX
Taxpayers shall submit a tax return for the gains earned in accordance with the preceding paragraph and
shall pay, if applicable, the tax for the year, along with the annual tax return.
REAL INTERESTS INCLUDIBLE IN GROSS INCOME, ACCRUED BY CAPITALS MARKET
SECURITIES MUTUAL FUNDS
In the case of accrued real interests accrued by capitals market securities mutual funds, gain from the
disposition of shares as well as the increase in the real value of the holding of shares through the end of the
year shall be determined pursuant to the provisions for debt securities mutual funds, but only for the portion
representing income from dividends received and interests subject to tax earned by the fund, with regard to
the total income during the holding period of shares by the shareholders or member that is a taxpayer.
RULES TO SIMPLIFY THE CALCULATION OF INTERESTS
The Tax Administration Service may issue provisions through general rules, simplifying the calculation of
interests includible in gross income by members of capitals market securities mutual funds, through a
prorating formula of the funds total income with regard to interests subject to tax accrued by it from debt
instruments and gains from holding shares that are income tax exempt during the holding period of shares
by its members. The Tax Administration Service may issue general rules providing a prorating mechanism
to simplify the calculation of interests subject to tax for debt securities mutual funds with a portfolio of
exempt instruments.
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this Law; or in any other way. Foreign resident individuals who conduct entrepreneurial activities or provide
independent personal services in Mexico through a permanent establishment are also required to pay tax
on the income attributable thereto.
INFORMATION ON LOANS, DONATIONS AND PRIZES IN THE ANNUAL RETURN
Mexican resident individuals shall report in their annual tax returns the loans, the donations and the prizes
obtained in the year whose value, separately or jointly, exceeds $600,000.00.
Mexican resident individuals shall, by using the means and forms indicated for such purpose by the Tax
Administration Service through general rules, inform the tax authorities of the amounts received of the items
indicated in the preceding paragraph when they file their annual tax return for the fiscal year in which said
items are obtained.
YIELDS THAT ARE NOT ITEMS OF INCOME
The following shall not be considered income earned by taxpayers: yields on goods placed in trust, provided
that said yields are only used for scientific, political, or religious purposes; or are used by the teaching
establishments and the charity or aid institutions indicated in article 151(III) of this Law; or are used to
finance the education of their direct descendents through the undergraduate level, and provided that the
studies are recognized as valid for official purposes.
INCOME FROM EXCHANGE GAINS
When individuals have debts or credits denominated in a foreign currency and realize an exchange gain
from fluctuations in said currency, they shall calculate the gain in accordance with the provisions of article
143 of this Law.
INCOME FROM NOT-FOR-PROFIT LEGAL ENTITIES AND AMOUNTS TO PAY THIRD PARTYS
EXPENSES
Income earned by individuals shall include income earned by them under Title III of this Law, as well as the
amounts that they receive to cover expenses for the account of third parties, unless said expenses are
documented with tax invoices in the name of the person to whose account the expense is made.
INCOME FROM ABROAD
Taxpayers shall not include income from a source of wealth located abroad in their estimated income tax
payments, except as provided in article 96 of this Law.
CHANGE OF TAX RESIDENCE
Mexican resident individuals who change their residence during a calendar year to another country shall
consider the estimated tax payments that they have made as a definitive income tax payment and may not
file an annual tax return.
CALCULATION OF INCOME AND DEDUCTIONS FROM TRANSACTIONS WITH RELATED PARTIES
Taxpayers under this Title who enter into transactions with related parties are required, for the purposes of
this Law, to calculate their income and their authorized deductions, considering the prices and
consideration amounts that would have been used in comparable transactions by independent parties.
Otherwise, the tax authorities may calculate the taxpayer's gross income and authorized deductions by
determining the price or consideration amount of transactions entered into between related parties using
the prices and consideration amounts that would have been used by independent parties in comparable
transactions, in accordance with the methods set forth in article 180 of this Law, irrespective of whether
such transactions are carried out with Mexican resident or foreign resident legal entities, individuals, or
permanent establishments in Mexico of foreign residents. The same shall apply to activities carried out
through trusts.
PARTIES THAT ARE RELATED TO EACH OTHER
Two or more parties shall be considered to be related to each other when one of them directly or indirectly
participates in the administration, control, or equity of the other, or when a party or group of parties
participates, directly or indirectly, in the administration, control, or equity of said parties, or when there is a
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link between these parties according to Customs Law.
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considered. Withholding tax shall be applied to the excess in accordance with the relevant provisions of the
Regulations of this Law.
REIMBURSEMENT FOR MEDICAL AND FUNERAL EXPENSES
VI. Income received as reimbursement for medical, dental, hospital and funeral expenses that are given
across-the-board, in accordance with labor contracts or laws.
SOCIAL SECURITY BENEFITS
VII. Social Security benefits provided by public institutions.
SOCIAL BENEFITS
VIII. Income received as subsidies for disabilities, educational scholarships for workers or their children, day
care, cultural and sports activities, and other, similar social benefits that are given across-the-board, in
accordance with the laws or labor contracts.
SOCIAL BENEFITS
IX. Social benefits referred to in the preceding section are those set forth in the fifth paragraph of article 7 of
this Law.
HOUSING CONTRIBUTIONS
X. Contributions and the yields thereon from the housing sub-account of the individual account set forth in
the Social Security Law; from the Housing Fund sub-account of the individual account of the retirement
savings system set forth in the Law of the Government Workers' Social Security and Services Institute; or
from the Housing Fund for Active Duty Members of the Army, Air Force and Navy set forth in the Law of the
Social Security Institute for Mexican Armed Forces; as well as dwellings provided to workers, including by
enterprises, provided that the deductibility requirements set forth in Title II of this Law or, if applicable, in this
Title are complied with.
SAVINGS FUNDS AND EMPLOYEE SAVINGS AND LOAN ASSOCIATIONS
XI. Income from savings funds and employee savings and loan associations established by enterprises for
their employees, when they meet the deductibility requirements set forth in Title II of this Law or, as
applicable, in this Title.
WORKER SOCIAL SECURITY DUES
XII. Worker Social Security dues paid by employers.
SENIORITY BONUSES, RETIREMENT, SEVERANCE PAY, AMONG OTHERS
XIII. Income received by employees when their labor relationship has ended, as payment of seniority
bonuses, retirement, severance pay, or other items; income from the retirement, early-retirement, and
old-age sub-account set forth in the Social Security Law; income received by State workers from the
individual account of the Retirement Savings System set forth in the Law of the Government Workers
Social Security and Services Institute; and income from the benefit set forth in the Universal Pension Law
[Ley de Pensin Universal], for up to the equivalent of ninety times the general minimum wage in effect in
the taxpayers geographic area for each year of service or of payment of dues, in the case of the retirement
insurance sub-account, the retirement, early-retirement, and old-age sub-account, or of the individual
account of the Retirement Savings System. The number of years of service shall be the number that was
used to calculate the aforementioned items. Any period of more than six months shall be considered a
complete year. Income tax shall be paid on the excess amount as set forth in this Title.
BONUSES, VACATION BONUSES, SUNDAY BONUSES, AMONG OTHERS
XIV. Bonuses received by workers from their employers, during a calendar year, for up to the equivalent of
the 30 days general minimum wage in effect in the workers geographic area, when said bonuses are given
across-the-board; as well as vacation bonuses given by employers during the calendar year to all of their
workers and employee profit-sharing, for up to the equivalent of 15 days general minimum wage in effect in
the workers geographic area, for each of the aforementioned items. Sunday bonuses shall be exempt for
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up to the equivalent one days general minimum wage in effect in the workers geographic area for each
Sunday worked.
EXCESS INCOME
XV. Income tax shall be paid on the excess above the income referred to in the preceding section, in
accordance with this Title.
WAGES RECEIVED BY FOREIGNERS IN DIPLOMATIC SERVICE
XVI. Compensation received by foreigners for dependent personal services in the following cases:
a) Diplomatic agents.
b) Consular agents performing their official duties, in cases of reciprocity.
c) Employees of foreign embassies, representations, and consulates who are nationals of the represented
countries, provided that there is reciprocity.
d) Members of official delegations representing foreign countries, provided that there is reciprocity.
e) Members of humanitarian and scientific delegations.
f) Representatives, officials, and employees of international agencies with headquarters or offices in
Mexico, when so established in treaties or agreements.
g) Foreign technicians retained by the Federal Government, when so provided in agreements between
Mexico and their country of residence.
TRAVEL EXPENSES
XVII. Travel expenses effectively incurred in the performance of work for an employer, when so evidenced
with the relevant tax invoices.
LEASE AGREEMENTS EXTENDED BY LAW
XVIII. Income from lease agreements extended by law.
DISPOSITION OF PROPERTY
XIX. Income derived from dispositions of:
DWELLINGS
a) The taxpayers dwelling, provided that the amount of the consideration received does not exceed seven
hundred thousand investment units and the transfer is executed before a person with notarial functions.
Gains shall be determined on the basis of the excess. The annual tax and estimated payment shall be
calculated in accordance with Chapter IV of this Title, upon such gain and considering the deductions in
proportion to the ratio obtained by dividing the excess by the relevant consideration. The person with
notarial functions shall calculate and make payment of the estimated tax, in accordance with said Chapter.
DISPOSITIONS QUALIFYING FOR THE EXEMPTION
The exemption set forth in this subsection shall apply, provided that the taxpayer had not transferred the
property of another dwelling during the five years preceding the date of the transfer, for which he had
claimed the exemption set forth in such subsection; and that the taxpayer so states under oath before the
person with notarial functions who certifies the transaction.
INQUIRIES CONCERNING THE EXEMPTION
The person with notarial functions shall inquire with the Tax Administration Service, through the webpage of
the latter and in accordance with the general rules issued by it, on whether the taxpayer has transferred the
property of any dwellings during the five years preceding the date when the transfer in question takes place,
for which he had claimed the exemption set forth herein. The person with notarial functions shall also notify
the Tax Administration Service about such transfer, as well as the amount of the consideration and the tax
withheld, if any.
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PERSONAL PROPERTY
b) Personal property other than shares, ownership interest, securities, and investments made by the
taxpayer, when, in a calendar year, the difference between total dispositions and the verified acquisition
cost of the goods transferred is not greater than three times the annual general minimum wage in effect in
the taxpayers geographic area. Income tax shall be paid on the excess profits as set forth in this Title.
INTERESTS
XX. Interest:
PAYMENTS BY BANKING INSTITUTIONS
a) Interest paid by banking institutions, provided that the interest is earned on checking accounts
established for depositing salaries and wages, pensions, retirement benefits or savings, and provided that
the average daily balance of the investment is not more than five times the annual general minimum wage
in effect in the Federal District.
PAYMENTS BY SAVINGS AND LOAN COOPERATIVES AND COMMUNITY FINANCE
b) Interest paid by savings and loan cooperatives and community finance companies on investments,
provided the average daily balance of the investment is not more than five times the annual general
minimum wage in effect in the Federal District.
For the purposes of this section, average daily balance shall be obtained by dividing the sum of the daily
balances of the investment by the number of days the investment lasts, without considering unpaid accrued
interest.
AMOUNTS PAID BY INSURANCE COMPANIES WHEN A RISK COVERED BY POLICIES OCCURS
XXI. The amounts paid by insurance companies to an insured or to an insureds beneficiaries when a risk
covered by the policies occurs, except in the case of insurance policies covering fixed assets. In the case of
insurance policies in which the insured risk is the survival of the insured, income tax shall not be paid on the
amounts paid by insurance companies to the insured or beneficiary parties, provided that the indemnity is
paid when the insured reaches the age of sixty and, in addition, at least five years have elapsed between
the date on which the policy was taken out and the payment of the indemnity. This paragraph shall apply
only when the premium is paid by the insured.
LIFE INSURANCE PAID BY EMPLOYER
Nor shall income tax be paid on amounts paid by insurance companies to the insured or beneficiaries for life
insurance contracts when the premium is paid directly by the employer on behalf of its employees, provided
that the benefits of said policies are payable only in the event of death, disablement, organ loss, or disability
of the employee, preventing him from performing a dependent service, in accordance with the Social
Security laws. In addition, in the event of a policy that covers the death of the policyholder, the beneficiaries
must be related to the policyholder referred to in article 151(I) of this Law and the remaining requirements
set forth in article 27(XI) of the same Law must be complied with. The exemption set forth in this paragraph
shall not apply to amounts paid by insurance companies as dividends derived from the insurance policy or
its collectivity.
LIFE INSURANCE PAID BY A PARTY OTHER THAN THE EMPLOYER
Income tax shall not be paid on the amounts paid by insurance companies to their insured or beneficiaries
for life insurance contracts when the premium is paid by a person other than those referred to in the
preceding paragraph and the benefits of said insurance policies are paid for death, disablement, organ loss,
or a disability affecting the insured to provide a personal service.
CALCULTATION OF RISK COVERED
The insured risk referred to in the preceding paragraph shall be calculated based on all of the insurance
policies that cover the risk of death, disablement, organ loss, or disability preventing the insured from
providing a paid personal service in accordance with the Social Security laws and that are taken out to the
benefit of the same insured by the same employer.
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INSURANCES FOR RETIREMENT, PENSIONS AND MEDICAL EXPENSES
(IV) and (VI) of this article, as applicable, shall be abided by regarding the amounts paid by insurance
companies for retirement, pension, and medical expenses.
EXEMPT INCOME
This section shall only apply to income received from insurance companies incorporated in accordance with
Mexican law and authorized by the proper authorities to organize and operate as such.
INHERITANCE OR BEQUEST
XXII. Income received for an inheritance or bequest.
DONATIONS
XXIII. Donations, in the following cases:
a) Between spouses or received by descendants from their lineal ascendants, whatever the amount of the
donation.
b) Those received by ascendants from their direct descendants, provided that the goods received are not
transferred or donated by the ascendant to another lineal descendant without limitation.
c) Other donations, provided that the total value of the donations received in a calendar year is not more
than three times the annual general minimum wage in effect in the taxpayers geographic area. Income tax
shall be paid on the excess amount as set forth in this Title.
AWARDS
XXIV. Awards won in a scientific, artistic, or literary contests open to the general public or given to a specific
association or group of professionals, as well as awards given by the Federal Government to promote civic
values.
INDEMNITIES
XXV. Compensation for damages not exceeding the market value of the good in question. Income tax shall
be paid on the excess amount as set forth in this Title.
ALIMONY
XXVI. Income received as alimony by individuals who qualify as alimony creditors in accordance with the
applicable civil law.
WITHDRAWALS TO
UNEMPLOYMENT
PAY
MARRIAGE
EXPENSES
AND
WITHDRAWALS
MADE
FOR
XXVII. Withdrawals from the retirement, early-retirement, and old-age sub-account of the individual account
opened pursuant to the Social Security Law, as aid for marriage expenses and unemployment. This
treatment shall also apply to transfers of funds from the individual account among retirement fund
management companies, among banking institutions, or between retirement fund management companies
and banking institutions, as well as between said management companies and insurance companies
authorized to operate retirement insurance policies arising from Social Security laws, with the sole purpose
of contracting a life annuity and survival insurance in accordance with the Social Security laws and the Law
of the Retirement Savings Systems [Ley de los Sistemas de Ahorro para el Retiro].
DISPOSITION OF PARCEL RIGHTS
XXVIII. Income from the disposition of parcel rights over parcels regarding which the taxpayer has assumed
full ownership or comunero rights, provided that this is the first transfer made by the ejidatarios or
comuneros; and it is carried out in accordance with pertinent laws.
Dispositions referred to in this section shall be performed before a person with notarial functions and the
transferor shall demonstrate that he is the holder of the parcel or comunero rights, as well as his status of
ejidatario or comunero, through the relevant certificates or deeds, referred to in Agrarian Law.
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In cases of failure to prove the status of ejidatario or comunero under the preceding paragraph as well as in
cases where it is not the first disposition performed by ejidatarios or comuneros, the person with notarial
functions shall calculate and pay the tax pursuant to this Title.
COPYRIGHTS
XXIX. Income equivalent to up to twenty times the annual general minimum wage in effect in the taxpayers
geographic area in exchange for allowing third parties to publish written works created by the taxpayer in
books, newspapers, or magazines, or to make serial reproductions of recordings of musical work created by
the taxpayer, provided that the books, newspapers or magazines or the goods containing the recordings
are to be sold to the public by the person who pays for these items; and the author of the work issues the
relevant tax invoice. Income tax shall be paid on the excess amount as set forth in this Title.
The exemption referred to in this section shall not apply in any of the following cases:
a) When the person receiving this income also obtains, from the payer thereof, income of the types
indicated in Chapter I of this Title.
b) When the person receiving this income is a partner or shareholder who holds more than 10% of the
capital stock of the legal entity that makes the payments.
c) In the case of income derived from ideas or advertising phrases, logos, emblems, trade dress, industrial
models or designs, operating manuals, or works of applied art.
This section shall not apply when income derives from the utilization of written or musical works created by
the taxpayer in entrepreneurial activities other than selling his work to the public or rendering services.
EXCEPTION FOR ENTREPRENEURIAL AND PROFESSIONAL ACTIVITIES
The provisions of (XIX)(b); (XX); (XXI); (XXIII)(c); and (XXV) of this article shall not apply to income earned
on the professional or entrepreneurial activities referred to in Chapter II of this Title.
CONTRIBUTIONS FOR RETIREMENT
Contributions made by employers and the Federal Government to the retirement, early-retirement, and
old-age sub-account established pursuant to the Social Security Law, as well as to the individual account of
the Retirement Savings System, pursuant to the Law of the Government Workers Social Security and
Services Institute, including the yields therefrom, shall not be included in the employees gross income in
the fiscal year in which they are made or generated, as applicable.
CONTRIBUTIONS FOR HOUSING
Contributions made by employers, pursuant to the Law of the Institute of the National Fund for Worker
Housing [Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores] to the housing
sub-account of the individual account opened pursuant to the Social Security Law; those made by the
Federal Government to the Housing Fund sub-account of the individual account of the Retirement Savings
System, pursuant to the Law of the Government Workers Social Security and Services Institute[Ley del
Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado]; and those made to the
sub-account of the Housing Fund for Active Duty Members of the Army, Air Force and Navy [Fondo de la
Vivienda para los miembros del activo del Ejrcito, Fuerza Area y Armada], set forth in the Law of the
Social Security Institute for Mexican Armed Forces [Ley del Instituto de Seguridad Social para las Fuerzas
Armadas Mexicanas]; as well as the earnings generated on said income, shall not be included in the
workers gross income in the year in which they are made or generated, as applicable.
INCOME THAT MUST BE DECLARED IN ORDER TO BE EXEMPT
The exemptions set forth in (XVII), (XIX)(a) and (XXII) of this article shall not apply when the taxpayer is
required to declare the corresponding income and fails to do so, in accordance with the third paragraph of
article 150 of this Law.
LIMITATIONS TO THE EXEMPTION FOR SOCIAL BENEFITS
The exemption applicable to income earned in the form of social benefits shall be limited when the sum of
income for dependent personal services or income received from cooperatives by partners or members
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thereof, plus the amount of the exemption exceeds the equivalent of seven times the annual general
minimum wage in effect in the taxpayers geographic area. When the sum exceeds the aforementioned
amount, only an amount equivalent to up to one annual general minimum wage in effect in the taxpayers
geographic area shall be considered income not subject to payment of income tax. In no event shall this
limitation cause the sum of income from dependent personal services or income received from
cooperatives by partners or members thereof, plus the exemption to be less than seven times the annual
general minimum wage in effect in the taxpayers geographic area.
CASES IN WHICH THE LIMITATION DOES NOT APPLY
The preceding paragraph shall not apply to retirement, pensions, retirement benefits, annuities, or workers
compensation for work-related injuries or illnesses provided in accordance with laws, collective bargaining
agreements, or industry-wide labor agreements; reimbursements on medical, dental, hospital, and funeral
expenses granted across-the-board in accordance with labor contracts or laws; or medical insurance, life
insurance, and savings funds, provided that the requirements set forth in article 27(XI) and (XXI) of this Law
are complied with, even if the party furnishing said social benefits is not an income tax taxpayer in
accordance with this Law.
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INDEPENDENT SERVICE PROVIDERS ELECTING THE REGIME
V. Fees received by individuals from legal entities or individuals with entrepreneurial activities for whom
they render independent personal services, when they notify the client that they elect to pay income tax
under this Chapter.
INDIVIDUALS WITH ENTREPRENEURIAL ACTIVITIES ELECTING THE REGIME
VI. Income received by individuals from legal entities or individuals with entrepreneurial activities for the
entrepreneurial activities that they perform, when they notify the payer that they elect to pay income tax
under this Chapter.
INCOME FROM STOCK OPTIONS GRANTED BY EMPLOYERS
VII. Income earned by individuals for exercising an option granted by the employer or a related party thereof
to acquire, including through subscription, shares or securities representing goods, at no cost or for a price
below or equal to the market value of said shares or securities at the time the option is exercised, regardless
of whether the shares or negotiable instruments are issued by the employer or a related party thereof.
INCOME INCLUDIBLE IN GROSS INCOME FROM STOCK OPTIONS GRANTED BY EMPLOYERS
Income includible in gross income shall be the difference between the market value of the shares or
securities on which the option may be exercised, at the time the taxpayer exercises the option, and the price
established when the option is given.
AUTOMOBILES FOR PUBLIC OFFICIALS
When automobiles assigned to Federal-, State-, and municipal-government officials do not meet the
requirements of article 36(II) of this Law, the amount that would not be deductible if the aforementioned
legal entities were income tax taxpayers shall be considered services income for the purposes of this
Chapter.
For the calculation of the income referred to in the preceding paragraph, monthly income shall be
one-twelfth of the amount obtained by multiplying the top annual deduction percentage by the amount of the
investment in automobiles to be carried forward, as if the investments had been deducted starting in the
year in which they were acquired, as well as the maintenance and repair expenditures corresponding to the
automobiles.
The tax referred to in this article shall be paid through withholding that shall be performed by the
aforementioned legal entities.
INCOME TAX IN THE YEAR IN WHICH INCOME IS COLLECTED
This income is deemed entirely received by the person who performs the work. For the purposes of this
Chapter, credit income shall be declared and the corresponding tax shall be calculated in the calendar year
in which income is collected.
ITEMS NOT CONSIDERED INCOME
Income in kind shall not include cafeteria and food services provided to employees, nor the use of goods
that the employer provides to the employees for the performance of the activities inherent to their work,
provided that, in the latter case, the goods are consistent with the nature of the work performed.
Artculo 95. INCOME FROM SENIORITY BONUSES, RETIREMENT, SEVERANCE PAY, AMONG
OTHERS
When income is earned in the form of seniority bonuses, retirement, and severance pay, or other payments,
due to severance, the annual tax shall be calculated in accordance with the following rules:
I. An amount equal to the last ordinary monthly salary shall be subtracted from earnings of this type, and
added to the remaining income on which income tax is payable in the calendar year in question. The tax on
said income shall be calculated in accordance with this Title. When the total for these earnings is less than
the last ordinary monthly salary, the earnings shall be added in their entirety to the remaining income on
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which income tax is payable, and (II) of this article shall not apply.
II. Total earnings for these items shall be reduced by an amount equal to the last ordinary monthly salary,
and the result shall be multiplied by the rate corresponding to the tax indicated in the preceding section. The
resulting tax shall be added to the tax calculated in accordance with the preceding section.
To calculate the rate referred to in (II) above, the tax indicated in (I) hereof shall be divided by the amount to
which the tax rate schedule indicated in article 152 of this Law was applied, and the quotient thereof shall be
multiplied by one hundred. The product shall be expressed as a percentage.
Upper limit
Fixed amount
Percentage to be applied
on the excess above the
lower limit
0.01
496.07
0.00
1.92
496.08
4,210.41
9.52
6.40
4,210.42
7,399.42
247.24
10.88
7,399.43
8,601.50
594.21
16.00
8,601.51
10,298.35
786.54
17.92
10,298.36
20,770.29
1,090.61
21.36
20,770.30
32,736.83
3,327.42
23.52
32,736.84
62,500.00
6,141.95
30.00
62,500.01
83,333.33
15,070.90
32.00
83,333.34
250,000.00
21,737.57
34.00
250,000.01
And above
78,404.23
35.00
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WITHHOLDINGS TO MEMBERS OF BOARDS OF DIRECTORS, STATUTORY AUDIT COMMITTEES,
ETC.
For fees paid to members of boards of directors, statutory audit committees, advisory boards, and boards or
committees of any other kind, as well as to administrators, statutory auditors, and general managers, the
withholding and payment referred to in this article may not be less than the amount resulting from applying
the top rate applicable to the excess over the lower limit set forth in the tax rate schedule in article 152 of this
Law to the amount of such fees. However, if there is also an employment relationship with the withholding
party, paragraph two of this article shall be abided by.
WITHHOLDING ON SENIORITY BONUSES, SEVERANCE PAYS, ETC.
To calculate the withholding, the parties that make payments of the items referred to in article 95 of this Law
shall multiply total income for this item by the rate obtained by dividing the tax corresponding to the last
ordinary monthly salary by said salary, and then multiplying the quotient by one hundred. The product shall
be expressed as a percentage. When payments for these items are less than the last ordinary monthly
salary, the withholding shall be calculated by applying the tax rate schedule set forth in this article.
TERM TO PAY WITHHOLDINGS FOR INDIVIDUALS AND NOT-FOR-PROFIT ENTITIES
The legal entities referred to in Title III of this Law as well as individuals shall pay the withholdings referred
to in this article no later than the seventeenth day of each month of the calendar year, by submitting a return
at the authorized offices.
WAGES PAID BY FOREIGNERS, INTERNATIONAL ORGANIZATIONS, FOREIGN STATES, AMONG
OTHERS
Taxpayers who provide dependent services to persons not required, in accordance with the last paragraph
of article 99 of this Law, to withhold income tax, and those who earn income from abroad for these services,
shall calculate their estimated tax payment in accordance with this article and shall pay it no later than the
seventeenth day of each month of the calendar year, by filing an amended tax return at the authorized
offices.
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party shall obtain the supporting documentation evidencing the amounts offset, delivered to an employee
with a favorable balance.
REFUND OF FAVORABLE BALANCE NOT SUBJECT TO OFFSET
When it is not possible to offset an employees favorable balance described in the preceding paragraph or it
may only be offset partially, the relevant refund may be requested, provided that the withholding party
describes in the certificate referred to in article 99(II) of this statute, the amount offset.
TAXPAYERS FOR WHOM ANNUAL INCOME TAX IS NOT CALCULATED
The annual tax referred to in this article shall not be calculated in the case of taxpayers who:
a) Began working after 1 January of the year in question or have ceased to work for the withholding party
before 1 December of the year for which the calculation is made.
b) Have earned annual income in excess of $400,000.00 for the items referred to in this Chapter.
c) Give written notification to the withholding party that they will submit an annual tax return.
Artculo 98. TAXPAYERS OBLIGATIONS
Taxpayers earning income of the types indicated in this Chapter shall, in addition to paying this tax, have
the following obligations:
FEDERAL TAXPAYER REGISTRY
I. To provide the persons from whom they receive the payments referred to in this Chapter information
allowing said persons to enroll them at the Federal Taxpayer Registry, or, if they are already enrolled, to
give their registration number to their employer.
CERTIFICATE OF TAX WITHHOLDINGS
II. To request the certificates referred to in article 99(III) of this Law and provide them to the employer within
the month following that in which they begin to work, or, if applicable, to the employer who is going to
calculate the definitive tax or, when applicable, to enclose them to annual tax return. Certificates shall not
be requested from an employer that is conducting its annual payment.
SUBMISSION OF ANNUAL TAX RETURNS
III. To file an annual tax return in the following cases:
a) When, in addition, they earn income other than that the type indicated in this Chapter.
b) When they have given written notification to the withholding party that they shall file an annual tax return.
c) When their employment ends before 31 December of the year in question or when they have
simultaneously worked for two or more employers.
d) When they earn income for the items referred to in this Chapter, from a source of wealth located abroad
or from individuals or entities not required to make the withholdings set forth in article 96 of this Law.
e) When their annual income exceeds $400,000.00 for the items referred to in this Chapter.
NOTIFICATION THAT THE EMPLOYEE PROVIDES SERVICES TO ANOTHER EMPLOYER
IV. To give written notification to the employer, before the latter makes the first payment to them for the
provision of the dependent personal services in the calendar year in question, if they work for another
employer and the latter applies the employment subsidy, in order for the subsidy to not be applied again.
Artculo 99. EMPLOYERS OBLIGATIONS
Those who make payments for the items referred to in this Chapter shall have the following obligations:
TO WITHHOLD INCOME TAX
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I. To make the withholdings indicated in article 96 of this Law.
TO CALCULATE THE ANNUAL TAX
II. To calculate the annual tax of the persons who have provided dependent services for them, in
accordance with article 97 of this Law.
TO ISSUE AND DELIVER TAX INVOICES
III. To issue and obtain tax invoices from the persons receiving payments for the items described in this
Chapter, on the date when the relevant expense is made, which may be sued as receipt of payment for
purposes of the labor laws, referred to in articles 132(VII) and (VIII), 804, first paragraph and (II) and (IV), of
the Federal Labor Law.
TO REQUEST CERTIFICATES FROM OTHER EMPLOYERS
IV. To request, as applicable, the certificates and invoices referred to in the preceding section from persons
whom they hire to provide dependent services, no later than in the month following that in which they began
to provide the service, and to verify that these persons are enrolled at the Federal Taxpayer Registry.
APPLICATION OF EMPLOYMENT SUBSIDIY BY ANOTHER EMPLOYER
They shall also ask their employees to give them written notification, before the first payment corresponding
to them for the provision of the dependent personal services in the calendar year in question, if they render
services for another employer and the latter applies the employment subsidy, in order for the subsidy to not
be applied again.
TO REQUEST INFORMATION FOR PURPOSES OF THE FEDERAL TAXPAYER REGISTRY
V. To request that the persons whom they hire to render dependent services provide them the information
required to enroll them at the Federal Taxpayer Registry, or, if they are already registered, that they provide
the aforementioned registration number.
CERTIFICATES AND TAX INVOICES OF PAID TRAVEL EXPENSES
VI. To provide, no later than 15 February of each year, certificates and tax invoices for the total amount of
travel expenses paid in the calendar year in question regarding which the provisions of article 93(XVII) of
this Law were applied to the persons who have provided dependent personal services for them.
ANNUAL RETURN OF EMPLOYEES WHO ACQUIRED SHARES OR SECURITIES
VII. To file at the authorized offices, no later than 15 February of each year, a return with information on the
persons who have made the election described in article 94(VII) of this Law in the preceding calendar year,
in accordance with the relevant general rules issued by the Tax Administration Service.
EXCEPTION FOR INTERNATIONAL ORGANIZATIONS AND FOREIGN STATES
International agencies shall not be subject to the obligations indicated in this article, when so set forth in the
respective treaties or agreements, as well as foreign governments.
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income tax in accordance with this Section on income attributable to said establishments derived from
entrepreneurial activities or professional services.
DEFINITIONS
For the purposes of this Chapter, the following terms are defined as indicated below:
INCOME FROM ENTREPRENEURIAL ACTIVITIES
I. Income from entrepreneurial activities is income derived from commercial, industrial, agricultural,
livestock, fishing, or forestry activities.
INCOME FROM PROFESSIONAL SERVICES
II. Income for rendering a professional service is the remuneration derived from an independent personal
service not considered in Chapter I of this Title.
Income is understood to be entirely earned by the persons who conduct the entrepreneurial activity or
provide the professional service.
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V. Income derived from sales of works of art made by the taxpayer.
AGENTS OF BANKING INSTITUTIONS, INSURANCE COMPANIES, BONDING COMPANIES, ETC.
VI. Income earned by agents of banking, insurance, securities, and bonding institutions as well as securities
brokers or retirement fund management companies for professional services rendered to said institutions.
UTILIZATION OF CUSTOMS AGENT PATENTS
VII. Income earned from the utilization of a customs agent patent.
COPYRIGHTS
VIII. Income earned from exploiting written works, photographs, or drawings in books, newspapers,
magazines or on electronic pages on the Internet, or the serial reproduction of recordings of musical works
and in general any other income derived from the exploitation of copyrights.
INTERESTS COLLECTED
IX. Interest collected, derived from the entrepreneurial activity or the professional services, without any
adjustment.
REFUNDS, DISCOUNTS AND REBATES
X. Refunds given or discounts or rebates received, provided that the corresponding deduction has been
claimed.
DISPOSITION OF ASSETS
XI. Gains stemming from the disposition of assets related to the activity.
INCOME ASSESSED BY THE AUTHORITY BASED ON PRESUMPTIONS
Income determined by the tax authorities based on presumptions, in cases in which the Federal Fiscal
Code authorizes them to do so, shall be considered items of gross income in accordance with this Section,
provided that in the year in question the taxpayer primarily receives income corresponding to the
entrepreneurial activities or professional services.
For the purposes of the preceding paragraph, a taxpayer is considered to receive income primarily from
entrepreneurial activities or professional services when in the year in question or the previous year said
income represents more than 50% of the taxpayers gross income.
FOREIGN RESIDENTS
The tax authorities may assess the profit from a foreign residents permanent establishment in the country,
by considering the proportion that income or assets of the establishments in Mexico represent with regard
to the total income or assets, respectively.
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on which the debt forgiveness, reduction, or remission is agreed on, or when the term of the statute of
limitations expires.
EXPORTATION OF GOODS
In the case of disposition of goods to be exported, income shall be included in gross income when
effectively received. If income is not received within twelve months following the month in which the export
is made, income shall be included in gross income once said term has expired.
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correspond to items that are deductible under this statute or, in accordance with other laws, it is mandatory
contract them. In addition, in the case of insurance, during the term of the policy, the insurance company
may not extend any loans collateralized with the insured amounts, the premiums paid, or the mathematical
reserves to any person.
INSTALLMENT PAYMENTS
VI. When payments are made in installments, the amount of the installments effectively made in the
corresponding month or year may be deducted, except for the deductions referred to in article 104 of this
Law.
NO TAX EFFECT FOR WRITE-UPS
VII. In the case of investments, no tax effects shall be attributed to write-ups.
TERM TO MEET REQUIREMENTS AND DATE OF INVOICES
VIII. When the corresponding transactions are conducted or no later than on the last day of the year, the
requirements set forth for each particular deduction in this Law must be complied with. Only the tax
invoices, referred to in article 27(III) of this statute, may be obtained no later than the day on which the
taxpayer is required to file the annual tax return, and the date thereof must correspond to the year for which
the deduction is claimed.
APPLICABILITY OF DEDUCTION REQUIREMENTS FOR LEGAL ENTITIES
For the purposes of this Section, the provisions of article 27(III), (IV), (V), (VI), (X), (XI), (XIII), (XIV), (XVII),
(XVIII), (XIX) and (XXI) of this Law shall be abided by.
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shall be creditable against the tax liability determined for the estimated payments required in accordance
with this Article.
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months, the month immediately following the midpoint in the year shall be considered to be the first month
of the second half of the period.
LOSS OF THE RIGHT TO CARRY FORWARD LOSSES
When in a given fiscal year a taxpayer fails to carry forward its tax loss from previous years, even though the
taxpayer could have done so in accordance with this article, the taxpayer shall forfeit the right to do so
subsequently, for up to the amount that could have been deducted.
RIGHT TO CARRY FORWARD LOSSES
II. The right to carry tax losses forward pertains exclusively to the taxpayer that sustained the losses and
may not be transferred by any act inter vivos or as a result of the disposition of the business. In the case of
entrepreneurial activities, only mortis causa transfers of the right, to heirs or legatees that continue to carry
out the entrepreneurial activities, from which the loss derived, shall be allowed.
Tax losses sustained by taxpayers in conducting the activities referred to in this Section may be carried
forward only against tax profits stemming from the same activities referred to in this section.
EMPLOYEES PROFIT SHARING
For purposes of this Section and the employees profit sharing, taxable profit referred to in articles
123(IX)(e) of the Political Constitution of the United Mexican States and 120 and 127(III) of the Federal
Labor Law, shall be tax profit determined under this article.
In order to calculate taxable profit for purposes of the employees profit sharing, taxpayers shall subtract
from gross income the non-deductible items described in article 28(XXX) of this statute.
When a taxpayer earns income from entrepreneurial activities and professional services in the same year,
taxable profit shall be determined for each of those activities, individually. To this end the proportion
determined under the preceding article shall be used.
Artculo 110. TAXPAYERS OTHER OBLIGATIONS
Individual taxpayers who are subject to the tax regime set forth in this Section shall have, in addition to the
obligations set forth in other articles of this Law and in other tax provisions, the following obligations:
FEDERAL TAXPAYER REGISTRY
I. To request registration at the Federal Taxpayer Registry.
ACCOUNTING RECORDS
II. To keep accounting records as set forth in the Federal Fiscal Code and its Regulations. Individuals
whose annual income does not exceed two million pesos shall keep their accounting records and issue
invoices, pursuant to articles 112(III) and (IV) of this statute.
TAXPAYERS WITH ESTABLISHMENTS ABROAD
Taxpayers that are residents in Mexico and have foreign establishments may fulfill the obligations referred
to in (III) and (V) of this Article regarding said establishments by complying with article 76 of this Law.
TAX INVOICES
III. To issue tax invoices for the income that they receive.
ACCOUNTING RECORDS AND SUPPORTING DOCUMENTATION
IV. To keep accounting records and supporting documentation related to the respective entries, as well as
the documents needed to evidence that the taxpayer has complied with his tax obligations, in accordance
with the provisions of the Federal Fiscal Code.
FINANCIAL STATEMENT AND INVENTORY
V. Taxpayers who carry out entrepreneurial activities must prepare a statement of financial position and an
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inventory of merchandise in stock through 31 December of each year, according to the respective
regulatory provisions.
When a taxpayer begins to conduct or ceases conducting entrepreneurial activities, he must prepare a
statement of financial position for each of those moments.
ANNUAL TAX RETURN WITH TAX PROFIT AND AMOUNT OF EMPLOYEES PROFIT SHARING
VI. In the annual tax return, the taxpayer shall include the tax profit and the amount paid in employee
profit-sharing.
TAX RETURNS BY EMAIL
The returns referred to in (VII) of this article may be submitted electronically to the e-mail address indicated
for such purpose by the Tax Administration Service through general rules.
INFORMATION ON FOREIGN LOANS AND AMOUNTS COLLECTED IN CASH, GOLD AND SILVER
VII. To file the information referred to in Article 76(VI) and (XV) of this Law and keep it available to the tax
authorities.
CERTIFICATES, TAX INVOICES FOR PAYMENTS AND WITHHOLDINGS TO FOREIGN RESIDENTS
VIII. To issue certificates and tax invoices, indicating the amounts of payments that constitute income from
a source of wealth located in Mexico in accordance with Title V of this Law or of payments to foreign
establishments of Mexican banking institutions, in accordance with Article 48 thereof, and, if applicable, of
tax withheld from foreign residents or from the aforementioned banking institutions.
OBLIGATIONS FROM PAYMENTS TO EMPLOYEES
IX. Taxpayers that make payments for the items referred to in Chapter I of this Title must comply with the
obligations set forth therein.
INFORMATION ON TRANSACTIONS WITH FOREIGN RESIDENT RELATED PARTIES
X. To file, in conjunction with the annual tax return, the information referred to in Article 76(X) of this Law.
SUPPORTING DOCUMENTATION CONCERNING TRANSACTIONS WITH FOREIGN RESIDENT
RELATED PARTIES
XI. To secure and keep the documentation referred to in article 76(IX) of this Law. This section shall not
apply to taxpayers whose income in the immediately preceding fiscal year did not exceed $13,000,000.00,
except those covered by the penultimate paragraph of article 179 of this Law. Review authorities, regarding
this obligation, may only be exercised with regard to past years.
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Individuals performing entrepreneurial activities through joint ownership may also make the election
described in this article, provided that the sum of all the joint owners income from entrepreneurial activities
without any deduction in the immediately preceding year does not exceed the threshold established in the
first paragraph of this article; and income that individually corresponds to each joint owner for such joint
ownership, without any deduction, added by income from sales of fixed assets germane to the same joint
owners entrepreneurial activity, in the immediately preceding year, does not exceed the threshold
established in the first paragraph of this article.
PARTIES THAT DO NOT QUALIFY FOR THIS REGIME
The following may not pay the tax under this Section:
I. Partners, shareholders or members of legal entities or when they are related parties under article 90 of
this statute, or when there is a link under such article with persons that were subject to tax under this
Section.
II. Taxpayers performing activities related to real estate, real estate capital, real estate businesses or
financial activities, except those who only earn income from personalized promotion and demonstration
activities with individual clients for sale purchases of dwellings and households, and such clients are also
individuals who do not perform activities of construction, development, remodeling, improvement or sale of
dwellings and households.
III. Individuals earning income described in this Chapter from commissions, mediations, agency,
representation, brokerage, consignment and distribution, except persons who earn income from mediation
or commission and it does not exceed 30% of their total income. Withholdings made by legal entities from
rendering these services shall be considered final payments for this Section.
IV. Individuals earning income described in this Chapter for public spectacles and franchisees.
V. Taxpayers performing activities through trusts or partnerships.
ASSESSMENT AND PAYMENT OF THE TAX
Taxpayers referred to in this article shall calculate and pay the tax on a bi-monthly basis, which shall be
final, no later than the 17th day of March, May, July, September, November and January of the following
year, by filing a tax return through the systems made available by the Tax Administration Service in its
webpage. For these purposes, the bi-monthly tax profit shall be determined by reducing from income
referred to in this article earned in the period in cash, goods or services, the deductions authorized by this
statute that are strictly necessary for earning income described in this Section, as well as the expenses
effectively incurred in the same period for the acquisition of assets, deferred expenses and charges, and
the employees profit sharing paid in the year, pursuant to article 123 of the Constitution of the United
Mexican States.
INCOME LOWER THAN DEDUCTIONS
When income earned is less than deductions for the relevant period, taxpayers shall consider the resulting
difference between those two items to be deductible for subsequent periods.
TAXABLE INCOME FOR EMPLOYEES PROFIT SHARING PURPOSES
For purposes of employees profit sharing under this Section, the taxable profit referred to in articles
123(IX)(e) of the Political Constitution of the United Mexican States and 120 and 127(III) of the Federal
Labor Law, shall be tax profit resulting from the sum of tax profits earned in each two months of the year.
In order to calculate taxable profit for purposes of the employees profit sharing, taxpayers shall subtract
from gross income the non-deductible items described in article 28(XXX) of this statute.
ASSESSMENT OF THE TAX
In order to determine the tax, taxpayers of this Section shall consider income when effectively collected,
and deduct expenses effectively made in the year for the acquisition of assets, and deferred expenses or
charges.
BI-MONTHLY TAX RATE SCHEDULE
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Tax profit obtained under the fifth paragraph of this article shall be subject to the following.
BI-MONTHLY TAX RATE SCHEDULE
Lower limit
Upper limit
Fixed amount
Percentage to be applied
on the excess above the
lower limit
0.01
992.14
0.00
1.92
992.15
8,420.82
19.04
6.40
8,420.83
14,798.84
494.48
10.88
14,798.85
17,203.00
1,188.42
16.00
17,203.01
20,596.70
1,573.08
17.92
20,596.71
41,540.58
2,181.22
21.36
41,540.59
65,473.66
6,654.84
23.52
65,473.67
125,000.00
12,283.90
30.00
125,000.01
166,666.67
30,141.80
32.00
166,666.68
500,000.00
48,475.14
34.00
500,000.01
And above
156,808.46
35.00
10
90%
80%
70%
60%
50%
40%
30%
20%
10%
The reduced tax may not be subject to further reduction for credits or reductions for -exemptions or
subsidies.
TERM TO REMAIN IN THE REGIME
Taxpayers making the election to apply the provisions of this Section may only remain in the regime set
forth therein during a maximum term of ten consecutive years. Once such period is concluded, they shall
pay tax in accordance with the regime for individuals with entrepreneurial or professional activities
described in Section I of Chapter II of Title IV of this statute.
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When income from the entrepreneurial activity earned by a taxpayer from the period between the beginning
of the year through the relevant month exceeds the amount described in the first paragraph of article 111 or
when any of the situations described in the second paragraph of (VIII) of this article arises, such taxpayer
shall stop paying the tax under this Section and shall do so in accordance with this statute in the
corresponding regime, as of the month following the month in which such threshold was exceeded or the
tax return described in the fifth paragraph of article 111 of this statute should have been filed, as applicable.
TAXPAYERS THAT STOP PAYING THE TAX UNDER THE REGIME
When a taxpayer stops paying the tax under this Section, he may not be able to do so again in any case.
Taxpayers subject to tax under this Section and who have their tax domicile in localities or rural zones with
no Internet services may be released from the obligation of filing returns and entering their transactions
through the Internet or using electronic means, provided that they comply with the requirements set forth by
the tax authorities in general rules.
Artculo 113. TRANSFER OF THE GOING CONCERN, THE ASSETS, AND THE DEFFERED
EXPENSES AND CHARGES
When a taxpayer transfers entirely the going concern, the assets and the deferred charges and expenses,
the acquirer thereof may not be subject to tax under this Section, and shall be subject to the regime
applicable under this statute.
The transferor of the property shall include in gross income, income from the disposition of such goods and
pay the tax under Chapter IV of Title IV of this statute.
CHAPTER III. RENTAL INCOME AND INCOME FROM GRANTING THE RIGHT TO TEMPORARILY
USE OR ENJOY REAL PROPERTY IN GENERAL
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II. Maintenance expenses that do not entail additions or improvements to the property in question and
expenses for water consumption, provided these expenses are not paid for by the user of the real property.
REAL INTERESTS
III. The real interest paid for loans used to purchase, construct, or improve the real property. Real interest is
considered to be the amount by which said interest exceeds the annual adjustment for inflation. To
calculate real interest, the relevant portions of article 134 of this Law shall be applied.
SALARIES, FEES AND CONTRIBUTIONS
IV. Salaries, commissions and fees paid, as well as taxes, fees or contributions whose payment on said
salaries is legally required and that have effectively been paid.
INSURANCE PREMIUMS
V. The amount paid for insurance premiums covering the respective property.
INVESTMENTS IN CONSTRUCTIONS
VI. Investments for construction, including additions and improvements.
OPTIONAL DEDUCTON
Taxpayers that grant the right to temporarily use or enjoy real property may elect to deduct 35% of income
referred to in this Chapter, rather than the deductions to which this Article refers. Taxpayers making this
election may, in addition, deduct property tax payments, regarding said real property, corresponding to the
calendar year or to the period of the year during which income was received, as applicable.
SUBLEASE DEDUCTIONS
In cases of sublease, only the amount of rents paid by the lessee to the lessor may be deducted.
PORTIONS OCCUPIED OR GRANTED FOR FREE
If a taxpayer earns income from granting the right to temporarily use or enjoy a real property and occupies
a portion thereof, or if the taxpayer grants such property free of charge, he may not deduct the prorated
portion of the expenses or of the property tax and public-works contribution fees that corresponds to the unit
occupied by him or whose use or enjoyment has granted free of charge. In cases of subleasing, the
sublessor may not deduct the pro-rata share of the rental payments corresponding to the unit that the
sublessor occupies or the use and enjoyment of which he has granted free of charge.
The pro-rata share referred to in the preceding paragraph shall be calculated in accordance with the
number of square meters of floor space that the sublessor occupies or the use and enjoyment of which he
grants free of charge with regard to the total number of meters of floor space of which the real property is
composed.
LEASE FOR A PORTION OF THE YEAR
If the right to temporarily use or enjoy the property in question is granted for less than the entire year, the
deductions referred to in (I) through (V) of this article shall apply only when they were made during the
period for which the right to temporarily use or enjoy the real property was granted, or within the three
months preceding that in which such use and enjoyment was granted.
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accordance with the third paragraph of article 106 of this Law shall be applied to the difference between
income for the month or quarter for which the payment is made and the deductions referred to in article 115
thereof in the same period.
TAXPAYERS NOT REQUIRED TO MAKE ESTIMATED PAYMENTS
Taxpayers who only earn income of the types indicated in this Chapter and whose monthly income does not
exceed ten times the monthly general minimum wage in effect in Mexico City shall be allowed to make
estimated payments on a quarterly basis.
SUBLEASE
In the case of subleasing, only the amount of the monthly or quarterly rents paid by the sublessor to the
lessor shall be deducted.
10% WITHHOLDING BY LEGAL ENTITIES
When income referred to in this Chapter is obtained for payments made by legal entities, the latter shall
withhold, as an estimated payment, an amount equivalent to 10% of the income, without any deductions;
and they shall provide a withholding certificate and a tax invoice to the taxpayer. Said withholdings shall be
paid in conjunction with those indicated in article 96 of this Law, as applicable. Tax withheld under this
paragraph may be credited against the tax calculated in accordance with paragraph two of this Article.
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IV. To file monthly estimated and annual returns in accordance with this Law.
REPORT OF AMOUNTS EXCEEDING ONE HUNDRED THOUSAND PESOS IN CASH, GOLD OR
SILVER
V. To inform the tax authorities, using the electronic forms and means set forth by the Tax Administration
Service through general rules, of cash considerations, in Mexican currency, as well as in gold or silver
pieces, for more than one hundred thousand pesos, no later than the seventeenth day of the month
immediately subsequent to that in which the transaction is carried out.
The information referred to in this section shall be available to the Ministry of the Treasury and Public Credit,
in accordance with Article 69, paragraph two, of the Federal Fiscal Code.
INCOME THROUGH TRUSTS
When income referred to in this Chapter is received through trusts, the trustee shall be responsible for
keeping books, issuing tax invoices, and making estimated payments. The persons to whom the earnings
correspond must ask the trustee for the tax invoice referred to in the last paragraph of the preceding article,
which must be submitted with their annual tax return.
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accordance with the following paragraph. The resulting tax shall be added to the tax calculated in
accordance the preceding section.
ELECTION TO DETERMINE THE RATE
The taxpayer may elect to calculate the rate referred to in the preceding paragraph, in accordance with
either (a) or (b) below:
a) By applying the tax rate schedule determined in accordance with article 152 of this Law to the difference
between gross income obtained in the year in which the disposition was made and the deductions
authorized in the Law, except those set forth in article 151(I), (II) and (III) thereof. The result shall be divided
by the amount to which the tax rate schedule was applied, and the quotient shall be the income tax rate.
b) The average rate obtained by adding the rates calculated in accordance with the preceding subsection
for the last five years, including that in which the disposition was made, divided by five.
If a taxpayer has not earned gross income in the four years prior to that in which the disposition is
performed, he may determine the average rate referred to in the preceding paragraph by using the tax that
he would have had to pay if he had included in gross income of each of the years the portion of the gain on
the disposition of goods referred to in (I) of this Article.
PAYMENT OF INCOME TAX FOR SALES IN INSTALLMENTS
When payment is received in installments, the tax corresponding to the portion of the gain not includible in
gross income may be paid in the calendar years in which the income is effectively received, provided that
the term for receiving it is longer than 18 months and the tax liability has been secured. To calculate the
amount of tax to pay in each calendar year, the tax calculated in accordance with (III) of this article shall be
divided between the total income from the disposition, and the quotient shall be multiplied by income
effectively received in each calendar year. The result shall be the tax to be paid for this item in the annual
tax return.
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gain on which, in accordance with the procedure set forth in Article 120 of this Law, the tax is to be
calculated.
UPDATE OF NOTARY-REALTED EXPENSES, COMMISSIONS, ETC.
The deductions referred to in (III) and (IV) of this article shall be updated for the period from the month in
which the respective expense was incurred until the month immediately preceding that in which the
disposition is made.
LOSSES FROM DISPOSITIONS OF REAL ESTATE AND SHARES
When taxpayers claim the deductions referred to in this article and sustain losses on the disposition of real
property, shares, estate contribution certificates issued by government-controlled banks, and ownership
interest, they may carry forward said losses in the calendar year in question or in the following three years,
in accordance with article 122 of this Law. However, in the case of shares and the aforementioned estate
contribution certificates and ownership interest, the requirements set forth in the Regulations of this Law
must be complied with. The portion of the loss not carried forward in a year, except for a loss sustained on
a disposition of real property, shall be updated for the period from the closing month of the year in which the
loss was sustained or was last updated through the last month of the year immediately preceding the year in
which it is carried forward.
Artculo 122. DEDUCTION OF LOSSES FROM DISPOSITIONS OF REAL ESTATE AND SHARES
Taxpayers sustaining losses on the disposition of real property, shares, ownership interest, or estate
contribution certificates issued by government-controlled banks shall reduce said losses as follows:
I. The loss shall be divided by the number of years between the acquisition date and the disposition date of
the property in question; if more than ten years have elapsed, only ten years shall be considered. The result
obtained shall be the portion of the loss that may be subtracted from remaining income except income
referred to in Chapters I and II of this Title that the taxpayer must include in the annual tax return of the
same year or in the following three calendar years.
II. The portion of the loss not subtracted in accordance with the preceding section shall be multiplied by the
taxpayers tax rate for the calendar year in which the loss is sustained; if in the return for said year no tax is
due, the rate corresponding to the following calendar year in which the taxpayer has a tax payable shall be
used, for a maximum of three years. The result obtained in accordance with this section may be credited in
the calendar years referred to in the preceding section, against the product of the tax rate for the year in
question times the total gain from the disposition of goods earned in the same year.
The rate referred to in (II) of this article shall be calculated by dividing the tax that the taxpayer would have
had in the annual tax return in question by the amount to which the tax rate schedule indicated in article 152
of this Law was applied in order to calculate said tax, and multiplying the quotient by one hundred. The
product is expressed as a percentage.
If in a calendar year a taxpayer is able to use the portion of the loss referred to in (I) above or to apply the
credit referred to in (II) of this article but fails to do so, he shall forfeit the right to do so in subsequent years
for up to the amount that could have been used.
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I. The cost of the land shall be subtracted from the verified acquisition cost and the result shall be the cost of
construction. When the cost cannot be disaggregated as described here, the cost of the land shall be
considered to be 20% of total cost.
II. The cost of constructions shall be reduced at a rate of 3% per year for each year elapsed between the
acquisition date and the disposition date. In no event shall this cost be less than 20% of the initial cost. The
resulting cost shall be updated for the period from the month in which the acquisition was made until the
month immediately preceding that in which the disposition is made. The same treatment must be applied to
improvements or adaptations entailing deductible investments.
UPDATE OF THE COST OF PERSONAL PROPERTY
In the case of personal property other than securities and ownership interest, the cost shall be decreased at
a rate of 10% per year, or 20% in the case of transport vehicles, for each year elapsed between the
acquisition date and the disposition date. The resulting cost shall be updated for the period from the month
in which the acquisition was made until the month immediately preceding that in which the disposition is
made. If more than 10 years have elapsed, or 5 in the case of transport vehicles, there shall be no
acquisition cost.
PERSONAL PROPERTY THAT DOES NOT LOSE ITS VALUE
Provided that the taxpayer complies with the requirements set forth in the Regulations of this Law, the
taxpayer may refrain from reducing the acquisition cost based on the years elapsed, regarding personal
property that does not decrease in value with the passage of time. Nevertheless, the taxpayer shall update
said cost in accordance with the preceding paragraph.
UPDATE OF THE COST OF PIECES OF LAND
The acquisition cost of land shall be updated for the period from the month in which the acquisition was
made until the month immediately preceding that in which the disposition is made.
AVERAGE PER-SHARE COST
In the case of shares, average per-share cost shall be calculated in accordance with the provisions of article
22 of this Law. In the case of the disposition of shares of mutual funds referred to in articles 87 and 88 of this
Law, said articles shall be abided by.
ACQUISITION BY INHERITANCE, BEQUEST OR DONATION
The acquisition cost or average per-share cost, as applicable, of goods acquired through inheritance,
bequest, or donation shall be the price paid by the decedent who left the estate or the donor, and the
acquisition date shall be the date that corresponded to the latter. When the decedent who left the estate or
succession or the donor had acquired said goods free of charge, the same rule shall apply. The acquisition
cost or average per-share cost, as applicable, of a donation on which income tax has been paid shall be the
appraised value used to calculate said tax, and the acquisition date shall be that on which the
aforementioned tax is paid.
AVERAGE ACQUISITION COST OF SHARES ISSUED BECAUSE OF MERGER OR SPIN OFF
In the case of mergers or spin-offs, the verified acquisition cost of the shares issued as a result of the
merger or spin-off, as applicable, shall be the average per-share cost that in accordance with article 23 of
this Law corresponded to the shares of the merged companies or original companies at the time of the
merger or spin-off.
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SECURITIES PLACED AMONG THE GENERAL PUBLIC
In accordance with the relevant general rules issued by the Tax Administration Service, when securities of
the type placed among the general investing public are transferred off a Stock Exchange, the tax authorities
shall consider the stock-market quote of the last event of the day of the disposition, rather than the
appraised value.
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invoice and a withholding certificate to the transferor; and the latter shall submit a copy thereof with his
annual tax return. Neither the withholding nor the estimated payment referred to in the preceding paragraph
shall be made when personal property other than securities or ownership interest is transferred and the
amount of the transaction is less than $227,400.00.
ESTIMATED PAYMENT FOR ASSIGNMENT OF CERTIFICATES OR TRUST RIGHTS
Taxpayers who earn income from the assignment of rights of nonamortizable investment certificates in real
estate, the assignment of housing certificate rights, or the assignment of settlor or trust beneficiary rights
incumbent on real property, shall calculate and make the estimated payment according to the first two
paragraphs of this article.
ESTIMATED PAYMENTS OF NOT-FOR-PROFIT LEGAL ENTITIES
With the exception of the legal entities referred to in article 86 of this Law and those authorized to receive
tax-deductible donations in accordance with articles 27(I) and 151 (III) thereof, the legal entities referred to
in Title III of this Law that transfer real property shall make estimated payments in accordance with this
article, which shall be definitive.
Artculo 128. REPORT OF AMOUNTS EXCEEDING ONE HUNDRED THOUSAND PESOS IN CASH,
GOLD OR SILVER
Taxpayers who earn income from the disposition of goods are required to report to the tax authorities
using the electronic forms and means set forth by the Tax Administration Service through general rules
regarding cash considerations, whether in Mexican or foreign currency, as well as in gold or silver pieces,
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for more than one hundred thousand pesos, no later than the seventeenth day of the month immediately
subsequent to that in which the transaction is carried out. The aforementioned general rules may set forth
cases in which it is not necessary to submit the information referred to in this article.
The information referred to in this article shall be available to the Ministry of the Treasury and Public Credit,
in accordance with article 69, paragraph two, of the Federal Fiscal Code.
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determined by reducing from the updated sale price of the shares or securities, the verified acquisition cost
of the shares of the same issuing entity or securities acquired in stock exchanges operating under
concession or recognized derivatives markets during the validity of the relevant agreement to liquidate the
transaction with the lender. For these purposes, the verified acquisition cost may include the cost of shares,
if any, acquired by the borrower through capitalization of profits or other items forming part of the issuing
entitys equity that such entity had decreed during the term of the agreement. An amount equivalent to the
dividends paid by the entity issuer of the shares subject to the loan may also be part of the verified
acquisition cost, provided that such dividends are collected by a third party, other than the borrower, and the
borrower repays them to the lender as patrimonial rights. The sale price of the shares or securities may be
reduced by the amount of commissions collected by the intermediary for the loans of shares or securities,
the disposition thereof, the acquisition thereof and the liquidation of the loan.
When a borrower does not acquire all or part of the shares or securities that he is required to deliver to the
lender within the term set forth in the agreement, the gain from the disposition shall be determined with
regard to the shares or securities not acquired, by reducing from the updated sale price of the shares or
securities, the average price of the shares or securities quoted in stock exchange or securities market in the
last day in which such shares or securities should have been returned to the lender, according to the
agreement executed. The sale price may also be reduced by the amount of dividends paid by the issuer of
the shares that were not acquired and were the subject matter of the loan, during the term in which they
were loaned, provided that such dividends are collected by a third party, other than the borrower, and the
borrower repays them to the lender as patrimonial rights. The sale price of the shares or securities may be
reduced by the amount of commissions collected by the intermediary for the loans of shares or securities,
the disposition thereof, the acquisition thereof and the liquidation of the loan.
UPDATE OF THE SALE PRICE OF SHARES AND SECURITIES
The sale price of the shares or securities shall be updated for inflation from the date in which the disposition
of the loaned shares or securities was executed through the date in which the borrower acquired them or
should have acquired them, as applicable, to liquidate the loan.
When the verified acquisition cost is greater than the sell price, the difference shall be the loss sustained in
the relevant transaction.
When a borrower fails to return to the lender within the set terms, the loaned shares or securities, such
shares or securities shall be deemed to be transferred by the lender to the borrower on the date in which
they should have been returned. To this end, the borrowers gain shall be calculated in accordance with (a)
of this paragraph, considering that the sale price of the shares or securities that were the subject matter of
the agreement is their average price quote in stock exchange or recognized derivative market through the
last they in which they should have been acquired by the borrower. Likewise, it shall be considered that the
shares that the lender obtains from the borrower in excess of those that were lent at the beginning of the
contract due to the issuance of shares by reason of capitalization of profits or any other item forming part of
the equity that the issuing entity had decreed during the validity of the agreement, have no average
acquisition cost.
CAPITAL DERIVATIVES
In the case of capital derivatives referred to shares traded in stock exchanges operating under concession
pursuant to the Stock Exchange Act, as well as those referred to stock indexes representing such shares,
the result shall be determined in accordance with article 20 of this statute, provided that such transactions
are carried out in recognized markets, described in article 16C(I) and (II) of the Federal Fiscal Code.
INTERMEDIARIES IN FINANCIAL MARKETS
Financial entities, authorized pursuant to the Stock Exchange Act to act as intermediaries in securities
markets, that participate in dispositions or transactions described in the first paragraph of this article, shall
calculate the gain or loss for the year. The information concerning such calculation shall be delivered to the
taxpayer for purposes of payment of income tax referred to in this article. In cases where a tax loss is
sustained in the year, the intermediaries in the securities market shall issue to individual transferors a
certificate evidencing such loss. For purposes of the delivery of the information described in this paragraph,
the intermediaries in the securities market shall issue certificates corresponding to the intermediation
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agreements, provided that they contain information in detail, required to comply with the obligations set
forth in this article.
FINANCIAL INTERMEDIATION AGREEMENTS
When the agreement for the intermediation of securities entered into by and between a taxpayer and an
intermediary in securities market ends before the end of the relevant fiscal year, the intermediary shall
calculate the gain or loss for the period in which the agreement was in force during the year, and deliver the
information referred to in the preceding paragraph. When taxpayers change the intermediary in securities
market, they shall be required to issue to the new intermediary all the information related to the agreement,
including the disposition or other transactions described in the first paragraph of this article that have been
executed during the relevant year. Intermediaries in securities markets that transfer a taxpayers account
shall deliver to the intermediary in securities market that receives the account the information concerning
the average acquisition cost of shares or securities acquired by the taxpayer, updated through the date of
the transfer. The intermediary in securities markets that receives the account shall consider such
information for the calculation of the average acquisition cost of shares or securities, when they are
disposed of.
INTERMEDIATION AGREEMENTS WITH FOREIGN FINANCIAL INSTITUTIONS
Taxpayers performing dispositions or other transactions described in the first paragraph of this article
through intermediation agreements entered into with foreign financial entities that are not authorized under
the Securities Exchange Act, shall calculate the tax gain or loss for the year and, when applicable, the tax.
They shall also have at the disposal of the tax authority, the account statements bearing the information
necessary to calculate gain or loss from the dispositions performed in each month of the year concerned.
SUBSTITUTION OF FOREIGN FINANCIAL INSTITUTIONS
When the taxpayers described in the preceding paragraph replace a foreign financial entity with an
intermediary in securities market, they shall deliver to the new intermediary retained all the information
concerning their agreement, including the dispositions or other transactions described in the first paragraph
of this article, entered into by such taxpayers, so that such intermediary may calculate the tax gain or loss
for the year.
OFFSET OF LOSSES
When taxpayers sustain a loss for the year from dispositions or other transactions described in this Section,
they may offset such losses only from gains, if any, earned by the same taxpayer in the year or in the ten
years following thereafter from dispositions or other transactions described in the first paragraph of this
article. The amount to be offset for the losses referred to in this paragraph may not exceed such gains.
UPDATE OF LOSSES
For purposes of the preceding paragraph, losses shall be updated for inflation for the period between the
month in which they were sustained through the closing month of the same year. The portion of the loss that
is not offset in a year shall be updated for the period between the closing month of the year in which it was
updated for the last time through the last month of the year immediately preceding the year in which it will be
offset.
FORFEITURE TO OFFSET A LOSS
When in a given year a taxpayer fails to offset a loss, even though such taxpayer could have done so in
accordance with this article, said taxpayer shall forfeit the right to do so in subsequent years, for up to the
amount that could have been offset.
TAX RETURN AND PAYMENT OF THE TAX
Taxpayers shall file a return with regard to the gains obtained in accordance with this Section, and pay the
tax, if any, for the year, which shall be submitted in conjunction with the annual tax return described in article
150 of this statute.
The Tax Administration Service, though general rules, shall establish procedures facilitating the calculation
and payment of the tax described in this article.
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INDIVIDUALS EARNING INCOME FROM THE DISPOSITION OF SHARES ISSUED BY MUTUAL
FUNDS SPECIALIZED IN RETIREMENT FUNDS
Individuals who obtain gains from the disposition of shares issued by mutual funds specialized in retirement
funds shall not pay income tax as described in this article, provided that such disposition is recorded in
stock exchanges operating under concession, pursuant to the Stock Exchange Act.
PAYMENT OF THE TAX
In the following cases, the provisions of this article shall not apply and therefore, the tax shall be paid
pursuant to the other provisions governing the disposition of shares set forth in this Title:
1. The disposition of shares or securities not placed among the general investing public or the execution of
transactions described in (I), (II), (III) and (IV) of this article, the acquisition of which was not performed in
recognized markets, described in article 16C(I) and (II) of the Federal Fiscal Code, except when shares or
other securities placed among the general investing public are disposed of in authorized stock exchanges,
provided that such securities are disposed of through one or several simultaneous or successive
transactions within a twenty-four-month period; they do not represent in any case more than 1% of the
outstanding shares of the issuer company; and the transferor of the shares or securities does not fall within
the scope of 2 below.
In these cases, the transferor of the shares or the securities shall be required to provide to the intermediary
in financial markets participating in the disposition, the information necessary to determine gain or loss from
the transaction.
2. When a person or group of persons that directly or indirectly hold 10% or more of the shares in the capital
stock of the issuing company, referred to in article 111 of the Stock Exchange Act, within a period of 24
months, dispose of the 10% or more of the paid-in shares of the relevant company, through one or several
successive or simultaneous transactions, including those performed through derivatives or any other similar
transaction. Likewise, it shall not apply to the person or group of persons that control the issuing entity and
that sell it through one or several successive or simultaneous transactions, within a period of 24 months,
including those performed through derivatives or any other similar transaction. For purposes of this
paragraph, control and group of persons shall have the meaning described in article 2 of the Stock
Exchange Act.
3. Dispositions of shares performed out of the stock exchanges referred to above; dispositions performed
within such stock exchanges as listing operations or protected cross trades regardless of how such
operations are called that prevent sellers from accepting more competitive bids than those they receive
before and during the period in which the shares are offered for sale, even if the National Banking and
Securities Commission has classified such transactions as agreed in a stock exchange, in accordance with
article 179 of the Stock Exchange Act.
4. In the cases of mergers or spin offs of companies, for the shares that are disposed of and that were
obtained in exchange of the shares of the merged company or the original company, if the shares of the
latter fall within the scope of any of the two preceding numerals.
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V. Construction carried out at, facilities added to, or permanent improvements made to real property that
benefit the owner, in accordance with the agreement through which the use or enjoyment of said property
was granted. Such income is considered earned at the termination of the agreement, and the amount
thereof is the value of the investments on that date in accordance with an appraisal carried out by a person
authorized by the tax authorities.
AMOUNT OF INCOME
In the case of (I) through (III) of this article, income shall be equal to the appraised value determined by the
person authorized by the tax authorities. For cases covered by (IV) of this Article, income shall be the total
difference referred to in article 125 of this Law.
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made to insured parties or their beneficiaries regarding policies in which the insured risk is the survival of
the person insured, if the requirements of article 93(XXI) of this Law are not complied with, on the condition
that the premium has been paid directly by the person insured. In these cases, the corresponding income
tax shall be calculated as follows:
REAL INTEREST INCLUDIBLE IN GROSS INCOME
The portion of the premium corresponding to death-risk insurance coverage and to other related charges
that do not generate surrender value shall be subtracted from the premium paid, and the result shall be
considered an investment contribution. The sum of the surrender value and the dividends to which the
insured or his beneficiaries are entitled shall be reduced by the sum of updated investment contributions;
and the difference shall be real interest includible in gross income. Investment contributions shall be
updated for the period from the month in which the premium in question is paid or the month in which the
last partial withdrawal referred to in paragraph five of this article is made, as applicable, until the month in
which the corresponding withdrawal is made.
COVERAGE OF DEATH INSURANCE
Death insurance coverage shall be obtained as follows: the policys mathematical reserve of unexpired risk
shall be subtracted from the amount insured for death; and the result shall be multiplied by the probability of
death of the insured by the policy anniversary date in the year in question. The probability of death shall be
as set forth by the National Insurance and Bonding Commission and shall be used to calculate the
mathematical reserve.
PARTIAL WITHDRAWALS PRIOR TO THE CANCELLATION OF THE POLICY
When partial withdrawals are paid before the cancellation of the policy, the amount withdrawn shall be
deemed to include investment contributions and real interest. For such purposes, the following method shall
be followed:
I. The partial withdrawal shall be divided by the sum of surrender value and the dividends to which the
insured is entitled through the date of the withdrawal.
II. Real interest shall be calculated by multiplying the result obtained in accordance with (I) of this article by
the amount of the real interest determined through the same date in accordance with paragraph three of this
Article.
III. The amount of the investment contribution being withdrawn shall be determined by multiplying the result
obtained in (I) above by the sum of updated investment contributions determined through the date of the
withdrawal in accordance with paragraph three of this Article. The amount of updated investment
contributions that are being withdrawn in accordance with this paragraph shall be subtracted from the sum
of updated investment contributions determined in accordance with paragraph three of this Article.
PAYMENT OF THE TAX ON REAL INTEREST
The taxpayer shall pay the tax on real interest, which shall be calculated as follows: the average tax rate
applied to said interest in immediately preceding years in which the taxpayer paid this tax shall be applied to
the real interest in the year for which the calculation is being made. The number of preceding years used for
this calculation may not exceed five. The average tax rate referred to in this paragraph shall be calculated
as follows: the tax determined for each of the preceding years in which this tax was paid is divided by
income subject to tax for the same year; the sum of the resulting amounts, expressed as percentages, shall
be divided by the same number of years considered, up to a maximum of five. The tax determined in
accordance with this paragraph shall be added to the tax corresponding to the year in question, and shall be
paid along with it.
YIELDS ON VOLUNTARY CONTRIBUTIONS TO THE RETIREMENT SAVINGS SYSTEM
For the purposes of this Chapter, the following shall be considered interest: Earnings on voluntary
contributions deposited into the voluntary contributions sub-account of individual accounts opened
pursuant to the Retirement Savings Systems Law, or into individual accounts of the Retirement Savings
Fund pursuant to the Law of the Government Workers Social Security and Services Institute, as well as
supplementary contributions deposited into the supplementary contributions account pursuant to the
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Retirement Savings Systems Law.
ASSESSMENT OF REAL INTEREST INCLUDIBLE IN GROSS INCOME
For the purposes of the preceding paragraph, real interest includible in gross income shall be calculated by
subtracting the updated contribution amount from income obtained on the withdrawal. The contribution
referred to in this paragraph shall be updated for inflation for the period from the month in which the
contribution was made until the month in which the withdrawal is made.
Artculo 135. WITHHOLDING AND PAYMENT OF INCOME TAX FOR INTERESTS PAID
(1) Those who pay the interest referred to article 133 of this Law shall withhold and pay tax. The tax shall be
calculated by multiplying the rate set forth by Federal Congress for the year in question in the Federal
Revenue Law by the amount of the capital on which the interest is paid. The payment made shall be an
estimated payment. In the case of the interest set forth in the second paragraph of article 134 of this Law,
the withholding shall be made at the 20% rate, applied on the nominal interest.
Individuals who solely earn income of the types indicated in this Chapter may elect to consider the amounts
withheld in accordance with this article as definitive payment, provided said income corresponds to the year
in question and does not exceed $100,000.00.
(1)During fiscal year 2015, the annual withholding rate described in this article shall be 0.60%. FRL 2015
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twenty first
Artculo 136. TAXPAYERS OBLIGATIONS
Those who earn items of income referred to in this Chapter, in addition to the obligations set forth in other
articles of this Law, shall have the following obligations:
FEDERAL TAXPAYER REGISTRY
I. To request registration at the Federal Taxpayer Registry.
SUBMISSION OF ANNUAL TAX RETURN
II. To file annual tax returns in accordance with this Law.
TO KEEP DOCUMENTATION
III. To keep, in accordance with the Federal Fiscal Code, documentation regarding income and the amounts
of income tax withheld and paid.
TAXPAYERS NOT REQUIRED TO INCLUDE INTERESTS IN GROSS INCOME
The provisions of this article shall not apply to taxpayers who elected not to include interest in their gross
income, in accordance with article 135, paragraph two, of this Law.
INFORMATION FOR THE TAX ADMINISTRATION SERVICES PROVIDED BY THOSE WHO PAY
INTEREST
Those who pay the interest referred to in this Chapter shall provide the Tax Administration Service the
information referred to in Article 55 of this Law, even if they are not banking institutions.
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under the second paragraph of article 90 of this statute. Withholding described in this paragraph shall not be
applied when income is received by taxpayers described in Title II of this statute or legal entities described
in article 86 thereof.
INFORMATION IN THE ANNUAL TAX RETURN
Individuals who fail to file the return described in the second paragraph of article 90 of this statute may not
consider the withholding performed pursuant to this article as definitive payment and therefore, they shall
include in their gross income, the items of income earned pursuant to this Chapter. In such case, the
individual who earned the income may credit against the tax determined in the annual tax return, the federal
withholding tax, performed by the person who paid the prize, pursuant to this provision.
Artculo 139. OBLIGATIONS FOR THE PARTIES WHO PAY THE PRIZES
Those who pay the prizes referred to in this Chapter, in addition to the obligation to withhold this tax, shall
have the following obligations:
TAX INVOICE DESCRIBING INCOME AND INCOME TAX WITHHELD
I. To provide to the persons to whom they pay the items described in this Chapter, a tax invoice bearing the
amount of the transaction and the tax withheld and paid.
CERTIFICATE ON PRIZES EXEMPT FROM TAX
II. To provide a certificate of income, and a tax invoice for the prizes for which it is not required to pay the tax
under this statute.
TO KEEP DOCUMENTATION
III. To keep, in accordance with the Federal Fiscal Code, documentation regarding the certificates, the tax
invoices and the withholdings of this tax.
CHAPTER VIII. INCOME FROM DIVIDENDS AND IN GENERAL FROM PROFITS DISTRIBUTED BY
LEGAL ENTITIES
Artculo 140. INCLUSION OF DIVIDENDS IN GROSS INCOME AND ELECTION TO CREDIT INCOME
TAX
Individuals shall include income received for dividends or profits in their gross income. In addition, they may
credit, against the tax calculated in their annual tax return, the income tax paid by the corporation that
distributed the dividends or profits, provided that the party that claims the credit referred to in this paragraph
considers as an item of gross income both the dividends or profits received and the income tax paid by said
corporation, corresponding to the dividends or profits and received, and provided that said party has the
certificate and the tax invoice referred to in article 76(XI) of this Law. For such purposes, the tax paid by the
corporation shall be calculated by applying the rate set forth in article 9 of this Law to the product obtained
by multiplying the dividends or profits by 1.4286.
ADDITIONAL TAX ON DIVIDENDS AND PROFITS DISTRIBUTED BY LEGAL ENTITIES
Notwithstanding the provisions of the preceding paragraph, individuals shall be subject to an additional 10%
rate on dividends or profits distributed by legal entities residing in Mexico. The latter shall be required to
withhold the tax when they distribute such dividends or profits, and shall pay it along with the estimated
payment for the relevant period. Payments made under this paragraph shall be definitive.
PAYMENT OF THE TAX
In the case of (III) hereof, the tax withheld by the legal entity shall be paid no later than on the date in which
the tax return for the year is filed or becomes due.
PARTY EARNING INCOME
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The income is considered to be received by the owner of the security and, in the case of ownership interest,
by the person who appears as the holder thereof.
DEEMED DIVIDENDS
For the purposes of this article, the following are also considered to be distributed dividends or profits:
INTERESTS AND SHARE IN PROFITS
I. The interest referred to in articles 85 and 123 of the General Corporation Law [Ley General de
Sociedades Mercantiles] and profit sharing paid to debenture holders or other parties by Mexican resident
business corporations or by government-controlled banks.
LOANS TO SHAREHOLDERS OR PARTNERS
II. Loans to partners or shareholders, except for loans regarding which the following requirements are met:
a) They shall be the result of the regular transactions of the legal entity.
b) They shall be agreed for a term of less than one year.
c) The agreed interest shall be equal to or greater than the rate set forth by the Federal Revenue Law for
extensions on the payment of tax liabilities.
d) These agreed conditions must be effectively complied with.
NONDEDUCTIBLE EXPENSES
III. Expenses that are not deductible in accordance with this Law and that benefit the shareholders of legal
entities.
UNREPORTED INCOME AND PURCHASES NOT PERFORMED
IV. Unreported income or purchases not made and improperly recorded.
TAX PROFIT ASSESSED BY THE AUTHORITY
V. Tax profit calculated, including based on presumptions, by the tax authorities.
PROFIT ASSESSED BY THE AUTHORITY IN RELATED PARTY TRANSACTIONS
VI. Modifications by the tax authorities to tax profit stemming from the calculation of gross income and
deductions, authorized in transactions entered into between related parties.
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II. Exchange gains and interest on credits other than those indicated in Title IV, Chapter VI, of this Law.
BENEFITS FROM FURNISHING BONDS OR ACTING AS AVAL
III. Benefits obtained from furnishing of bonds or acting as an aval, when the guarantor is not a legally
authorized institution.
INVESTMENTS IN FOREIGN RESIDENT COMPANIES
IV. Income from all kinds of investments in foreign resident corporations without a permanent establishment
in Mexico except for the dividends or profits referred to in (V) of this article.
DIVIDENDS, CAPITAL REDUCTIONS AND LIQUIDATIONS OF FOREIGN RESIDENT COMPANIES
V. Dividends or profits distributed by foreign resident corporations. In the case of a capital reduction or
liquidation of foreign resident corporations, income shall be calculated by reducing the per share amount of
the capital reimbursement by the verified acquisition cost of the share updated for the period from the month
of the acquisition until that in which the reimbursement is paid. In the latter cases, the applicable provisions
of article 5 of this Law shall be complied with.
INDIVIDUALS RECEIVING DIVIDENDS OR PROFITS
Individuals receiving dividends or profits described in this section, shall include them in gross income for
purposes of determining income tax they are required to pay under this Title and, in addition, they shall pay
income tax at the 10% rate, which shall be applied to the amount of the dividend or profit effectively
distributed by the foreign resident, without including the amount of income tax withheld, if any. Payment of
this tax shall be definitive and shall be made no later than the 17th day of the month following the month in
which dividends or profits were received.
USE OF CONCESSIONS
VI. Income derived from acts or contracts through which concessions, permits, authorizations, or contracts
granted by the Federal Government, the states, and municipalities, or the rights covered by pending
applications, are permitted to be operated, without transferring the respective rights.
EXPLOITATION OF SUBSOIL
VII. Income from any act or contract entered into with the surface owner for the exploitation of the subsoil.
PARTICIPATION IN SUBSOIL PRODUCTS
VIII. Income from participation in products obtained from the subsoil by a person other than the concession
holder, operator, or surface owner.
PAST-DUE INTERESTS AND INDEMNITIES
IX. Past-due interest, indemnities for lost profits, and income derived from contractual penalties.
DISTRIBUTABLE BALANCE FROM NOT-FOR-PROFIT ENTITIES
X. The taxpayer's pro-rata share of the distributable balance determined by the legal entities referred to in
Title III of this Law, provided that the tax referred to in the last paragraph of article 79 thereof has not been
paid.
INCOME FROM COPYRIGHTS EARNED BY THIRD PARTIES
XI. Income from copyrights received by individuals other than the author.
PERSONAL SAVINGS ACCOUNTS
XII. The amounts includible in gross income pursuant to article 185(II) of this Law.
CONDOMINUM OWNERS AND TRUST BENEFICIARIES
XIII. The amounts corresponding to the taxpayer in his capacity as condominium owner or trust beneficiary
of a real property used for lodging, granted to a third party to manage it and use it to lodge persons other
than the taxpayer.
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DERIVATIVES
XIV. Income from derivatives and financial transactions referred to in articles 16-A of the Federal Fiscal
Code and 21 of this Law. For these purposes, the provisions of article 146 of this Law shall be abided by.
DEEMED INCOME RESULTING FROM EXPENSES EXCEEDING DECLARED INCOME
XV. Income estimated pursuant to article 91(III) of this Law and income determined, including based on
presumptions by the tax authorities, in applicable cases pursuant to the tax laws.
PAYMENTS FROM INSURANCE COMPANIES
XVI. Amounts paid by insurance companies to their insured or beneficiaries, not considered interest or
indemnities, referred to in articles 93(XXI) and 133 of this Law, irrespective of the name given to such
income, provided that the premium has been paid by the employer, as well as amounts corresponding to
the excess determined in accordance with the second paragraph of article 93(XVII) of this Law. In such
cases, insurance companies shall withhold income tax by applying a 20% rate to the amounts paid, without
any deductions; and issue a tax invoice, bearing the amount of the transaction and the amount withheld and
paid.
When individuals are not required to file an annual tax return, the amount withheld shall be considered
definitive payment. When said individuals elect to file an annual tax return, they shall include the amounts
referred to in the preceding paragraph in their remaining income and may credit the amount withheld in
accordance with the preceding paragraph against their tax payable.
ROYALTIES
XVII. Income from the royalties referred to in article 15-B of the Federal Fiscal Code.
INCOME FROM PERSONAL RETIREMENT PLANS OR FROM THE VOLUNTARY CONTRIBUTIONS
SUB-ACCOUNT
XVIII. Income from personal retirement plans or from the voluntary contributions sub-account referred to in
article 151(V) of this Law, when received by a taxpayer to whom the cases of invalidity or disability to
perform compensated work do not apply, in accordance with the Social Security laws, or who have not
reached the age of 65. For such purposes, income shall be considered to be the total amount of the
contributions that the taxpayer has paid to said personal retirement plan or into the voluntary contributions
sub-account and that the taxpayer has deducted in accordance with article 151(V) of this Law, updated for
inflation, as well as the real interest accrued during all the years of the investment, updated for inflation. For
the calculation of the tax on this income, the following rules shall be abided by:
a) Income shall be divided by the number of years elapsed between the date on which the personal
retirement plan was opened and the date on which income is obtained, up to a maximum of five years.
b) The result obtained in accordance with the preceding paragraph shall be the portion of income to be
added to the taxpayers remaining gross income for the year in question, and the tax corresponding to gross
income shall be calculated in accordance with this Title.
c) To the portion of income not added to gross income in accordance with preceding section, the tax rate for
the year corresponding to all of the items of the taxpayers gross income shall be applied, and the resulting
tax shall be added to that of the aforementioned year.
If more than five years have elapsed since the date on which the personal retirement plan or the voluntary
contributions sub-account was opened and the date on which the income is obtained, the taxpayer shall pay
tax on this income by applying the average tax rate that corresponded to the income in the five years
immediate preceding that in which the calculation is made. The average tax rate referred to in this
paragraph shall be calculated as follows: The tax determined for each of the five preceding years in which
this tax was paid shall be divided by the income subject to tax for the same fiscal year; the sum of the
resulting amounts, expressed as percentages, shall be divided by five. The tax determined in accordance
with this paragraph shall be added to the tax corresponding to the year in question, and shall be paid along
with it.
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Artculo 143. RULES FOR EXCHANGE GAINS AND INTERESTS
Regarding exchange gain and the types of interest referred to in this Chapter, the following rules shall
apply:
CREDITORS EARNINGS
I. All earnings obtained by creditors shall be deemed to be applied firstly to past-due interest, except in the
cases of an acquisition through a judicial order for the payment of debts, cases in which the procedure
described below shall be followed:
a) If the creditor receives goods from the debtor, income tax shall be paid on total past-due interest,
provided that the value thereof suffices to cover the principal and the aforementioned interest.
b) If the goods only cover the principal owed, income tax shall not be charged on the interest provided that
the creditor states that the creditor reserves no rights against the debtor for the unpaid interest.
c) If the award of goods is made to a third party, the difference between the principal owed and the amounts
received by the creditor shall be considered to be past-due interest, provided that the creditor reserves no
rights against the debtor.
For the purposes of this section, the tax authorities may deem the value of the goods to be the value
indicated in the appraisal that they order to be practiced or the value that served as the base for the first
auction.
FORGIVENESS OF CAPITAL OR INTERESTS
II. Total or partial forgiveness of the principal or of the interest owed, when the creditor reserves no rights
against the debtor, gives rise to the payment of income tax by the debtor on the principal and interest
forgiven.
CREDITS EXTENDED TO MEXICAN RESIDENTS
III. In cases of credits or loans extended to Mexican residents, income shall be included in gross income
when collected in cash, in kind, or in services.
DEPOSITS MADE ABROAD AND CREDITS EXTENDED TO FOREIGN RESIDENTS
IV. Income from deposits made abroad or from credits or loans extended to foreign residents shall be
includible in gross income as accrued.
TRANSACTIONS DENOMINATED IN INVESTMENT UNITS
V. In the case of credits, debts, or transactions denominated in investment units, both the interest and the
adjustment for inflation to the principal derived from its denomination in said units shall be includible in gross
income.
INCLUSION IN GROSS INCOME OF INTERESTS NOT COMING FROM ABROAD
Interest received in accordance with this article, except the types set forth in (IV) thereof, shall be includible
in gross income in accordance with article 134 of this Law. When in accordance with the aforementioned
article, the adjustment for inflation is greater than the interest earned the result shall be considered a loss.
OFFSET OF LOSSES
The loss referred to in the preceding paragraph, as well as any exchange loss sustained by the taxpayer,
may be subtracted from interest includible in gross income received by the taxpayer in accordance with this
Chapter in the year in which the loss is sustained or it may be carried forward in the four years subsequent
to that in which the loss is sustained.
FOREITURE OF THE RIGHT TO OFFSET A LOSS
When in a given year, a taxpayer fails to offset the losses referred to in the preceding paragraph sustained
in previous years, even though the taxpayer could have done so in accordance with this article, the taxpayer
shall forfeit the right to do so in subsequent years, for up to the amount that could have been offset.
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UPDATE OF LOSSES
For the purposes of this Chapter, the amount of the exchange loss or the loss stemming from the difference
referred to in paragraph three of this article that is not offset in a year shall be updated. To this end, the
amount shall be multiplied by the update factor for the period from the first month of the second half of the
year in which it was sustained through the last month of the same year. The portion of this loss from
previous years, updated for inflation, to be offset from interest or from the exchange gain shall be updated
by multiplying it by the update factor for the period from December of the year in which it was last updated
until December of the year immediately preceding that in which will be applied.
INCLUSION IN GROSS INCOME OF INTERESTS FROM ABROAD
In the case of the interest referred to in (IV) of this article, the nominal interest shall be included in gross
income; the provisions of article 44 of this Law shall be abided by; and debts shall not be considered in the
calculation of the adjustment for inflation referred to in said article.
Artculo 144. SEMIANNUAL ESTIMATED PAYMENT FOR EXCHANGE GAINS AND INTERESTS
Taxpayers who earn income of the types set forth in article 143 of this Law shall make two semiannual
estimated payments on said income on account of their annual tax, except regarding the items covered by
(IV) of the aforementioned article. Said payments shall be made in July of the same year and in January of
the next year by applying to gross income obtained in the six-month period, the tax rate schedule based on
the tax rate schedule set forth in article 96 of this Law, which results from adding the amounts indicated in
the lower limit, upper limit, and fixed amount columns that are obtained, in accordance with said Article, for
each month of the six-month period for which the payment is being made, and, if applicable, the
withholdings made in the period in question may be credited against the tax payable. The tax authorities
shall carry out the arithmetic operations set forth in this paragraph and publish the corresponding tax rate
schedule in the Federal Register.
WITHHOLDING BY LEGAL ENTITIES
When income referred to in this article is obtained from payments made by persons covered by Titles II and
III of this Law, said persons shall withhold, as an estimated payment, the amount resulting from applying the
top rate applicable to the excess over the lower limit set forth in the tax rate schedule of article 152 of this
Law to the amount of interests and exchange gains includible in gross income.
WITHHOLDING CERTIFICATE
Persons who withhold income tax in accordance with this article shall give the taxpayers a withholding
certificate. Said withholdings shall be paid in conjunction with those indicated in article 96 of this Law, as
applicable.
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INCOME TAX WITHHOLDING BY LEGAL ENTITIES
When income referred to in this Chapter, except the types of income referred to in article 143 of this Law, is
obtained from payments made by the legal entities referred to in Title II of this Law, said legal entities shall
withhold an estimated payment equivalent to the amount obtained by applying the 20% rate to the income,
without any deductions, and they shall provide a tax invoice to the taxpayer, evidencing the transaction and
the withholding. Such withholdings must be paid in conjunction with those indicated in article 96 of this Law,
as applicable.
INCOME TAX WITHHOLDING ON DISTRIBUTABLE BALANCE OF NOT-FOR-PROFIT LEGAL
ENTITIES
In the case of income referred to in Article 142(X) of this Law, the legal entities shall withhold, as an
estimated payment, the amount obtained when the top rate applicable to the excess over the lower limit set
forth in the tax rate schedule of article 152 thereof is applied to the amount of the distributable balance.
They shall pay this amount at the same time as they file the return set forth in article 96 of this Law or, as
applicable, on the dates set forth for the same purposes; and they shall provide a tax invoice to the
taxpayer, evidencing the transaction and the withholding.
WITHHOLDING ON PAYMENTS TO PERSONAL SAVINGS ACCOUNTS
In the case of the income referred to in article 142(XII) of this Law, the persons who make the payments
shall withhold, as an estimated payment, the amount resulting from applying the top rate applicable to the
excess over the lower limit set forth in the schedule of article 152 of this Law to the amount includible in
gross income.
REDUCTION OF ESTIMATED PAYMENTS
Taxpayers may request a reduction in the amount of estimated payment referred to in the preceding
paragraph, provided that the corresponding requirements set forth by the Tax Administration Service
through general rules are complied with.
ANNUAL TAX RETURN ON INCOME TAX WITHHELD
Parties who make the withholdings referred to in paragraphs three, four, and five of this article, as well as
the banking institutions at which the personal savings accounts referred to in article 185 of this Law are
established, shall file a return at the authorized offices no later than 15 February of each year, providing the
information corresponding to the persons from whom they have withheld tax in the preceding calendar year.
In addition, banking institutions shall indicate the amount corresponding to the withdrawal made from the
aforementioned accounts.
COPYRIGHTS CONSIDERED SALARY
When the persons who make the payments referred to in article 142(XI) of this Law pay the taxpayer, in
addition, income of the types set forth in Chapter I of this Title, the income referred to in the aforementioned
(XI) shall be considered salary income for the purposes of this Title.
WITHHOLDING ON CONDOMINUMS AND TRUST BENEFICIARIES
In the case of the income referred to in article 142(XIII) of this Law, the persons who administrate the real
property in question shall withhold from the payments that they make to condominium owners or trust
beneficiaries the amount thereof multiplied by the top rate applicable to the excess over the lower limit set
forth in the tax rate schedule of article 152 of this Law. Said withholdings shall be paid in conjunction with
those indicated in article 96 of this Law and shall be definitive payments.
The taxpayers referred to in the preceding paragraph may elect to include the income referred to therein in
their remaining income. In this case, they shall include, as an item of gross income, the amount of income
effectively obtained, once the corresponding withholding has been made, multiplied by 1.4286. Individuals
may credit, against the tax determined in the annual tax return, the amount resulting from multiplying the top
rate applicable to the excess over the lower limit set forth in the tax rate schedule in article 152 of this Law
to the gross income determined in accordance with this paragraph.
WITHHOLDING ON ROYALTIES PAID BY LEGAL ENTITIES
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When the royalties referred to in article 142(XVII) of this Law are obtained from payments made by the legal
entities referred to in Title II thereof, said legal entities shall withhold income tax by applying the top rate
applicable to the excess over the lower limit set forth in the tax rate schedule of article 152 of this Law to the
amount of the payment made, without any deductions. This shall be an estimated tax payment. Said
withholding must be paid in conjunction with those indicated in article 96 of this Law, as applicable. The
party who makes the payment must provide the taxpayer a tax invoice, bearing the amount of the
transaction and the tax withheld.
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sustained on said derivatives for the corresponding year, and up to the amount of the gains. The taxpayer
may credit any tax withheld in the year against the tax payable. The provisions of this paragraph shall also
apply to the financial transactions referred to in article 21 of this Law.
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PAYMENTS TO THIRD PARTIES AND FOREIGN RESIDENTS
VII. The obligations set forth in this Law regarding withholding and payment of tax on account of third parties
shall be complied with, or, as applicable, a copy of the proof of payment of said taxes shall be obtained from
said third parties. Payments made abroad may only be deducted if the taxpayer provides the information
required under article 76(VI) of this Law.
DEDUCTION OF WAGES PAID
Payments that are also income under the Title IV, Chapter I, of this Law may be deducted provided that the
compensation, the applicable withholdings and the deduction of the local tax on wages and in general on
the provision of independent personal services are described in a tax invoice; the obligations set forth in
article 99(I), (II) and (V) of this statute are complied with, as well as any applicable provisions on the
employment subsidy; and the taxpayer duly registers his employees in the Mexican Social Security Institute
when so required in accordance with the laws governing Social Security.
TERM TO MEET REQUIREMENTS, DATE IN INVOICES AND INFORMATION RETURNS
VIII. When the corresponding transactions are conducted or no later than on the last day of the year, the
requirements set forth for each particular deduction in this Law must be complied with. The tax invoice
referred to in the first paragraph of (IV) of this Article must be obtained no later than the day on which the
taxpayer is required to file an annual tax return. Further, such tax invoice must bear a date that corresponds
to the year in which the deduction is claimed. The information returns referred to in articles 76 of this statute
and 32(V) and (VII) of the Value Added Tax Law shall be filed within the periods of time set forth in said
article 76, and as the date in question, the taxpayer must have the corresponding tax invoice.
AMOUNTS EFFECTIVELY SPENT IN THE YEAR
IX. The amounts must have been effectively spent in the year in question. Effectively spent shall mean
paid in cash, through transfers from accounts at banking institutions or brokerage houses, or with services
or with goods other than negotiable instruments. Payments by check shall be considered effectively made
on the date on which the check is cashed or when the taxpayer transfers it to a third party, except when said
transfer is carried out solely for collection purposes. Effectively spent shall also mean when the taxpayer
delivers negotiable instruments subscribed by another person. Payments are also understood to be
effectively made when the creditors interest is fulfilled through any form of discharge of the obligations.
PAYMENTS BY CHECK
When payments referred to in the preceding paragraph are made by check, the deduction shall be claimed
in the year in which the check is cashed, provided that not more than four months have elapsed between
the date indicated on the tax invoice and the date on which the check is effectively cashed, except when
both dates correspond to the same year.
The taxpayers subscription of negotiable instruments other than checks shall be deemed to be a guarantee
of payment of the price or consideration agreed for the entrepreneurial activity or for the professional
service. In the case of the subscription of such instruments, payment shall be understood to have been
received when the payment is effectively made, or when the taxpayer transfers the negotiable instruments
to a third party, except when said transfer is carried out solely for collection purposes.
INTERESTS PAID IN PRIOR YEARS
Interest paid in the years prior to that in which leased property begins to be used may be deducted in
accordance with the following method:
The interest paid in each month of each unproductive year shall be added, and, if applicable, the deductible
annual inflation adjustment referred to in article 44 of this Law shall be reduced from the result. The sum
obtained for each nonproductive year shall be updated by using the update factor for the period from the
last month of the first half of the year in question through the last month of the first half of the year in which
the property or properties in question began to yield income.
The interest updated for inflation for each year, calculated in accordance with the preceding paragraph,
shall be added and the result thus obtained shall be divided by the number of unproductive years. The
quotient obtained shall be added to interest expenses in each productive year and the result thus obtained
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shall be the amount of interest deductible in the year in question.
In the years following the first productive year, the quotient obtained in accordance with the preceding
paragraph shall be updated from the last month of the first half of the year in which income began to be
earned through the last month of the first half of the year in which interest is deducted. This procedure shall
be performed until all said interest is amortized.
ACQUISITION COST OR INTERESTS AT MARKET RATES
X. The declared acquisition cost or the interest on credits received by the taxpayer shall be consistent with
the market. If the cost or interest exceeds the market value, the excess shall not be deductible.
NO TAX EFFECTS FOR WRITE-UPS
XI. In the case of investments, there is to be no tax consequences for write-ups.
ACQUISITION OF IMPORTED GOODS
XII. In the case of the acquisition of imported goods, it must be demonstrated that the legal requirements for
the definitive import of the goods were complied with. The amount of such acquisitions shall be the amount
declared on the importation.
DEDUCTION OF EXCHANGE LOSSES WHEN ACCRUED
XIII. Exchange losses from debts or credits denominated in a foreign currency shall be deducted as they are
accrued.
The amount of the annual inflation adjustment deductible in accordance with the preceding paragraph shall
be calculated in accordance with article 44 of this Law.
VAT CHARGE
XIV. When a payment that is being deducted is made to a taxpayer who is subject to value added tax, said
tax must be expressly and separately charged in the tax invoice.
WAGES TO EMPLOYEES ENTITLED TO EMPLOYMENT SUBSIDY
XV. In the case of payments of salaries and in general payments to employees providing a dependent
personal service and who are entitled to an employment subsidy, the amount of the subsidy corresponding
to the taxpayers employees must be effectively paid and the taxpayer must comply with the requirements
referred to in any provisions that govern the employment subsidy, unless otherwise is set forth in the
aforementioned provisions.
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INVESTMENTS IN OR LEASES OF AUTOMOBILES
III. In no event shall investments in automobiles or payments for the temporary use and enjoyment of
automobiles be deductible.
DONATIONS AND REPRESENTATION EXPENSES
IV. Donations and representation expenses.
PENALTIES AND INDEMNITIES
V. Penalties, compensation for damages and losses or contractual penalties. Compensation for damages
and losses and contractual penalties may be deducted when the taxpayer is legally required to pay these
items because they stem from created risks, strict liability, acts of God, events of force majeure, or acts
committed by third parties, except, in the case of a contractual penalty, if the damages or the underlying
cause of the contractual penalty are attributable to the taxpayer.
WAGES, COMMISSIONS AND FEES PAID BY LESSORS OF IMMOVABLE PROPERTY
VI. The amount of the total salaries, commissions, and fees paid by persons who grant the temporary use or
enjoyment of real property in a calendar year in excess of 10% of the annual income earned by said
persons from granting the temporary use or enjoyment of real property.
INTERESTS
VII. Interest paid by the taxpayer corresponding to investments from which he is not deriving gross income
on which this deduction may be claimed.
In the case of capital borrowed to acquire investments or to carry out expenses or when the investments or
the expenses are made on credit and said investments or expenses are not deductible for the purposes of
this Law, the interest on the capital borrowed or the credit transactions shall not be deductible, either. If the
investments or expenses are partially deductible, the interest shall only be deductible in the same ratio as
are the investments or expenses, including interest calculated in accordance with article 44 of this Law.
For the purposes of this section, payment of interest is considered to mean the amounts paid for taxes,
fees, or any other item for the account of the person who earns the interest, or any other payment, in cash
or in kind, made for any item to the person who receives the interest, provided that said payment derives
from the same contract that gave rise to the interest payment.
VAT AND SPECIAL TAX ON PRODUCTION AND SERVICES
VIII. Payments of value added tax or of the special tax on production and services that the taxpayer has
made or that the taxpayer has been charged by other taxpayers. The provisions of this section shall not
apply if the taxpayer is not entitled to credit the aforementioned taxes that have been charged to him or that
the taxpayer paid on the importation of goods or services corresponding to expenses or investments that
are deductible under this Law.
Nor shall be the value added tax or the special tax on production and services charged to or paid by the
taxpayer as a result of the importation of goods or services be deductible if the expenditure for which the
charge or payment was made is not deductible under this Law.
LOSSES FROM NONDEDUCTIBLE EXPENSES
IX. Losses derived from the disposition of, as well as from acts of God or events of force majeure affecting,
investment in assets not deductible under this Law.
LOSSES FROM DISPOSITIONS OF SECURITIES
Nor shall be losses stemming from the disposition of securities be deductible, provided that they are of the
type that are placed among the general investing public, in accordance with the general rules issued for
said purpose by the Tax Administration Service.
EXPENSES IN NONDEDUTIBLE INVESTMENTS
X. Expenses that are made with regard to nondeductible investments in accordance with this Title.
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LOSSES FROM DERIVATIVES EXECUTED WITH RELATED PARTIES
XI. Losses sustained on derivative transactions and the transactions referred to in article 21 of this Law,
when such transactions are carried out with individuals or legal entities, either Mexican residents or foreign
residents, that are related parties under article 85 of this Law, when the agreed terms do not correspond to
those that would have been agreed by independent parties in comparable transactions.
CONSUMPTIONS IN BARS AND RESTAURANTS
XII. Consumption at bars or restaurants. Nor shall expenses at company cafeterias that, by their very
nature, are not available to all of the enterprises employees be deductible; and even if such cafeterias are
available to all employees, the expenses shall not be deductible if they exceed an amount equivalent to the
daily general minimum wage for the taxpayers geographic area for each employee who uses the cafeterias
and for each day on which the services are provided plus the recovery fee paid by employees for using such
cafeterias.
EXPENSES RELATED TO CAFETERIA SERVICES
The limit set forth in this section shall not include expenses related to the provision of cafeteria service, such
as for laboratories or specialists to study the quality and suitability of meals served at the cafeterias referred
to in the preceding paragraph.
PAYMENTS FOR CUSTOMS SERVICES
XIII. Payments for customs services, other than the fees of customs brokers and the expenses incurred by
said brokers or the legal entities established by them pursuant to the Customs Law.
INITIAL PAYMENTS FOR GOODS NOT TRADED ON RECOGNIZED MARKETS
XIV. Initial payments for the right to acquire or sell goods, currencies, shares or other securities not traded
on recognized markets, according to the provisions of Article 16-C of the Federal Fiscal Code, when said
right has not been exercised, provided that the contracting parties are related parties in accordance with
article 179 of this Law.
PECUNARY RIGHTS ON BORROWED INSTRUMENTS
XV. Reimbursement by the borrower of an amount equivalent to the pecuniary rights of the instruments
borrowed.
SHARE IN PROFITS
XVI. Amounts that constitute a sharing of the taxpayers profits or that are contingent on the obtainment of
profits, whether they correspond to employees, members of the Board of Directors, debenture holders, or
others.
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DEDUCTION IN CASES OF TRANSFER OF OWNERSHIP OR THE GOODS BECOMING USELESS
If a taxpayer transfers ownership of the goods, or if the goods become useless for obtaining income, the
taxpayer shall deduct, in the calendar year in which this occurs, the portion not yet deducted. If the goods
become useless for obtaining income, the taxpayer shall file a notice to the tax authorities and maintain one
peso non-deducted in his records. The provisions of this paragraph shall not apply to the cases set forth in
article 31 of this Law.
AMOUNT OF THE INVESTMENT
The amount of the investment shall be calculated in accordance with Article 31, paragraph two, of this Law.
If the amount of the investment is higher than the market value of the goods or the appraisal that the tax
authorities carry out themselves or order to be carried out, the lower value shall be taken for the purposes of
the deduction.
UPDATE OF DEDUCTION
The deduction of the investments referred to in this article shall be updated in accordance with the seventh
paragraph of Article 31 of this Law, and paragraphs one, five, six, and eight of the same Article shall be
applied as well.
ESTIMATED COST OF THE LAND
When the cost of the structures cannot be disaggregated from the cost of the real property, the cost of the
land shall be equal to 20% of total cost.
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entitled, the following personal deductions:
MEDICAL FEES AND HOSPITAL EXPENSES
I. Payment for medical and dental fees as well as hospital expenses incurred by the taxpayer for himself, his
spouse, his common-law spouse, and his lineal ascendants or descendants, provided that said persons do
not receive, during the calendar year, income equal to or greater than the annual general minimum wage in
effect in the taxpayers geographic area; and such payments are made by check with specified payee of the
taxpayer, wire transfer of funds from a taxpayers account in a member institution of the financial system or
in the entities authorized for that purpose by Mexicos Central Bank, credit card, services card or debit card.
The tax authorities may release from the obligation to pay for expenses using the electronic means
described in the preceding paragraph, when made in rural zones or localities with no financial services.
FUNERAL EXPENSES
II. The portion of funeral expenses that does not exceed the annual general minimum wage in effect in the
taxpayers geographic area for funerals held for the persons indicated in the preceding section.
DONATIONS
III. Donations that are neither onerous nor remunerative and that meet the requirements set forth in this Law
and in the relevant general rules set forth by the Tax Administration Service and that are given as described
below:
a) To the Federal Government, the states, or the municipalities, to their decentralized entities that pay tax in
accordance with Title III of this Law, as well as to international organizations in which Mexico participates as
a member in good standing, provided that the purposes for which they were created correspond to the
activities for which it is possible to obtain an authorization to receive tax deductible donations.
b) To the entities referred to in the sixth paragraph of article 82 of this Law.
c) To the entities referred to in articles 79(XIX) and 82 of this Law.
d) To the legal entities referred to in article 79(VI), (X), (XI), (XX) and (XXV) of this Law that comply with the
requirements set forth in article 82 thereof.
e) To associations and partnerships governed by civil law that provide scholarships and comply with the
requirements of article 83 of this Law.
f) To company educational programs.
AUTHORIZED DONEES INFORMATION PUBLISHED IN THE FEDERAL REGISTER AND THE TAX
AUTHORITYS WEBPAGE
The Tax Administration Service shall make available the information of the institutions referred to in (b), (c),
(d) and (e) of this section that meet the aforementioned requirements by publishing it in the Federal
Register and posting it on its webpage.
DONATIONS TO TEACHING INSTITUTIONS
Donations to educational institutions shall be deductible provided that the institutions are public
establishments, or, if they are privately owned, that they have authorization under the General Law of
Education or that the studies conducted therein are recognized under said Law as valid for official
purposes. In addition, the donations shall be used in investments, scientific research, technological
development, or for administrative expenses for up to the amount indicated in the Regulations of this Law.
In no event may such donations be remunerative or onerous, pursuant to the general rules issued by the
Ministry of Education; and the institutions may not have distributed remainders to their partners or members
for the last years five years.
DEDUCTIBLE DONATIONS
The amount of the donations referred to in this section shall be deductible for up to a maximum of 7% of the
gross income on which the taxpayers income tax is calculated in the year immediately preceding that in
which the deduction is claimed, before the deductions referred to in this article are claimed. The deduction
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of donations in favor of the Federal Government, the states, the municipalities, or to their decentralized
entities, shall not exceed an amount equivalent to 4% of gross income described in this paragraph, and in
no case the limit to the deduction of these donations and those made in favor of other authorized donees
may exceed said 7%.
DONATIONS BETWEEN RELATED PARTIES
In the case of donations between related parties, the donee shall not enter into agreements with the related
party who granted the donation for the provision of services, the disposition of property or the temporary use
and enjoyment of goods. Otherwise, the donor shall include in gross income the amount of the deduction
claimed in connection with the donation for purposes of the calculation of income tax, updated for inflation
from the date in which the deduction was claimed through the moment in which it is included in gross
income.
REAL INTERESTS PAID FOR MORTGAGE CREDITS FOR THE ACQUISITION OF DWELLINGS
IV. The real interest effectively paid in the year on mortgage credits for the acquisition of dwellings,
contracted with institutions that are members of the financial system, provided that the total amount of the
credits for the relevant real estate does not exceed seven hundred fifty thousand investment units. For such
purposes, real interest shall be the amount of interests effectively paid in the year that exceed the annual
inflation adjustment for the same year, which shall be determined by applying the provisions of the third
paragraph of article 134 of this statute, as applicable, for the relevant period.
Member institutions of the financial system, referred to in the preceding paragraph, shall issue a tax invoice,
bearing the amount of real interest paid by the taxpayer in the relevant year, in accordance with the rules
issued by the Tax Administration Service.
COMPLEMENTARY RETIREMENT CONTRIBUTIONS, CONTRIBUTIONS
RETIREMENT PLANS AND CONTRIBUTIONS TO THE SUBACCOUNT
CONTRIBUTIONS
TO PERSONAL
OF VOLUNTARY
V. Complementary retirement contributions made directly into the complementary contributions retirement
sub-account in accordance with the Retirement Savings Systems Law or to personal retirement plan
accounts, as well as voluntary contributions made to the voluntary contributions sub-account, provided, in
the latter case, that said contributions fulfill the permanence requirements set forth for retirement plans in
accordance with paragraph two of this section. The amount of the deduction referred to in this section shall
be up to 10% of the taxpayers gross income in the year and shall not exceed five times the yearly general
minimum wage in the taxpayers geographic area.
CONCEPT OF PERSONAL RETIREMENT PLANS
For the purposes of the preceding paragraph, personal retirement plans shall be deemed to be investment
accounts or instruments established for the sole purpose of receiving or administrating funds to be used
exclusively when the holder of the investment account or instruments reaches the age of 65 years or in the
case of the holders invalidity or disability to perform compensated work in accordance with the Social
Security laws. Such accounts or instruments shall be administrated in an individualized account by
insurance companies, banking institutions, brokerage houses, retirement fund management companies or
managing companies of mutual funds authorized to operate in Mexico and must obtain prior authorization
from the Tax Administration Service.
EARLY WITHDRAWALS
When funds invested in complementary contributions retirement sub-accounts, in voluntary contributions
sub-accounts, or in personal retirement plans, as well as the earnings accrued in such sub-accounts are
withdrawn before the requirements set forth in this section are complied with, the withdrawal shall be
considered includible in gross income in accordance with Chapter IX of this Title.
HOLDERS DECEASE
In the event of the death of the personal retirement plan account holder, the appointed beneficiary or the
heir shall be required to include in gross income for the year the withdrawals he makes from the investment
account or instrument, as the case may be.
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MEDICAL INSURANCE PREMIUMS
VI. Premiums on medical insurance policies complementary to or independent from the health services
furnished by public social welfare institutions, provided that the beneficiary is the taxpayer, his spouse, his
common-law spouse, or his direct ascendants or descendants.
MANDATORY SCHOOL TRANSPORTATION
VII. School transportation expenses for the taxpayers lineal descendants when such transportation is
mandatory in accordance with applicable legal provisions of the area where the school is located or when
said expense is included in the tuition of all the students at the school in question. For such purposes, the
amount corresponding to the payment of school transportation shall be disaggregated in the tax invoice.
Further, such payment shall be made by a taxpayers check with specified payee, wire transfer of funds
from a taxpayers account in a member institution of the financial system or in an entity authorized by
Mexicos Central Bank, credit card, debit card or service card.
The tax authorities may waive the requirement for expenses to be paid with the means described in the
preceding paragraph, when such expenses are incurred in localities or rural areas without financial
services.
LOCAL TAX PAID
VIII. Payments of local tax on salary income and in general for the provision of dependent personal services
provided that the rate of said tax does not exceed 5%.
GEOGRAPHIC AREA
The taxpayers geographic area shall be the location of his residence through 31 December of the year in
question. The geographic area of persons who have a domicile outside of Mexican territory shall be Mexico
City.
INVOICES
For the deductions referred to in (I) and (II) to be valid, the taxpayer shall be required to prove through tax
invoices that the relevant amounts were effectively paid in the relevant calendar year to institutions or
persons residing in Mexico. If a taxpayer recovers a portion of such amounts, he shall only deduct the
unrecovered difference.
NOT APPLICABLE REQUIREMENTS
The requirements for the deductions set forth in the Chapter X of this Title shall not be applicable to the
personal deductions referred to in this article.
The amount of the deductions that may be claimed by taxpayers pursuant to this article and article 185 shall
not exceed the lesser between four annual minimum wages for the taxpayers geographic area and 10% of
the taxpayers total income, including those items not subject to payment of tax. The provisions of this
paragraph shall not apply to donations described in (III) hereof.
Upper limit
Fixed amount
Percentage to be applied
on the excess above the
lower limit
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0.01
5,952.84
0.00
1.92%
5,952.85
50,524.92
114.29
6.40%
50,524.93
88,793.04
2,966.91
10.88%
88,793.05
103,218.00
7,130.48
16.00%
103,218.01
123,580.20
9,438.47
17.92%
123,580.21
249,243.48
13,087.37
21.36%
249,243.49
392,841.96
39,929.05
23.52%
392,841.97
750,000.00
73,703.41
30.00%
750,000.01
1,000,000.00
180,850.82
32.00%
1,000,000.01
3,000,000.00
260,850.81
34.00%
3,000,000.01
And above
940,850.81
35.00%
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Foreign residents who earn income in cash, in kind, in services or in credit, including income determined
through presumptions by the tax authorities in accordance with articles 58-A of the Federal Fiscal Code and
11, 179 and 180 of this Law, are required to pay income tax in accordance with this Title when said income
arises from sources of wealth located in Mexican territory and they do not have a permanent establishment
in Mexico or when they have such an establishment and income is not attributable thereto. Payments made
as a result of the acts or activities referred to in this Title that benefit the foreign resident, including
payments that resulted in decreased expenditures for him, are considered to be part of the income
mentioned in this paragraph and therefore, the provisions governing the items of income that originated
such payments shall be applied thereto.
INCOME EARNED THROUGH TRUSTS
When foreign residents earn income referred to in the preceding paragraph through a trust created in
accordance with Mexican law in which they are trust beneficiaries or settlors, the trustee shall calculate the
taxable amount of said income for each foreign resident under this Title and withhold the tax that would
have been applicable if they had earned said income directly. In the case of trusts that issue instruments to
be offered to the general investing public, the persons required to withhold the tax on the income derived
from said instruments shall be the custodians of said securities.
INCOME TAX PAID ON THE FOREIGN RESIDENTS ACCOUNT
When a person who makes any of the payments referred to in this Title covers, for the account of the
taxpayer, the tax corresponding to the latter, the amount of said tax shall be considered income of the types
covered in this Title and the provisions applicable to the relevant type of income for which the tax is paid
shall apply thereto.
WITHHOLDING EVEN WHEN THERE IS NO PAYMENT
When in accordance with this Title, the tax is required to be paid through a withholding, the withholding
party shall be required to pay an amount equivalent to that which such withholding party should have
withheld on the date on which the obligation becomes due or at the time the payment is made, whichever
occurs first. In the case of considerations denominated in a foreign currency, the tax shall be paid by
converting the consideration amount to Mexican currency at the moment when the consideration is due or is
paid. For the purposes of this Title, any other act by which the debtor discharges the obligation in question
shall have the same effect as a payment.
DEFINITIVE TAX
The tax due under this Title shall be considered definitive and shall be paid by filing a tax return at the
authorized offices.
INVESTMENTS BY PENSION AND RETIREMENT FUNDS
Income tax is not required to be paid under this Title in the case of income from interest, capital gains, or the
granting of the temporary use or enjoyment of land or structures attached thereto located in Mexican
territory derived from investments made by pension and retirement funds established pursuant to the laws
of the country in question, provided that said funds are the effective beneficiaries of such income and such
income is exempt from income tax in that country.
CAPITAL GAINS
For the purposes of this article, capital gains shall be understood to be income from the disposition of
shares whose value comes in more than 50% from land and the structures affixed thereto, located in
Mexico, as well as income from the disposition of said goods.
LAND AND CONSTRUCTIONS
The preceding paragraph shall apply to the land and the structures affixed thereto, provided that these
goods have been granted for temporary use or enjoyment by the aforementioned pension and retirement
funds for a period of not less than four years prior to the disposition thereof.
When pension and retirement funds participate as shareholders in legal entities whose total income derives
at least in 90% from disposing of or granting the temporary use or enjoyment of land and the structures
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affixed thereto, located in Mexico, and from the disposition of shares whose value derives in more than 50%
from land and the structures affixed thereto, located in Mexico, said legal entities shall be exempt in
proportion to the shareholding or participation of the pension and retirement funds in the legal entity,
provided that the conditions set forth in the preceding paragraphs are complied with. This paragraph shall
also apply when said funds participate as partners in a partnership.
LEGAL ENTITIES HAVING PENSION AND RETIREMENT FUNDS AS SHAREHOLDERS
For purposes of the calculation of the 90% described in the preceding paragraph, legal entities who have as
shareholders, foreign pension and retirement funds that meet the requirements set forth in this article, may
exclude from total income, the annual inflation adjustment and the exchange gain derived exclusively from
debts for the acquisition or to earn income from granting the temporary use and enjoyment of land and
structures affixed thereto, located in Mexico.
CASES IN WHICH THE EXEMPTION TO FUNDS IS INAPPLICABLE
The exemption set forth in the sixth paragraph of this article shall not apply when the agreed consideration
for the temporary use and enjoyment of real property is determined in accordance with the lessees income.
Notwithstanding the provisions of this article, foreign pension and retirement funds and legal entities that
have such funds as shareholders shall be required to pay income tax pursuant to this statute when they
earn income from the disposition or the acquisition of land and structures affixed thereto, registered as
inventory.
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residents, whether individuals or legal entities, that do not have a permanent establishment in Mexico, or
that do have such an establishment but such service is not related to said establishment, shall be exempt
from the tax set forth in this article, provided that the service provider remains in Mexican territory less than
183 calendar days, whether consecutive or otherwise, in a twelve-month period.
The provisions of the preceding paragraph shall not apply when the person who pays for the service has an
establishment in Mexican territory with which said service is related, even when the establishment is not a
permanent establishment in accordance with articles 3, 168 and 170 of this Law, as well as when the
person rendering a service for the aforementioned establishment receives complementary payments from
foreign residents, in consideration for services for which the service provider has earned income subject to
withholding tax in accordance with the third paragraph of this article.
A taxpayer who is required to pay the tax in accordance with this article shall be required to continue doing
so until he demonstrates that has remained outside of Mexican territory for more than 183 consecutive
days.
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The tax shall be calculated by applying the 25% rate to total income earned, without any deductions; and
such tax shall be withheld by the person who makes the payments if he is a Mexican resident or a foreign
resident with a permanent establishment in Mexico to which the service is related. Otherwise, taxpayers
shall pay the corresponding tax by filing a tax return at the authorized offices within fifteen days following the
day when income is earned.
Taxpayers who receive income of the types set forth in this provision shall be required to issue tax invoices.
EXEMPT INCOME
Fees income and in general fees for the provision of an independent personal service paid by foreign
residents, whether individuals or legal entities, that do not have a permanent establishment in Mexico, or
that do have such an establishment but the service is not related to said establishment, shall be exempt
from the tax set forth in this article, provided that the service provider remains in Mexican territory less than
183 calendar days, whether consecutive or otherwise, in a twelve-month period.
The provisions of the preceding paragraph shall not apply when the person who pays for the service has an
establishment in Mexican territory to which said service is related, even when the establishment is not a
permanent establishment in accordance with articles 3, 168 and 170 of this Law, as well as when the
person rendering a service for the aforementioned establishment receives complementary payments from
foreign residents, in consideration for services for which the service provider has earned income subject to
withholding in accordance with the third paragraph of this article.
A taxpayer who is required to pay the tax in accordance with this article shall be required to continue doing
so until he demonstrates that has remained outside of Mexican territory for more than 183 consecutive
days.
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LEASE OF PERSONAL PROPERTY
Regarding income from granting the temporary use and enjoyment of personal property, the source of
wealth shall be considered to be in Mexican territory when the personal property is used for commercial,
industrial, agricultural, livestock or fishing activities in Mexico. Unless demonstrated otherwise, the personal
property shall be presumed to be used in Mexico in the aforementioned activities when the party who uses
or enjoys the property is a Mexican resident or a foreign resident with a permanent establishment in
Mexican territory. If the personal property is used for activities other than those mentioned above, when the
personal property is physically delivered in the country.
INCOME TAX WITHHOLDING
For purposes of the preceding paragraph, the tax shall be calculated by applying the 25% rate on total
income earned, without any deductions, and the person that makes the payment shall withhold the tax. In
the case of containers, trailers and semi-trailers that are temporarily imported for up to a month pursuant to
the Customs Law, as well as airplanes and ships that have a Federal Government concessions or permit for
commercial operation, the tax shall be calculated by applying the 5% rate, provided that said goods are
used directly by the lessee to transport passengers or goods.
EXCEPTION TO FINANCIAL LEASE AND ROYALTIES
The provisions of the two preceding paragraphs shall not apply to the personal property referred to in
Articles 166 and 167 of this Law.
AFFREIGHTMENT CONTRACTS
Regarding income derived from contracts of affreightment, the source of wealth shall be considered to be in
Mexican territory when the chartered ships carry out coastal shipping in Mexican territory. The tax shall be
calculated by applying the 10% rate on total income earned, without any deductions, and the person that
makes the payments shall withhold the tax.
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The tax shall be calculated by applying the 25% rate to all income earned by the foreign resident effective
beneficiary, without any deductions, and if the client is a Mexican resident or a foreign resident with a
permanent establishment in Mexico, the client shall withhold the tax; otherwise, taxpayers shall pay the
corresponding tax by filing a tax return at the authorized offices within fifteen days after income is earned.
Taxpayers who have a representative in Mexico who meets the requirements set forth in article 174 of this
Law may elect to apply to the profits they obtain, the top rate applicable to the excess over the lower limit set
forth in the tax rate schedule described in article 152 of this Law, provided that said representative has the
audited financial statements or those described in the informative return on the tax situation available to the
tax authorities.
The income or the profit obtained as described in the preceding paragraph shall be calculated as follows:
the value of the real properties of the taxpayer and of the taxpayers related parties located in Mexico shall
be divided by the value of all of the real properties of the taxpayer and the taxpayers related parties used for
the provision of such service. The resulting quotient shall be multiplied by the foreign residents worldwide
income or worldwide profit, before payment of income tax, as applicable, derived from the provision of the
time-sharing tourism services.
For the purposes of this article, the value of the real properties referred to in the preceding paragraph shall
be the value indicated in the audited financial statements or those described in the informative return on the
tax situation of the taxpayer and the taxpayers related parties through the end of the immediately preceding
year.
INCOME TAX PAYMENT
The taxpayer shall pay the tax upon the profits referred to in this article by filing a tax return at the authorized
offices within fifteen days after income is earned.
When the person who makes the payments referred to in this article is a foreign resident, the taxpayer shall
pay the tax by filing a tax return at the authorized offices within 15 days after income is earned.
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Code regarding transactions conducted in the immediately preceding year.
DISPOSITIONS RECORDED IN PUBLIC DEEDS
Regarding dispositions recorded in notarial instruments, no representative shall be required in Mexico in
order to make the election referred to in the preceding paragraph.
DIFFERENCE BETWEEN APPRAISAL AND PRICE
When the tax authorities practice an appraisal and it exceeds by more than 10% the agreed consideration
for the disposition, the excess shall be considered income of the foreign resident purchaser. The tax shall
be calculated by applying the 25% rate on the entire excess without any deductions, and the taxpayer shall
pay this tax by filing a return at the authorized offices within fifteen days after notice is served by the tax
authorities.
FREE ACQUISITIONS
In the case of acquisitions for free, the tax shall be calculated by applying the 25% rate to the total appraised
value of the real property, without any deductions; said appraisal must be practiced by a person authorized
by the tax authorities. Income received as donations referred to in article 93(XXIII)(a) of this Law shall not
be subject to payment of said tax.
INCOME TAX FOR SALES IN INSTALLMENTS
When in dispositions recorded in notarial instruments, it is agreed that the payment will be made in
installments over a term of more than 18 months, the tax that is assessed may be paid on the portion of the
consideration due and payable, in proportion to the pro-rata share corresponding to each installment,
provided the tax liability has been secured. The tax shall be paid by the fifteenth day of the month following
that on which each installment payment is due and payable.
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ELECTION AVAILABLE WHEN THE TAXPAYER HAS A REPRESENTATIVE IN MEXICO
Taxpayers who have a representative in Mexico who meets the requirements set forth in article 174 of this
Law and are foreign residents whose income is not subject to a preferential tax regime in accordance with
this Law or who are not residents of a country governed by a territorial taxation system may elect to apply,
to the gain obtained, the top rate applicable to the excess over the lower limit set forth in the tax rate
schedule in article 152 of this Law. For these purposes, the gain shall be calculated in accordance with Title
IV, Chapter IV, of this Law, and the losses referred to in the last paragraph of article 121 thereof may not be
offset. In this case, the representative shall calculate the tax and pay it by filing a tax return at the office
competent in the taxpayer's domicile within fifteen days after income is earned.
ACCOUNTANTS REPORT
Taxpayers that make the election referred to in the preceding paragraphs shall file a report prepared by a
public accountant registered with the tax authorities in accordance with the rules set forth in the Regulations
of this Law and the general rules issued by the Tax Administration Services, indicating that the annual tax
was calculated according to tax provisions. A copy of the appointment of the legal representative shall be
included as an annex to the report.
TRANSACTIONS WITH RELATED PARTIES
For the purposes of the preceding paragraph, in the case of transactions between related parties, in the
report, the public accountant shall indicate the accounting value of the shares being transferred and the
treatment given to the elements referred to in article 179(I)(e) of this Law for determining the sale price of
the shares disposed of.
If the public accountant fails to comply with the provisions of this article, he shall be subject to the penalties
set forth in the Federal Fiscal Code.
DISPOSITIONS OF SHARES THROUGH STOCK EXCHANGES
In the case of income earned from disposing of shares issued by Mexican corporations through the Mexican
Stock Exchange, operating under concession, or derivatives markets recognized, pursuant to the Stock
Exchange Act, and provided that said shares are of the type placed among the general investing public in
accordance with said general rules, or shares issued by foreign corporations, quoted in such stock
exchanges or derivatives markets, or instruments representing those shares or stock indexes that are
disposed of in such stock exchanges or derivatives markets, including those dispositions performed
through capital derivatives, described in article 16-A of the Federal Fiscal Code, referred to shares traded in
stock exchanges operating under concession or derivatives markets recognized pursuant to the
aforementioned Act or to stock indexes representing such shares, the tax shall be paid through a 10%
withholding upon the gain from the disposition of such shares or securities. For these purposes, the gain
from the disposition of shares or securities shall be calculated for each transaction, using the procedure set
forth in the third and fourth paragraphs of article 129 of this statute, as applicable, without offsetting the
losses described in the ninth paragraph of such article.
INCOME TAX WITHHOLDING
For purposes of the tax described in the preceding paragraph, the financial intermediary in the securities
market shall withhold and pay the tax at the authorized offices no later than the 17th day of the month
following the month in which the disposition is performed. Payment of the tax in connection with a
disposition shall not be required when the taxpayer is a resident of a country that has a treaty to avoid
double taxation in force. For these purposes, the taxpayer shall deliver to the financial intermediary a
document in writing, attesting under oath that he is a resident for purposes of the treaty; and provide his
registration number or tax identification issued by the competent tax authority. Whenever a foreign resident
fails to deliver such information, the intermediary shall withhold pursuant to the preceding paragraph.
The provisions of paragraphs ninth and tenth shall not apply to the cases described in the last paragraph of
article 129 of this statute. In such cases, the top rate applicable to the excess over the lower limit set forth in
the tax rate schedule in article 152 of this Law shall be applied upon the gain obtained, which shall be
calculated in accordance with the provisions of Chapter IV of Title IV of this statute, without offsetting the
losses described in the last paragraph of article 121 thereof.
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DISPOSITION OF SHARES OF CAPITALS MARKET SECURITIES MUTUAL FUNDS
In cases of disposition of shares issued by capitals market securities mutual funds, the tax shall be paid
through withholding that shall be performed by the distributor of shares of mutual funds, applying the 10%
rate over the gain derived from such disposition. The calculation of the gain from the disposition of shares
issued by capitals market securities mutual funds shall be performed pursuant to the provisions of article 88
of this statute, without offsetting the losses described in the sixth paragraph of such article. Withholding and
payment of the tax shall be considered definitive with regard to the gain derived from such disposition. In the
case of capitals market securities mutual funds described in article 79 of this statute, the provisions of article
166 thereof shall be abided by.
DIFFERENCE BETWEEN APPRAISAL AND PRICE
In the case of acquisitions by foreign residents of shares or securities that represent the ownership of
goods, referred to in paragraph one of this article, the tax authorities may practice an appraisal of the
transaction in question and if the value indicated thereby is more than 10% above the agreed consideration
for the disposition, the entire difference shall be considered the purchaser's income and the acquisition cost
of the goods shall be increased by the entire aforementioned difference. The tax shall be calculated by
applying, on the entire difference without any deductions, the top rate applicable to the excess over the
lower limit set forth in the tax rate schedule in article 152 of this Law; and the taxpayer shall pay the tax by
filing a tax return at the authorized offices within fifteen days following the serving of notice by the tax
authorities, with the corresponding update for inflation and interest on unpaid taxes. This paragraph shall be
applicable regardless of the transferor's residence.
FREE ACQUISITIONS
In the case of acquisitions for free, the tax shall be calculated by applying the 25% rate to the total appraised
value of the shares or ownership interest, without any deduction. Said appraisal shall be practiced by a
person authorized by the tax authorities. Income received as donations referred to in article 93(XXIII)(a) of
this Law shall not be subject to tax.
SECURITIES PLACED AMONG THE GENERAL PUBLIC
In accordance with the relevant general rules issued by the Tax Administration Service, when securities of
the type placed among the general investing public are transferred off of the Stock Exchange, the tax
authorities shall consider the stock-market quote of the last event of the day of the disposition, rather than
the appraised value.
CORPORATE REORGANIZATIONS
In the case of reorganizations of corporations that belong to a group, the tax authorities may authorize the
deferral of the tax payment for the gain on the disposition of shares within said group. In these cases, the
deferred tax shall be paid within 15 days following the date on which a subsequent disposition is carried out
resulting in the exclusion from the group of the shares referred to in the corresponding authorization, and
the payment shall be updated from the time it was incurred until it is made. The disposition value of the
shares that must be considered to calculate the gain shall be the value that would have been used between
independent parties in comparable transactions or the value indicated by an appraisal practiced by the tax
authorities.
The authorizations referred to in this article shall only be granted before the reorganization, and provided
that the consideration stemming from the disposition consists solely of an exchange of shares issued by the
corporation that purchases the shares being transferred, and provided that the purchaser and transferor are
not subject to a preferential tax regime and do not reside in a country with which Mexico does not have a
broad agreement for the exchange of tax information. If the transferor or purchaser resides in a country with
which Mexico does not have a broad agreement for the exchange of tax information, the authorization
referred to in this paragraph may be obtained provided that the taxpayer submits a document in writing,
evidencing that he has authorized the foreign tax authorities to give the Mexican authorities information on
the transaction for tax purposes. An authorization issued in accordance with this paragraph shall become
ineffective if the aforementioned information is requested from the country in question and is not provided.
Similarly, the authorizations referred to in this paragraph may be contingent on compliance with the relevant
requirements set forth in the Regulations of this Law.
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In the case of the aforementioned restructurings, the taxpayer shall name a legal representative in
accordance with this Title and submit to the tax authorities a report prepared by a public accountant
registered with said authorities in accordance with the Regulations of this Law and the general rules issued
by the Tax Administration Service, indicating that the tax was calculated according to tax provisions. In
addition, the requirements set forth in the Regulations of this Law shall be complied with.
DEFINITION OF GROUP
For the purposes of the preceding paragraphs, a group is considered to be a group of corporations in which
at least 51% of the voting shares representing the capital stock are directly or indirectly owned by a single
legal entity.
SUBMISSION OF DOCUMENTATION TO THE AUTHORITY
The authorized taxpayer shall also submit to the competent authorities supporting documentation
demonstrating that the shares covered by the authorization have not left the group of corporations. Said
information must be submitted in the first 15 days of March of each year following the date on which the
disposition was made, for all the years during which said shares remain within the group. If a taxpayer fails
to comply with this article by the required date, the shares shall be presumed to have left the group.
GAINS FROM DISPOSITIONS OF SHARES, TAX EXEMPT UNDER A TAX TREATY
Whenever in accordance with treaties entered into by Mexico to avoid double taxation, the gain obtained on
a disposition of shares as a result of a reorganization, restructuring, merger, spin-off, or similar transactions
cannot be taxed; and the foreign resident taxpayer does not comply with the requirements set forth by the
Regulations of this Law, this benefit shall be granted through a refund.
FOREIGN FINANCIAL ENTITIES
Foreign resident financing entities in whose capital the Federal Government participates through the
Ministry of Finance and Public Credit or Mexicos Central Bank, may pay income tax from a disposition of
shares or securities referred to in this article, based on the gain determined in accordance with the sixth
paragraph of this Article, provided that the provisions thereof are complied with.
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Artculo 163. CAPITAL DERIVATIVES
In the case of the capital derivatives referred to in article 16-A of the Federal Fiscal Code, the source of
wealth shall be considered to be in Mexican territory whenever one of the parties that enter into said
derivative transactions is a Mexican resident or a foreign resident with a permanent establishment in
Mexico, and the derivatives are referred to shares or securities of the types described in article 161 of this
Law.
INCOME TAX WITHHOLDING
For purposes of the preceding paragraph, the tax shall be determined by applying the 25% rate on the gain
earned by the foreign resident from the derivative in question, calculated in accordance with article 20 of
this Law. Withholding or payment of the tax, as applicable, shall be performed by the Mexican resident or
the foreign resident with a permanent establishment in Mexico, except in cases in which the transaction is
carried out through a Mexican resident brokerage house or bank, in which case the brokerage house or
bank shall withhold the corresponding tax.
For purposes of withholding and payment of the tax over the gains derived from capital derivatives, referred
to shares quoted in stock exchanges operating under concession, pursuant to the Stock Exchange Act, as
well as those referred to stock indexes, representing such shares, provided that they are executed in
recognized markets, described in article 16C(I) and (II) of the Federal Fiscal Code, the provisions of
paragraphs nine and ten of article 161 of this statute shall be abided by.
ELECTION AVAILABLE WHEN THE TAXPAYER HAS A REPRESENTATIVE IN MEXICO
Taxpayers referred to in the two first paragraphs of this article whose income is not subject to a preferential
tax regime and that have a representative in the country meeting the requirements set forth in article 174 of
this Law may elect to apply the top rate applicable to the excess over the lower limit set forth in the tax rate
schedule in article 152 of this Law on gains obtained in accordance with article 20 thereof, resulting from
transactions entered into during the month, reduced by deductible losses, as applicable, from other
transactions entered into during the month by the foreign resident with the same institution or person, in
accordance with the provisions of article 146 of this Law. In such cases, the representative shall calculate
the tax and pay it by filing a tax return at the office competent in his domicile no later than the seventeenth
day of the month following that in which the withholding is made.
Foreign residents may apply the provisions of the preceding paragraph even if the they do not have a legal
representative in the country, provided that the foreign residents counterpart in the transaction is a Mexican
resident and that the latter pays the corresponding tax and obtains the information needed to determine the
base on which the tax is calculated. To apply the provisions of this paragraph, the Mexican resident shall
inform the tax authorities in writing of his decision to voluntarily assume joint and several liability regarding
the tax.
Whenever the capital derivative is liquidated in kind with the delivery by the foreign resident of the shares or
securities referred to in the same derivative, the provisions of article 161 of this Law shall apply in
connection with the disposition of shares or securities included in said delivery. For the calculation of the tax
set forth in said article, the foreign residents income shall be the price received in the liquidation, increased
or reduced by the initial amounts received or paid for the execution of said transaction or for a subsequent
acquisition of the rights or obligations contained therein, updated for the period from the month in which the
foreign resident received or paid such amounts until the month in which the transaction is liquidated. In this
case, the source of wealth of the income earned from the disposition shall be deemed to be located within
the Mexican territory, even if the derivative transaction was entered into with another foreign resident.
Whenever the liquidation of a capital derivative in kind does not take place, foreign residents shall be
subject to the tax on the amounts that they have received for entering into such derivative transactions, and
said tax shall be calculated by applying the 25% rate or the top rate applicable to the excess over the lower
limit set forth in the tax rate schedule in article 152 of this Law, as set forth in this Law. The Mexican resident
or foreign resident with a permanent establishment in Mexico with whom the derivative transaction was
carried out shall withhold the tax. For the calculation of said tax, the aforementioned amounts shall be
updated for inflation for the period from the month in which they were received until the month in which the
derivative transaction expires. The Mexican resident or foreign resident with a permanent establishment in
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Mexico shall pay said tax no later than the seventeenth day of the calendar month immediately subsequent
to the month in which the derivative transaction expires.
Whenever a foreign resident acquires instruments off stock exchanges operating under concession
pursuant to the Stock Exchange Act or recognized markets, described in article 16C(I) of the Federal Fiscal
Code, and said instruments contain rights or obligations of capital derivatives of the type placed among the
general investing public in accordance with the relevant general rules issued by the Tax Administration
Service for a price 10% or more below the average opening and closing quotes of the day on which they are
acquired, the difference shall be considered income for the foreign resident purchaser of said instruments.
DEBT DERIVATIVES
For the purposes of this Title, gains calculated in accordance with the following paragraphs shall be
considered interests from debt derivatives referred to in article 16-A of the Federal Fiscal Code as well as
from the financial transactions referred to in article 21 of this Law. In this case, the source of wealth is
considered to be in Mexican territory when one of the parties that enter into said derivative transactions is a
Mexican resident or a foreign resident with a permanent establishment in Mexico and the transaction is
attributable to said permanent establishment. The source of wealth shall be considered to be in Mexican
territory when debt derivatives that are entered into between foreign residents are liquidated through the
delivery of the ownership of debt instruments issued by Mexican residents.
INCOME TAX WITHHOLDING
For purposes of the preceding paragraph, the tax shall be determined by applying the corresponding rate in
accordance with article 166 of this Law to the gain from the debt derivative in question, calculated in
accordance with article 20 thereof. If the transaction is settled in kind, the 10% withholding rate shall be
applied. Regarding the financial transactions referred to in article 21 of this Law, the tax shall be calculated
on income received in accordance with the same terms set forth in said article, and by applying the
corresponding rate in accordance with this Title. The tax referred to in this paragraph shall be paid through
withholding to be performed by the person who makes the payments.
For the purposes of this article, a debt derivative is also considered to be settled in cash when payment
thereof is made in foreign currency.
The provisions of the tenth paragraph of this Article shall apply to gains stemming from the disposition of the
rights set forth in such transactions or to the initial amount received for entering into the transaction when
the aforementioned rights are not exercised.
In cases of debt derivatives that may be settled in cash, the tax shall be determined by applying the rate that
corresponds to the effective beneficiary of the transaction, according to the tenth paragraph of this Article,
to the gain obtained from such transactions, without updating for inflation.
To determine a foreign residents interest income and the respective tax thereon, in the case of debt
derivatives on which differences are periodically paid in cash during the validity of the derivatives, the
differences that such foreign resident has paid to the Mexican resident may be deducted from the amounts
collected by the foreign resident.
The tax referred to in this article shall not be paid in the case of debt derivatives referred to the Interbank
Equilibrium Interest Rate or negotiable instruments issued by the Federal Government or by Mexicos
Central Bank and any other negotiable instrument determined by the Tax Administration Service through
general rules, placed in Mexico among the general investing public, or that, in addition to being referred to
such rates or instruments, are referred to another interest rate or other underlying assets that are, in turn,
referred to the Interbank Equilibrium Interest Rate or any other of the instruments mentioned before,
provided that the derivative transactions are carried out on a recognized stock exchange or in recognized
markets, in accordance with article 16-C(I) and (II) of the Federal Fiscal Code and the effective beneficiaries
are foreign residents.
Whenever it is not possible to identify the foreign resident effective beneficiary of the gains derived from the
derivatives referred to in the preceding paragraph, the liquidating partners shall not be required to make the
corresponding withholding and they shall not be jointly and severally liable pursuant to article 26 of the
Federal Fiscal Code.
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FOREIGN RESIDENTS PERMANENT ESTABLISHMENTS
In cases of permanent establishment of foreign residents, when payments for the items described in this
article are made through the central office of the corporation or another establishment thereof located
abroad, withholding shall be performed within fifteen days following the day in which payment is made
abroad or the amount thereof is deducted by the permanent establishment, whichever occurs first.
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The capital remittances received from the corporations main office or from any of its foreign establishments
shall be added to the Capital Remittances Account referred to in this article; and the capital remittances
reimbursed to said establishments in cash or in kind shall be reduced from it. The balance of this account
through the last day of each year shall be updated for inflation for the period from the month of the last
update through the last month of the year in question. When remittances are reimbursed or sent after the
update set forth in this paragraph, the balance of the account through the date of the capital remittance or
receipt of the remittances shall be updated for inflation for the period from the month of the last update until
the month in which the remittance was reimbursed or received.
REIMBURSEMENTS TO HEAD OFFICES
III. Permanent establishments that make reimbursements to their main office or to any of their foreign
establishments shall consider said capital reimbursements, including those derived from the termination of
their activities, to be distributed profits, under the terms of the provisions of article 78 of this Law. For such
purposes, a share shall be considered to be the value of the remittances contributed by the main office or
any of its foreign permanent establishments in the ratio that this value is to the total value of the permanent
establishments remittances account, and the Capital Contribution Account shall be considered to be
Capital Remittances Account set forth in this article.
Permanent establishments shall calculate and pay the tax corresponding to the result obtained pursuant to
the provisions of this section, applying the rate set forth in the first paragraph of article 9 of this statute to the
amount resulting from multiplying said result by 1.4286. Payment of this tax shall not be required when the
profit derives from the foreign residents net tax profit account, described in the preceding section. The tax
resulting in accordance with this section shall be paid in conjunction with any tax, determined pursuant to
the preceding section.
ADDITIONAL TAX ON DIVIDENDS AND GAINS DISTRIBUTED BY PERMANENT ESTABLISHMENTS
IV. Dividends and, in general, profits distributed by permanent establishments, described in (I) and (II)
hereof shall be subject to an additional tax at the 10% rate over the amount of profits or reimbursements.
Permanent establishments shall pay the tax described in this section along with the tax, if any, resulting
from (II) hereof and shall be considered definitive payment.
For purposes of (I) and (II) of this article, it shall be considered that the last item that a permanent
establishment sends abroad is a reimbursement of capital.
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securities lending; discounts for the placement of securities, bonds, or debentures, fees or payments made
as a result of opening or guaranteeing credits, including contingent credits; payments made to third parties
as a result of opening or guaranteeing credits, including contingent credits; payments to a third party as a
result of the acceptance of an aval, the granting of a guarantee or liability of any kind; gains from disposing
of instruments placed among the general investing public referred to in article 8 of this Law, as well as from
disposing of shares of the debt securities mutual funds referred to in the Mutual Funds Law and of the
capitals market securities mutual funds referred to in article 79 of this Law; adjustments to the acts that give
rise to the income referred to in this article, when said adjustments are made through the application of
indexes or factors or in any other way, including adjustments made to the principal because the credits or
transactions are denominated in investment units. Similarly, interest is considered to include gains
stemming from dispositions by a foreign resident of credits owed by a Mexican resident or by a foreign
resident with a permanent establishment in Mexico, when they are acquired by a Mexican resident or a
foreign resident with a permanent establishment in Mexico.
GAINS FROM DISPOSING OF SHARES OF THE DEBT SECURITIES MUTUAL FUNDS AND THE
CAPITALS MARKET SECURITIES MUTUAL FUNDS
Gains from disposing of shares of the debt securities mutual funds and the capitals market securities mutual
funds referred to in the preceding paragraph shall be calculated by reducing the amount of the original
investment from income earned in the disposition. For such purposes, the amount of the original investment
shall be considered to be the per-share amount paid to the mutual fund for the acquisition of the shares
being disposed of, updated from the date on which the shares were acquired through the date on which
they are disposed of.
The tax shall be calculated by multiplying the withholding rate that according to this article corresponds to
the effective beneficiary of the gain, by the gain obtained in accordance with the preceding paragraph.
Mutual funds that make payments for dispositions of shares are required to withhold and pay income tax in
accordance with this Article. Similarly, capitals market securities mutual funds referred to in this article shall
provide both the Tax Administration Service and the taxpayer information relative to the portion of the gain
that corresponds to the shares disposed of on the Mexican Stock Exchange operating under concession
pursuant to the Stock Exchange Act.
ACQUISITION OF CREDIT RIGHTS
Interest shall also be considered to be credit income earned by a foreign resident as the result of the
acquisition of a present, future or contingent credit right of any kind. For the purposes of this paragraph, the
source of wealth shall be considered to be in Mexican territory when the credit right is disposed of by a
Mexican resident or a foreign resident with a permanent establishment in Mexico. Said income shall be
calculated by reducing the price agreed in the disposition from the nominal value of the aforementioned
credit right, added with the earnings and related charges that have not been subject to withholding.
GAINS FROM ASSIGNING CREDITS
In the case of gains from the disposition credits owed by a Mexican resident or a foreign resident with a
permanent establishment in Mexico, performed by a foreign resident to a Mexican resident or a foreign
resident with a permanent establishment in Mexico, the tax shall be calculated by multiplying the
withholding rate that in accordance with this article corresponds to the effective beneficiary of said gain by
the difference between the amount obtained by the foreign resident on the disposition of the credit and the
amount received for the credit by the original debtor thereof.
INCOME TAX WITHHOLDING
The tax shall be paid through withholding by the person who makes the payments and shall be calculated
by applying the rate mentioned in each case below to the interest earned by the taxpayer, without any
deductions:
I. 10% in the following cases:
a) Interest paid to the persons listed below, provided that they submit to the Tax Administration Service the
information required by it through general rules on financing granted to Mexican residents.
1. Financing entities belonging to foreign states, provided that they are the effective beneficiaries of the
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interest.
(1) 2. Foreign banks, including investment banks, provided that they are the effective beneficiaries of the
interest.
Foreign resident non-bank financial institutions shall be treated as foreign banks, provided that they comply
with the placement and funding percentage requirements set forth in the relevant general rules issued by
the Tax Administration Service and are the effective beneficiaries of the interest.
3. Entities that place or invest in Mexico capital from negotiable instruments that they issue and that are
placed abroad among the general investing public in accordance with the relevant general rules issued by
the Tax Administration Service.
b) Interest paid to foreign residents derived from negotiable instruments placed through banks or brokerage
houses in a country with which Mexico does not have a treaty to avoid double taxation, provided that the
notification set forth in article 7, paragraph two, of the Stock Exchange Act has been submitted to the
National Banking and Securities Commission with respect to the documents in which the corresponding
financing transaction is recorded, in accordance with the provisions of said Law.
c) The acquisition of a present, future, or contingent credit right of any kind. In this case, it shall be collected
by the Mexican resident transferor or foreign resident transferor with a permanent establishment in Mexico,
on behalf and for account of the foreign resident, and shall be paid within 15 days following the disposition
of the credit rights.
II. 4.9% in the following cases:
a) Interests paid to foreign residents derived from negotiable instruments placed among the general
investing public referred to in article 8 of this Law, as well as gains derived from the disposition thereof;
gains on certificates, acceptances, negotiable instruments, loans or other credits owed by banking
institutions, non-bank banks, multiple purpose financial institutions that for purposes of this law are
considered members of the financial system, as well as those placed through banks or brokerage houses in
a country with which Mexico has a treaty to avoid double taxation, provided that the notification set forth in
article 7, paragraph two, of the Stock Exchange Act has been submitted to the National Banking and
Securities Commission regarding the documents in which the corresponding financing transaction is
recorded in accordance with the provisions of said Act, and provided that the relevant information
requirements set forth by the Tax Administration Service through general rules are complied with. If the
aforementioned requirements are not fulfilled, the applicable rate shall be 10%.
b) Interest paid to foreign resident financing entities in whose capital stock the Federal Government
participates through the Ministry of the Treasury and Public Credit or the Central Bank (Banco de Mxico),
provided that they are the effective beneficiaries thereof and comply with the relevant general provisions set
forth by the Tax Administration Service.
III. 15% on interest paid to reinsurers.
IV. 21% on interest in the following cases:
a) Interest paid by banking institutions to foreign residents other than those indicated in the preceding
sections of this article.
b) Interest paid to foreign resident suppliers for the disposition of machinery and equipment that are part of
the purchasers fixed assets.
c) Interest paid to foreign residents to finance the acquisition of the goods referred to in the preceding
subsection and in general for working capital loans or for trading, provided that any of these circumstances
are recorded in writing.
When interest referred to in this section is paid by banking institutions to the parties set forth in (I) of this
article, the rate referred to in the latter section shall be applied.
V. Interest other than the types of interest set forth in the preceding sections shall be subject to the top rate
applicable to the excess over the lower limit set forth in the tax rate schedule in article 152 of this Law.
PARTIES REQUIRED TO WITHHOLD
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Persons who are required to make payments for the items indicated in this article shall withhold as
applicable.
INTERESTS FROM INSTRUMENTS PAYABLE TO THE BEARER
In the case of interests from instruments payable to the bearer, only the withholding party shall have tax
obligations, and the foreign resident shall be released from any liability other than accepting the relevant
withholding.
INTERESTS NOT SUBJECT TO TAX
Interest paid by the foreign establishments of Mexican banking institutions referred to in article 48 of this
Law shall not be subject to the tax set forth in the preceding paragraphs.
The rates set forth in (I) and (II) of this article shall not be applicable if the effective beneficiaries receive,
either directly or indirectly, individually or in conjunction with related parties, more than 5% of the interest
derived from the instruments in question and are:
1. Shareholders that hold more than 10% of the voting shares of the issuer, whether directly or indirectly,
and individually or in conjunction with related parties, or
2. Legal entities more than 20% of whose voting shares are owned by the issuer, whether directly or
indirectly, and individually or in conjunction with related parties.
In the case set forth in (1) and (2) above, the rate to be used shall be the top rate applicable to the excess
over the lower limit set forth in the tax rate schedule in article 152 of this Law. For such purposes, parties are
considered to be related when one of them holds interest in the business of the other, when they have
common interests, or when a third person has an interest in their business or goods.
For the purposes of this article, in cases of interest obtained from the negotiable instruments placed among
the general investing public referred to article 8 of this Law, as well as interest received from certificates,
acceptances, negotiable instruments, loans or other credits owed by banking institutions, non-bank banks,
multiple purpose financial institutions or ancillary credit organizations, income tax shall be withheld by the
custodians of said instruments when the latter transfers them to the purchaser, in the event of disposition
thereof, or when interest is due, in other cases. In the case of transactions that are free of charge, the
intermediary that receives the resources involved in the transaction from the purchaser in order to deliver
them to the transferor of the instruments shall withhold. In these cases, the issuer of said instruments shall
be released of the obligation to make the withholding.
In cases in which a custodian merely receives instructions to transfer the instruments and is not given the
funds to make the withholding, the custodian may be released of the obligation to withhold the tax, provided
that the custodian give the intermediary or the custodian that receives the instruments the necessary
information when the transfer is made. In this case, the intermediary or custodian that receives the
instruments shall calculate and withhold the tax at the moment when it is due. The information referred to in
this paragraph shall be determined through relevant general rules issued by the Tax Administration Service.
ASSIGNMENT WITHOUT THE INTERVENTION OF AN INTERMEDIARY
When the instruments referred to in this article are disposed of without the intervention of an intermediary,
the foreign resident that disposes of them shall appoint the custodian who will transfer them to pay the tax
on behalf of and for account of the transferor. Said payment shall be made no later than the seventeenth
day of the month immediately subsequent to the date on which the disposition is made. For such purposes,
the foreign resident shall provide the custodian the funds needed to pay said tax. In such a case, the
custodian shall be jointly and severally liable for the tax. If said custodian must, in addition, transfer the
instruments to another intermediary or custodian, the custodian shall inform the other intermediary or
custodian of the sale price of the instruments at the time the transfer thereof is carried out, and the latter
shall abide by the preceding paragraph.
CONCEPT OF INTERMEDIARY
Where this Article refers to intermediaries, the term shall be understood to refer to Mexican banking
institutions and brokerage houses that intervene in the acquisition of the instruments referred to in this
article.
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FINANCIAL LEASE
Regarding interest from financial leasing, the source of wealth shall be considered to be in Mexican territory
when the goods are used in the country or when payments made abroad are totally or partially deducted by
a permanent establishment in Mexico, even if the payment is made through any establishment abroad.
Unless demonstrated otherwise, the goods shall be presumed to be used in Mexico when the person who
uses or enjoys them is a Mexican resident or a foreign resident with a permanent establishment in Mexican
territory. The source of wealth shall also be considered to be in Mexican territory when the person who
makes the payment is a Mexican resident or a foreign resident with a permanent establishment in Mexico.
INCOME TAX RATE
For purposes of the preceding paragraph, the tax shall be calculated by applying the 15% rate on the
amount agreed as interest in the respective agreement, and the persons that make payments shall withhold
the tax.
PERMANENT ESTABLISHMENTS OF FOREIGN RESIDENTS
In the case of permanent establishments in Mexico of foreign residents, if the payments for the items
indicated in this article are made through the main office of the corporation or another establishment of the
latter abroad, withholding shall be made within fifteen days following that on which the payment is made
abroad or the amount thereof is deducted by the permanent establishment, whichever occurs first.
EXEMPT INTERESTS
The types of interest referred to below are exempt from the payment of income tax:
a. Interest derived from credits extended to the Federal Government or to the Central Bank and from bonds
issued by them acquired and paid abroad.
b. Interest stemming from term credits for three or more years extended or guaranteed by foreign resident
financing entities engaged in promoting exports by granting loans or guarantees under preferential
conditions.
c. Interest derived from credits granted or guaranteed under preferential conditions by foreign resident
financing entities to institutions authorized to receive tax-deductible donations under this Law, provided that
the latter use the credits to carry out assistance or charity activities.
d. Interest derived from credits extended to the Federal Government or the Central Bank and from
negotiable instruments issued by the Federal Government or by the Central Bank, placed in Mexico among
the general investing public, provided that the effective beneficiaries thereof are foreign residents.
Whenever it is not possible to identify the foreign resident effective beneficiary of the interest derived from
the credits or instruments referred to in the preceding paragraph, the financial intermediaries shall not be
required to withhold and shall not be jointly and severally liable under Article 26 of the Federal Fiscal Code.
(1)During fiscal year 2015, interests referred to in this provision shall be subject to the 4.9% rate, provided
that the effective beneficiary thereof is a resident of a country that has a treaty to avoid double taxation with
Mexico in force; and the requirements set forth in such treaty to apply the rates described therein upon
interests are met. FRL 2015 eighth twenty two
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I. Royalties for the temporary use or enjoyment of railroad cars: 5%.
II. Royalties other than those covered by (I), as well as royalties for technical assistance: 25%
In the case of royalties for the temporary use or enjoyment of patents or certificates of invention or
improvement, trademarks, and trade names, as well as for advertising, the rate applicable to income earned
by the taxpayer for said items shall be the top rate applicable to the excess over the lower limit set forth in
the tax rate schedule in article 152 of this Law.
When the agreements involve a patent or certificate of invention or improvement and other related items
referred to in (II) of this article, the tax shall be calculated by applying the corresponding rate to the portion
of the payment made for each of the aforementioned items. If the pro-rata share of each payment
corresponding to each item cannot be determined, the tax shall be calculated by applying the rate set forth
in (II) of this Article.
For the purposes of this article, temporary use or enjoyment shall also be understood to be granted when
the goods or rights referred to in article 15-B of the Federal Fiscal Code are disposed of, provided that such
disposition is conditioned to productivity, the use or further disposition of the same goods or rights. In this
case, the rates referred to in this article shall be applied to the income earned, without any deductions, in
accordance with the good or right in question.
COPYRIGHTS
For the purposes of this article, the retransmission of visual images, sounds, or both, or the right to provide
the public access to said images or sounds entails the use of or the license for the use of a copyright, an
artistic, scientific, or literary work, among other items, provided that in both cases, the images and sounds
are transmitted by satellite, cable, optical fiber or other similar means and the content being retransmitted is
protected by the copyright.
PARTIES REQUIRED TO WITHHOLD
Persons who must make payments for the items indicated in this article are required to withhold as
applicable.
PERMANENT ESTABLISHMENTS OF FOREIGN RESIDENTS
In the case of permanent establishments in Mexico of foreign residents, if the payments for the items
indicated in this article are made through the main office of the corporation or another establishment of the
latter abroad, withholding shall be made within fifteen days following that on which the payment is made
abroad or the amount thereof is deducted by the permanent establishment, whichever occurs first.
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Artculo 169. PRIZES
In the case of income from prizes, the source of wealth shall be considered to be in Mexican territory when
the lottery, raffle, drawing, gambling with betting, or contest of any kind takes place in Mexico. Unless
demonstrated otherwise, the lottery, raffle, drawing, gambling with betting and contest of any kind shall be
understood to take place in Mexico when the prize is paid in Mexico.
INCOME TAX RATE
The tax on prizes won in lotteries, raffles, drawings, and contests shall be calculated by applying the 1%
rate to the value of the prize corresponding to each complete ticket, without any deductions, provided that
State Governments do not levy a local tax on the income referred to in this paragraph or any such tax does
not exceed 6%. The tax rate referred to in this article shall be 21% in States that charge a local tax higher
than 6% on the income referred to in this paragraph.
INCOME TAX ON WINNINGS AT GAMING EVENTS
Income tax on winnings at gaming events with betting shall be calculated by applying 1% to the total value
of the amount to be distributed among all winning tickets.
A returned stake in a lottery shall not be considered a prize.
PAYMENT OF THE TAX
When the person who makes the payment is a Mexican resident or a foreign resident with a permanent
establishment located in Mexico the tax shall be paid through withholding, and when the award is paid by a
foreign resident, the tax shall be paid through a return to be filed at the authorized office within fifteen days
after the income is received.
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artistic, or sporting event is held, within the month following that in which the event ends. This election may
only be made when the tax has been secured for an amount equivalent to the tax determined in accordance
with paragraph four of this article, no later than the day after income is earned. In the latter case, the
withholding party shall be released from the obligation of making the withholding referred to in the preceding
paragraph.
SALARY INCOME AND FEES
Articles 154 and 156 of this Law shall not apply to taxpayers that earn items of income described in this
article in connection with such items.
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considered to be in Mexican territory when the business, investment, or legal transaction takes place in
Mexico, provided that said business, investment or legal transaction does not consist of making
contributions to the capital stock of a legal entity.
INDEMNITIES
III. Income derived from indemnities for lost profits and from contractual or penalty clauses. In these cases,
the source of wealth shall be considered to be in Mexican territory when the person who pays of the items
referred to in this section is a Mexican resident or a foreign resident with a permanent establishment in
Mexico.
TRANSFERS OF GOODWILL
IV. Income derived from a transfer of goodwill. The source of wealth shall be considered to be in Mexican
territory when goodwill is attributable to a Mexican resident or a foreign resident with a permanent
establishment located in Mexico.
For the purposes of this section, the source of wealth shall be considered to be in Mexican territory when a
foreign resident disposes assets used by a Mexican resident or by a foreign resident with a permanent
establishment in Mexico, provided that the consideration in exchange for the disposition exceeds the
market price of said assets. Unless demonstrated otherwise, income derived from a transfer of goodwill
shall be presumed to be the difference between the market price of the assets on the date on which
ownership thereof is transferred and the total amount of the agreed consideration, when the latter is greater.
The tax authorities may practice an appraisal to determine the market price of the assets owned by the
foreign resident and if said appraisal is more than 10% lower than the market price used by the taxpayer to
determine the tax, the difference shall be considered income for the purposes of this article.
This section shall not apply to gains on the disposition of shares.
INCOME TAX RATE
The tax referred to in this article shall be calculated by applying the top rate applicable to the excess over
the lower limit set forth in the tax rate schedule in article 152 of this Law to the income, without any
deductions. In the case of (I) above, the tax shall be calculated on the total amount of the forgiven debt, and
the creditor that forgives the debt shall make the payment by filing a tax return at the authorized offices on
the day after the debt is forgiven.
In the case of the income referred to in (II) of this article, the tax shall be calculated on the gross amount of
the agreed consideration, and in the case of income described in (III) thereof, it shall be calculated on the
gross amount of the indemnities or payments derived from contractual or penalty clauses.
In the case of income referred to in (IV) of this article, the tax shall be calculated on the gross amount of the
agreed consideration. In the case set forth in paragraph two of the aforementioned section, the tax shall be
calculated on the difference between the total amount of the agreed consideration and the value of the
assets on the date on which the ownership is transferred, in accordance with an appraisal practiced by a
person authorized by the tax authorities, as applicable.
PAYMENT OF THE TAX
For income referred to in (II), (III) and (IV) of this Article, the tax shall be paid through withholding, made by
the person who makes the payment, provided that said person is a Mexican resident or a foreign resident
with a permanent establishment in Mexico. In other cases, the taxpayer shall pay the tax by filing a tax
return at the authorized offices within fifteen days after income is earned.
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The tax shall be calculated by applying the 2% rate to the gross amount paid to the foreign resident, without
any deductions. The tax shall be paid through withholding to be made by the person who makes the
payments.
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such in article 114 of this Law.
DISPOSITION OF GOODS
IV. Income from disposing of goods shall be income derived from the transactions referred to in article 14 of
the Federal Fiscal Code, including in the case of expropriation.
PRIZES
V. Income from lotteries, raffles, drawings, gaming with betting, and contests of all kinds shall be the items
considered as such in article 137 of this Law.
ENTREPRENEURIAL ACTIVITIES
VI. Income from entrepreneurial activities shall be the items considered as such in article 16 of the Federal
Fiscal Code. The items of income referred to in articles 153 through 173 of this Law shall not be included.
INTERESTS
VII. Interest income shall be the items of income set forth in articles 163 and 166 of this Law, which are
considered yields on credit of any kind.
PROVISIONS APPLICABLE TO LEGAL ENTITIES
The provisions of (II), (III), and (V) of this article shall also apply to legal entities.
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shall be considered.
INCOME EARNED INDIRECTLY
In cases in which income is earned indirectly through two or more foreign legal vehicles or entities, the tax
effectively paid by all of the foreign legal vehicles or entities through which the taxpayer conducted
income-generating transactions shall be considered for the purposes of calculating the lower income tax
referred to in this article.
The tax treatment set forth in this Chapter shall also apply to income earned through foreign legal vehicles
or entities that are fiscally transparent abroad, even if said income is not subject to a preferential tax regime.
FISCALLY TRANSPARENT ENTITIES
Foreign legal vehicles or entities are considered fiscally transparent when they are not considered income
tax taxpayers in the country in which they are incorporated or in which their main administration or effective
headquarters are established and their income is attributed to their members, partners, shareholders, or
beneficiaries.
CONCEPT OF FOREIGN ENTITIES
Corporations and other entities created or incorporated under foreign law that have their own legal
personality, as well as legal entities established in accordance with Mexican law that are foreign residents,
shall be considered foreign entities; and trusts, associations, investment funds, and any other similar legal
vehicle established under foreign law that do not have their own legal personality shall be considered
foreign legal vehicles.
INCOME NOT SUBJECT TO TAX HAVENS
Income subject to a preferential tax regime in accordance with this article shall not include income earned
through foreign legal vehicles or entities that carry out entrepreneurial activities, unless said entities
passive income accounts for more than 20% of their total income.
PASSIVE INCOME
For the purposes of this Chapter, the following shall be considered passive income: interest; dividends;
royalties; gains on the disposition of shares, securities or intangible assets; gains from derivatives when the
underlying assets are debts or shares; commissions and mediation fees; as well as income from the
disposition of goods that are not physically in the country, territory, or jurisdiction where the foreign legal
vehicle or entity resides or is located, and income from services rendered outside of said country, territory or
jurisdiction, as well as income from the disposition of real estate, income from granting the temporary use
and enjoyment of goods, and income received for free.
INCOME NOT SUBJECT TO A TAX HAVEN
Income subject to a preferential tax regime shall not include income earned through a foreign entity that is a
tax resident in a country, territory, or jurisdiction and that is subject to income tax as such therein, whenever
the entity's profits are taxed at a rate equal to or higher than 75% of the rate set forth in article 9 of this Law,
provided that all of the entity's income is taxable, except dividends received from entities that are residents
of the same country, territory or jurisdiction and its deductions are or have been effectively spent, even if the
income is included in, or the deductions are claimed at moments other than those indicated in Titles II and
IV, respectively, of this Law. For such purposes, it shall be presumed, unless demonstrated otherwise, that
the requirements set forth in this paragraph have not been met.
ROYALTIES NOT CONSIDERED SUBJECT TO A TAX HAVEN
Nor shall income subject to a preferential tax regime include income received by foreign legal vehicles or
entities for royalties paid for the use of or for a license to use a patent or industrial secrets, provided that the
following requirements are complied with:
I. Said intangibles must have been created and developed in the country in which the foreign legal vehicle
or entity that owns them is located or resides. This requirement shall not apply if said intangibles were or are
acquired by said foreign legal vehicle or entity at prices or for amounts that would have been used by
independent parties in comparable transactions.
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II. The royalties paid must not generate an authorized deduction for a Mexican resident.
III. The payments of royalties received by said foreign legal vehicle or entity must be for prices and amounts
that would have been used by independent parties in comparable transactions.
IV. The accounting records of the foreign legal vehicles or entities referred to in this paragraph must be kept
available to the tax authorities, and the information return set forth in article 178 of this Law must be filed
within the term provided for that purpose.
AVERAGE DAILY PARTICIPATION THAT DOES NOT ALLOW EFFECTIVE CONTROL OVER
ADMINISTRATION
Likewise, income subject to a preferential tax regime shall not include income earned as a result of an
average daily participation in foreign legal vehicles or entities that does not allow the taxpayer to have
effective control of said entities or vehicles or to control their administration to an extent that would allow
them to decide when to distribute income, profits, or dividends from said vehicles or entities, either directly
or through a third party. For such purposes, it shall be presumed, unless demonstrated otherwise, that the
taxpayer controls foreign legal vehicles or entities that earn income subject to a preferential tax regime.
DETERMINATION OF EFFECTIVE CONTROL
The determination of effective control shall be based on the average daily participation of the taxpayer and
of its related parties, as defined in article 179 of this Law, or its linked parties, whether they are Mexican or
foreign residents. For the purposes of this paragraph, a link shall be considered to exist between persons if
one of them holds positions of direction or responsibility in the enterprise of the other; if they are legally
recognized as business associates; or if they are spouses or common-law husband and wife; or if they are
lineal consanguineous relatives, whether ascendant or descendant, and whether collaterally or by affinity,
up to the fourth degree.
The tax authorities may authorize the taxpayers subject to the terms of this Chapter to not apply the
provisions thereof to passive income earned by foreign legal entities or vehicles that are authorized to act
as financing entities by the authorities of the country in which they reside, when said income is used to
comply with the relevant requirements set forth for granting credits contracted with persons, entities or
vehicles not considered related parties in accordance with article 179 of this Law and when no authorized
deduction is generated for a Mexican resident.
The authorization referred to in the preceding paragraph shall be subject to the conditions set forth in the
relevant general rules issued by the tax authorities.
DISPOSITION OF SHARES OF THE SAME GROUP
When shares are disposed of within a single group as a result of an international reorganization including
a merger or spin-off generating items of income of the type covered by this Chapter, the taxpayers may
refrain from applying the provisions thereof to said income, provided that the following requirements are
complied with and the documentation indicated below is filed:
1. Notice must be submitted to the tax authorities before said reorganization is carried out, including the
groups organizational chart and shareholding structure and a detailed description of all the steps to be
taken through the reorganization.
2. The restructuring shall be based on valid business and economic reasons and motivations, and the main
motivation may not be to seek a tax benefit, to the detriment of federal tax authorities. In the notice referred
to in the preceding item, the taxpayer shall give a detailed explanation of the motives and reasons for which
the reorganization was carried out.
3. The taxpayer shall submit to the tax authorities, within 30 days following the conclusion of the
reorganization, documents evidencing the execution of the transactions contemplated within the
reorganization.
4. The shares that are part of the reorganization shall not be transferred to a person, entity, or legal vehicle
that does not belong to said group for two years following the date on which the reorganization ends.
For the purposes of this Chapter, a group shall be understood to be a group of corporations in which at least
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51% of the voting shares representing their capital stock are directly or indirectly owned by a single legal
entity.
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income tax shall be paid on the difference by applying the rate set forth in article 9 of this Law.
The balance of the account set forth in the preceding paragraph on the last day of each year, without
including taxed income, tax profit, or taxable income for the year in question, shall be updated for inflation
for the period from the month of the last update through the last month of the year in question. When the
taxpayer receives income, profits, or dividends after the update set forth in this paragraph, the balance of
the account on the date of the distribution shall be updated for inflation for the period from the month of the
last update until the month in which income, dividends, or profits are distributed.
INCLUSION OF DIVIDENDS RECEIVED INTO THE NET TAX PROFIT ACCOUNT
Income, dividends, or profits received by Mexican resident legal entities, reduced by the income tax paid by
them in accordance with this article, shall be added to said legal entities net tax profit account referred to in
article 77 of this Law.
DISPOSITION OF SHARES OF FOREIGN LEGAL ENTITIES OR VEHICLES
When a taxpayer disposes of the shares of a foreign legal vehicle or entity or its interest therein, the gain
therefrom shall be calculated in accordance with the third paragraph of article 22 of this statute. The
taxpayer may elect to apply the provisions of article 22 of this Law, as if the shares had been issued by
Mexican resident legal entities.
LIQUIDATIONS OR CAPITAL REDUCTIONS
In the case of income derived from a capital reduction or liquidation of the foreign entities referred to in this
article, the taxpayer shall calculate income subject to tax in accordance with article 78 of this Law. For such
purposes, the taxpayer shall keep a Capital Contribution Account into which each shareholder's capital
contributions and net premiums on stock subscriptions shall be added and from which each shareholder's
capital reductions shall be subtracted.
UPDATE OF THE CAPITAL CONTRIBUTION ACCOUNT
The balance of the account set forth in the preceding paragraph on the closing day of each year shall be
updated for inflation for the period from the month of the last update through the closing month of the year in
question. When capital reductions or contributions are made after the update set forth in this paragraph, the
balance of the account on that date shall be updated for inflation for the period from the month of the last
update until the month in which the contribution or capital reimbursement is paid, as the case may be.
UPDATED PER-SHARE CONTRIBUTED CAPITAL
The updated, per-share contributed capital shall be determined by dividing the balance of the Capital
Contribution Account referred to in this article corresponding to each shareholder by the total number of
shares of the legal entity held by each such shareholders on the date of the capital reimbursement,
including those corresponding to the reinvestment or capitalization of profits or those items that in any other
way make up the shareholders equity of the legal entity.
CREDIT FOR INCOME TAX PAID IN TAX HAVENS
Taxpayers referred to in this Chapter may credit the tax paid abroad by the foreign legal vehicles or entities
in which they participate against the income tax to which said income is subject in Mexico, in the same ratio
that the income of said entities or vehicles is taxable for them, provided that they are able to demonstrate
that the tax that they are crediting was paid abroad.
Taxpayers may credit income tax withheld and paid in accordance with Title V of this Law corresponding to
income received by the foreign legal vehicles or entities in which they participate, in the ratio that said
income is taxable for them, against their income tax in Mexico on that income in accordance with this
Chapter, provided that the income subject to tax includes the income tax withheld and paid in Mexico.
The amount of the tax credit referred to in the preceding paragraph shall not exceed the amount obtained by
applying the rate set forth in article 9, paragraph one, of this Law to the income taxed in accordance with
Title V thereof. When the tax credit is within the limit described in this paragraph and may not be used either
totally or partially, the credit may be claimed in the following ten years, until depleted. In no case shall a
taxpayer be entitled to claim a refund of the tax that could not be credited.
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ACCOUNTING RECORDS
Taxpayers accounting records concerning the items of income referred to in this Chapter shall meet the
requirements set forth in article 76(XVII)(a) of this Law and shall be available to the tax authorities. For the
purposes of this Chapter, a taxpayer shall be considered to have made the accounting records of the
foreign legal vehicles or entities referred to in the first paragraph of article 176 of this statute available to the
tax authorities when the taxpayer is required to provide said records to the tax authorities when exercising
their review powers.
SHAM TRANSACTIONS
For the purposes of this Title and to calculate income from a source of wealth in Mexico, the tax authorities
may, in exercising the review powers afforded by law, determine that a transaction is a sham exclusively for
tax purposes. Such a determination shall be duly based in law and facts within the review procedure, and
the existence of the sham shall be stated in the ruling assessing the taxpayer's fiscal situation, as set forth
in article 50 of the Federal Fiscal Code, provided that the transactions had been conducted between related
parties as set forth in article 179 of this Law.
In cases of sham transactions, the taxable event shall be that effectively carried out by the parties.
The ruling in which the authorities determine the existence of a sham transaction shall comply with the
following requirements:
a) To identify the sham transactions and the transaction truly carried out;
b) To quantify the tax benefit obtained by virtue of the sham transaction; and
c) To state basis of which the sham was determined, including the parties intention to enter into a sham
transaction.
For the purpose of proving sham transactions, the authorities may base their determination on
presumptions, among other elements.
In cases in which a sham transaction is determined in accordance with the four preceding paragraphs, the
taxpayer shall not be required to file the return referred to in article 178 of this Law.
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A taxpayer shall be deemed to have failed to file the return referred to in this article when the return does not
contain information on all the income earned by the taxpayer subject to a preferential tax regime in the
immediately preceding year.
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corresponding comparable transactions of two or more years, either before or after, may be considered.
RELATED PARTIES
Two or more persons are considered to be related parties when one of them participates, directly or
indirectly, in the administration, control or equity of the other, or when a person or group of persons
participates, directly or indirectly, in the administration, control, or equity of said persons. Members of
partnerships are considered to be related, as are the persons who in accordance with this paragraph are
considered related parties of said members.
PARTIES RELATED TO A PERMANENT ESTABLISHMENT
Similarly, the head office or other permanent establishments thereof are considered related parties of a
permanent establishment, as are the persons indicated in the preceding paragraph and the permanent
establishments thereof.
TRANSACTIONS WITH ENTITIES IN TAX HAVENS
Unless demonstrated otherwise, transactions between Mexican residents and corporations or entities
subject to a preferential tax regime shall be considered to take place between related parties not using the
prices and consideration amounts that would have been used by independent parties in comparable
transactions.
OECDS TRANSFER PRICING GUIDELINES
The Organization for Economic Co-operation and Developments Transfer Pricing Guidelines for
Multinational Enterprises and Tax Administrations, approved by the OECDs Council in 1995, or on the
guidelines that replace them may be used to interpret this Chapter to the extent that said guidelines are
consistent with the provisions of this Law and the treaties entered into by Mexico.
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involved in the transaction;
b) Global operating profit shall be allocated to each related party in accordance with factors such as the
assets, costs, and expenses of each of the related parties involved with regard to the transactions between
said related parties.
RESIDUAL PROFIT SPLIT
V. Residual profit split method, which consists of allocating the profit from a transaction obtained by related
parties in ratio to the allocation of said profit that would have been made by independent parties, as
described below:
a) Global operating profit shall be determined by adding the operating profit obtained by each related party
involved in the transaction,
b) Global operating profit shall be allocated as follows:
1. The minimum profit corresponding, as applicable, to each related party shall be determined through the
application of any method referred to in (I), (II), (III), (IV) and (VI) of this Article, without taking into account
the use of significant intangibles.
2. Residual profit shall be obtained by reducing the minimum profit referred to in 1 above from global
operating profit. This residual profit shall be allocated among the related parties involved in the transaction
on the basis of, among other factors, the significant intangibles used by each related party in the ratio in
which such profit would have been distributed by independent parties in comparable transactions.
TRANSACTIONAL NET MARGIN METHOD
VI. Transactional net margin method, which consists of calculating, for transactions between related
parties, the operating profit that would have been obtained by comparable enterprises or independent
parties in comparable transactions, based on return factors that take into account variables such as assets,
sales, costs, expenses, or cash flows.
RANGES OF ARMS LENGTH PRICES
From the implementation of one of the methods set forth in this article, it shall be possible to obtain a range
of prices, of consideration amounts, or of profit margins, when there are two or more comparable
transactions. These ranges shall be adjusted through the use of statistical methods. Prices, consideration
amounts, or profit margins of the taxpayer that fall within these ranges shall be considered to have been
agreed or used between independent parties. Whenever a taxpayer falls outside of the adjusted range, the
median in the range shall be considered to be the price or consideration amount that would have been used
between independent parties.
APPLICABLE METHOD
Taxpayers shall first apply the method set forth in (I) of this article, and may only use the methods indicated
in (II), (III), (IV), (V) and (VI) thereof when the method set forth in (I) is inappropriate for determining if the
transactions were conducted at market prices, in accordance with the Transfer Pricing Guidelines for
Multinational Enterprises and Tax Administrations referred to in the last paragraph of article 179 of this Law.
For the purposes of applying the methods set forth in (II), (III), and (VI) of this article, a taxpayer shall be
considered to have complied with the methodology, provided that the cost and the sale price are
demonstrated to be in line with the market. For such purposes market prices shall be understood to be the
prices and consideration amounts that would have been used by independent parties in comparable
transactions, or when the taxpayer had received a favorable ruling in accordance with article 34-A of the
Federal Fiscal Code. Similarly, it shall be demonstrated that the method used is the most appropriate or
most reliable in accordance with the available information, and preference shall be given to the methods set
forth in (II) and (III) of this Article.
ACCOUNTING PRINCIPLES
For the purposes of this article and article 179 of this Law, income, costs, gross profit, net sales, expenses,
operating profit, assets, and liabilities shall be calculated based on financial information norms.
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Artculo 181. FOREIGN RESIDENTS THAT ARE DEEMED NOT TO HAVE A PERMANENT
ESTABLISHMENT
A foreign resident shall not be deemed to have a permanent establishment in Mexico as a result of the legal
or economic relationships that the foreign resident has with enterprises that carry out toll manufacturing
[maquila] operations which habitually process in Mexico goods or merchandise maintained in Mexico by the
foreign resident using assets provided, directly or indirectly, by the foreign resident or any enterprises
related thereto. The foregoing shall apply provided that Mexico and the foreign residents country of
residence have entered into a treaty to avoid double taxation and the requirements of the treaty are
complied with, including the mutual agreements entered into under the treaty as implemented by the parties
to the treaty, so that the foreign resident is not considered to have a permanent establishment in Mexico.
This paragraph shall only apply to enterprises that conduct toll manufacturing operations that comply with
article 182 of this Law.
For purposes of this paragraph, toll manufacturing operations are those that comply with the following
requirements:
I. The merchandise supplied by a foreign resident under a toll manufacturing agreement, pursuant to a
Maquila Program authorized by the Ministry of Economy, and that is subject to a transformation or repair
process, shall be temporarily imported and returned abroad, even through virtual transactions, performed in
accordance with the Customs Law and the general rules issued by the Tax Administration Service. For
purposes of this section, the return abroad of waste and scrap shall not be required.
Merchandise described in this section may only be owned by a third party residing abroad, when such party
has a commercial manufacturing relationship with a foreign resident enterprise that has, in turn, a toll
manufacturing agreement with the enterprise engaged in toll manufacturing operations in Mexico, provided
that such merchandise is supplied by reason of such commercial relationship.
CONCEPT OF TRANSFORMATION
For purposes of this section, transformation shall mean processes performed with the merchandise that
consist of: dilution in water or other substances; washing and cleaning, including removal of oxide, grease,
paint or any other coverings; the application of conservatives, including lubricants, protective encapsulation
or paint for preservation; adjustment, liming or cut; conditioning in doses; packaging, re-packaging, baling
and re-baling; testing, marking, labeling and classifying, as well as development of products, expect in
cases of trademarks, trade names and slogans.
II. All income from productive activities must exclusively derive from the toll manufacturing operation.
III. Whenever the enterprises with a Program that perform transformation or repair processes described in
(I) hereof, incorporate in their productive processes domestic or foreign merchandise that is not temporarily
imported, such merchandise shall be exported or returned abroad, along with the merchandise temporarily
imported.
IV. Transformation or repair processes described in (I) hereof shall be performed using machinery and
equipment owned by the foreign resident with whom the enterprise with a Program has entered into a toll
manufacturing agreement, provided that such items have not been owned by the enterprise performing the
toll manufacturing operation or by another enterprise residing in Mexico that is its related party.
Transformation and repair processes may be supplemented with machinery and equipment owned by a
third party residing abroad that has a manufacturing commercial relationship with the foreign resident
enterprise that has, in turn, a toll manufacturing agreement with the enterprise performing the toll
manufacturing operation in Mexico, provided that those goods are supplied by reason of such commercial
relationship; or with machinery and equipment owned by the enterprise performing the toll manufacturing
operation in Mexico; or with machinery and equipment leased from an independent party. In no case such
machinery and equipment may have been owned by another enterprise residing in Mexico that is related to
the enterprise performing the toll manufacturing operation.
The provisions of this section shall apply, provided that the foreign resident with whom a toll manufacturing
agreement has been executed owns at least 30% of the machinery and equipment used in the toll
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manufacturing operation. Such percentage shall be calculated pursuant to the general rules issued by the
Tax Administration Service.
Toll manufacturing operations shall not include transformation or repair of merchandise that is disposed of
within the national territory and is not covered by a customs declaration form for exportation and therefore,
the provisions of article 182 of this statute shall not apply thereto.
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ii) The undepreciated amount shall be calculated by reducing the amount of the original investment,
determined in accordance with the previous subsection, by the amount obtained by multiplying the latter
amount by the top authorized percentages set forth in articles 34, 35, 36 and 37 and other appropriate
articles of this statute, as applicable for the asset in question. In no event may article 51 of the Income Tax
Law that was in force until 1998 or article 220 of such law in force through December 31, 2013 may be
applied. For the purposes of this subsection, depreciation shall be calculated for complete months, from the
date on which the asset was acquired through the last month of the first half of the year for which tax profit
is determined. When the asset in question was acquired during said year, the depreciation shall be based
on complete months, from the acquisition date of the asset through the last month of the first half of the
period during which the asset has been used in the operation in question in said fiscal year.
In the case of the first and last year in which the asset is used, the average value thereof shall be
determined by dividing the aforementioned result by twelve and multiplying the quotient by the number of
months in which the asset has been used in said years.
The undepreciated amount, calculated in accordance with this subsection, of the assets denominated in
U.S. dollars shall be converted to Mexican currency by using the exchange rate published in the Federal
Register on the last day of the last month of the first half of the year in which the asset has been used. If
Mexicos Central Bank has not published said exchange rate, the last exchange rate published shall be
used. The conversion to U.S.-dollars of values denominated in other foreign currencies shall be made by
using the U.S.-dollar equivalent of said foreign currencies in accordance with the table published each
month by Mexicos Central Bank during the first week of the month immediately following the month
corresponding to the conversion.
iii) In no event shall the undepreciated amount be less than 10% of the acquisition price of the assets.
3. The Mexican resident may elect to include deferred charges and deferred expenses in the value of the
assets used in the toll manufacturing operation.
Mexican residents shall keep available to the tax authorities the corresponding documentation
demonstrating, as applicable, the values set forth in (I)(1) and (2) hereof. Said residents shall be considered
to have complied with the obligation to keep the aforementioned supporting documentation available to the
tax authorities when they provide it to said authorities within the term indicated in the tax provisions, as
applicable.
II. 6.5% on the total operating expenses and costs of the operation in question incurred by the Mexican
resident, determined in accordance with financial information norms, including those incurred by foreign
residents, except as follows:
1. The value corresponding to acquisition of merchandise, raw materials, and finished or semi finished
products used in the toll manufacturing operation acquired by foreign residents on their own shall not be
included.
2. Depreciation and amortization of fixed assets and deferred charges and deferred expenses owned by the
toll manufacturer used in the toll-manufacturing operation shall be calculated in accordance with the
provisions of this Law.
3. The inflation effects determined in financial information norms shall not be considered.
4. Financial expenses shall not be considered.
5. Extraordinary or nonrecurring expenses of the operation in accordance with financial information norms
shall not be considered. Extraordinary expenses shall not include those regarding which reserves and
provisions have been created in accordance with the aforementioned financial information norms and for
which the toll manufacturer has liquid funds expressly allocated for such expenses. Likewise, if a taxpayer
has not created the aforementioned reserves and provisions and the toll manufacturer has liquid funds
expressly allocated to cover such expenses, payments made for items regarding which the taxpayer should
have created the aforementioned reserves or provisions shall not be considered extraordinary expenses.
The items referred to in this subsection shall be considered at their historical value, not updated for inflation,
except as set forth in item number 2 of this section.
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For the purposes of this section, only expenses incurred abroad by foreign residents for services directly
related to the toll-manufacturing operation for account of the Mexican resident to cover obligations assumed
by said resident in Mexican territory, or expenses incurred by foreign residents for dependent personal
services performed at the toll-manufacturing operation, when the service provider has remained in Mexican
territory for more than 183 calendar days, whether consecutive or otherwise, in the preceding twelve
months, in accordance with article 154 of this Law, shall be considered.
For the purposes of the calculation referred to in the preceding paragraph, the amount of the expenses
incurred by foreign residents for dependent personal services related to the toll-manufacturing operation
that are provided or utilized in Mexican territory shall comprise total salaries paid in the fiscal year in
question, including any fringe benefits, described in general rules issued by the Tax Administration Service.
When an individual provider of dependent personal service is a foreign resident, the taxpayer may, rather
than applying the preceding paragraph, prorate the expenses referred to in said paragraph. To obtain the
pro-rata share, the total salary received by the individual in the fiscal year in question shall be multiplied by
the quotient derived from dividing the number of days that said person remained in Mexican territory by 365.
The number of days that the individual has remained in Mexican territory shall include the number of days in
which he has been physically present in the country; plus one Saturday and Sunday for each five business
days that he remains in Mexican territory; plus vacation days, when he has remained in the country for more
than 183 days in a period of 12 months; plus short work stoppages; plus authorized days of sick leave.
Mexican residents that elect to apply this section shall submit a written statement to the tax authorities
expressing that the tax profit of the year was at least equal to the largest amount resulting from applying (I)
and (II) hereof, no later than three months after the date on which said year ends.
ENTERPRISES WITH MAQUILA PROGRAM
Enterprises with a Maquila program that apply the provisions of this article shall submit annually to the tax
authorities and no later than on June of the relevant year, an information return on their toll-manufacturing
operations, as required by the Tax Administration Service in general rules.
LETTER RULINGS ON THE TRANSFER PRICING METHOD
Mexican residents may obtain a letter ruling, pursuant to article 34-A of the Federal Fiscal Code, whereby
compliance with articles 179 and 180 of this statute is confirmed. Such a ruling shall not be necessary to
meet the requirements of this article.
EXEMPTION TO FILE INFORMATION RETURNS ON MAQUILA OPERATIONS WITH FOREIGN
RESIDENT RELATED PARTIES
Mexican residents that have elected to apply the provisions of this article shall be exempt from the
obligation to file the information return set forth in article 76(X) of this Law, exclusively regarding the
toll-manufacturing operation.
TOLL MANUFACTURERS PERFORMING OTHER ACTIVITIES
Mexican residents that carry out activities in addition to those related to toll-manufacturing operations
referred to in article 181 of the Law may avail themselves of this article only with regard to the
toll-manufacturing operation.
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transactions performed through the enterprise with a Maquila program in shelter modality or its related
parties. The information described in this paragraph shall be presented itemized, per each of the foreign
residents that perform toll manufacturing activities through the enterprise with a Maquila program in shelter
modality.
Enterprises with a Maquila program in shelter modality subject to the provisions of this article shall not be
subject to the provisions of articles 181 and 182 of this statute.
OBLIGATIONS FOR ENTERPRISES WITH A MAQUILA PROGRAM IN SHELTER MODALITY
Enterprises with a Maquila program in shelter modality shall comply with the following obligations in addition
to others set forth in this article and in tax and customs provisions:
I. To comply with the provisions of the fifth paragraph of article 32-D of the Federal Fiscal Coe, only with
regard to (I), (II), and (III) thereof.
II. To submit the following returns as provided in tax provisions:
a) Annual and monthly definitive returns on federal taxes, when required to do so, regardless of whether
any amount thereof is payable or not.
b) Information return on transactions with third parties.
c) The section corresponding to foreign trade transactions of the Information Return for Manufacturing
Enterprises, Toll Manufacturers and Services to Exportation.
SUSPENSION FROM IMPORTERS REGISTRY FOR FAILURE TO COMPY WITH OBLIGATIONS
When an enterprise with a Maquila program in shelter modality fails to meet any of the obligations set forth
in the preceding sections, the Tax Administration Service shall order that enterprise to make any
clarifications in its defense with regard to such breach within a term of 30 calendar days; and if such
company fails to correct that situation within such term, that enterprise shall be suspended from the
Importers Registry, described in article 59(IV) of the Customs Law.
Foreign residents performing toll manufacturing agreements through an enterprise with a Maquila program
in shelter modality may abide by the provisions of this article for a period of 4 consecutive years.
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in article 152 of this Law would have been applied if they had not conducted said transactions, for the year
in which the transactions were carried out or, when the payment is made before the respective return is
filed, for the immediately preceding year, in accordance with the rules described below:
TOP AMOUNT
I. The amount of the deposits, payments or acquisitions referred to in this article may not exceed, in the
calendar year in question, the equivalent of $152,000.00, when all of the items have been taken into
account.
SHARES IN MUTUAL FUNDS
The shares of the mutual funds referred to in this article shall remain in the custody of the mutual fund to
which they correspond, and may not be transferred to third parties, reimbursed, or repurchased by said
legal entity until a period of five years has elapsed since the date of their acquisition, except in the event of
the death of the owner of the shares.
INCOME INCLUDIBLE IN GROSS INCOME FOR THE YEAR OF RETIREMENT
II. The amounts deposited in the personal accounts, paid for the insurances, or invested in shares of the
mutual funds referred to in this article, as well as interest, reserves, sums, or any amount earned as
dividends, as earnings on the disposition of the shares of mutual funds, as indemnities or loans derived
from those accounts, from the respective agreements or the shares of the mutual funds, shall be considered
items of gross income in the taxpayers return for the calendar year in which they are received or withdrawn
from his special personal savings account, from the insurance in question, or from the mutual fund from
which the shares were acquired. In no event shall the rate applicable to the amounts includible in gross
income in accordance with this section be higher than the tax rate that would have been applied to the
taxpayer in the year in which the deposits were made, the premiums were paid, or the shares were
acquired, had the taxpayer not received such deposits, payments, or shares.
TAXPAYERS DECEASE
In the event of death of the holder of the special savings account, of the insured, or of the purchaser of the
shares referred to in this article, the appointed beneficiary or the heir shall be required to include in gross
income the withdrawals made from the account, agreement, or mutual fund, as the case may be.
COMMUNITY PROPERTY
Persons who are married under the community property system may consider the special account or the
investment in shares referred to in this article to belong to both spouses in the proportion that corresponds
to each; or they may consider that it belongs to only one of them, in which case the deposits, investments,
and withdrawals shall be considered to belong entirely to said person. This election shall be made for each
account or investment at the time the account is opened or the investment is made and it may not be
changed.
PLANS WITH LIFE INSURANCES
Taxpayers that make premium payments on insurances that are based on pension plans related to age or
retirement and that, in addition, insure the life of the contracting party may not claim the deduction referred
to in paragraph one of this article for the portion of the premium corresponding to the life insurance
component. In the respective insurance contract, the insurance company shall specify the portion of the
premium that covers life insurance. The amount paid by the insurance company to the appointed
beneficiaries or to the heirs as result of the death of the insured shall be treated, for tax purposes, as set
forth in article 93(XXI), first paragraph, of this Law regarding the portion corresponding to the life insurance.
Insurance companies that make payments to cover premiums corresponding to the life insurance
component chargeable to the funds created to cover the pensions or retirements of the insured shall
withhold, as an estimated payment, the tax calculated in accordance with Article 145 of this Law.
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Artculo 186. EMPLOYERS RETAINING PERSONS WITH MOTOR DISABILITIES OR VISUALLY
IMPAIRED
Employers that hire persons who suffer motor disabilities and who are required to permanently use
prostheses, crutches or wheelchairs; mental disabilities; hearing or speech disabilities in 80% or more of
the normal capacity; or persons visually impaired, may deduct from their income, 100% of the income tax of
these workers that has been withheld and paid in accordance with Title IV, Chapter I, of this Law. To do so,
the employer shall comply regarding said employees, with the obligation set forth in article 12 of the Social
Security Law, and obtain each employee's disability certificate from the Mexican Social Security Institute.
A tax incentive shall be granted to taxpayers hiring senior citizens equal to 25% of the salary effectively paid
to persons of 65 years of age or more. To this end, the full amount of the salary that is used to calculate
income tax withholdings for the employee concerned for the year in question, pursuant to article 96 of this
statute, shall be considered.
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RENTS
VII. When a trustee agrees in the lease agreements that the amount of the consideration includes variable
amounts or amounts referred to percentages, except when consideration is based on a fixed percentage of
the lessees sales, such items shall not exceed 5% of the trusts annual income for rents.
REGISTRY OF TRUSTS ENGAGED IN THE ACQUISITION AND CONSTRUCTION OF REAL ESTATE
VIII. Trusts shall be enrolled at the Registry of Trusts engaged in the acquisition and construction of real
estate, pursuant to the general rules, issued by the Tax Administration Service.
Artculo 188. RULES FOR TRUSTS ENGAGED IN THE ACQUISITION AND CONSTRUCTION OF
REAL ESTATE
Trusts that meet the requirements set forth in article 187 of this Law shall abide by the following:
TAXABLE INCOME
I. The trustee shall calculate, in accordance with Title II of this Law, taxable income for the year derived from
the income generated by the goods, rights, credits or securities that make up the trust property.
TAXABLE INCOME FOR EACH PARTICIPATION CERTIFICATE
II. Taxable income for the year shall be divided by the number of participation certificates issued by the
trustee on behalf of the trust in order to determine the taxable income corresponding to each
aforementioned certificate individually.
ESTIMATED PAYMENTS
III. The obligation to make estimated tax payments referred to in article 14 of this Law shall not apply.
WITHHOLDING UPON DISTRIBUTED TAXABLE INCOME
IV. The trustee shall withhold income tax on the taxable income that the trustee distributes to the holders of
the participation certificates, by applying the rate set forth in article 9 of this statute to the distributed amount
of said taxable income, unless the holders that receive the income are exempt from paying income tax on
such amounts.
When participation certificates are placed among the general investing public, the financial intermediary
who holds the aforementioned certificates in deposit shall be responsible for withholding the tax referred to
in the preceding paragraph; and the trustee shall be released of the obligation to make such a withholding.
INCLUSION IN GROSS INCOME OF THE DISTRIBUTED TAXABLE INCOME
V. Holders of participation certificates who are Mexican residents or foreign residents with a permanent
establishment in Mexico shall include in their gross income, the taxable income distributed to them by the
trustee or the financial intermediary derived from the goods, rights, credits, or securities that make up the
property of the trust that issued said certificates, and they shall not deduct the tax withheld by them.
Likewise, they shall include in gross income, the gains that they obtain on the disposition of the
aforementioned certificates, unless they are exempt from paying income tax on said gains. In addition, they
may credit the tax withheld from them on said taxable income and gains against their income tax for the
year in which the income is distributed or the gains are obtained by them.
Mexican resident individuals shall consider that the distributed taxable income corresponds to the items of
income referred to in article 114(II) of this Law.
Withholdings from holders of participation certificates that are foreign residents shall be considered to be
the definitive payment of the tax.
EXEMPT FOREIGN PENSION AND RETIREMENT FUNDS
VI. The pension and retirement funds referred to in article 153 of this Law that acquire participation
certificates may apply the exemption set forth in said article to income that they receive derived from the
goods, rights, credits, and securities that make up the property of the trust that issued said certificates and
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to the capital gains that they obtain from disposing of them.
DISPOSITION OF IMMOVABLE PROPERTY CONTRIBUTED TO A TRUST
VII. When real property held in trust is disposed of before the minimum period referred to in article 187(IV) of
this Law has elapsed, the trustee shall pay, within 15 days following the day of the disposition, the tax on the
gain from said disposition. This tax shall be calculated by applying the rate set forth in article 9 of this statute
to said gain, determined in accordance with Title IV, Chapter IV, of this Law, and the trustee shall pay it for
the account of the holders of the participation certificates, without identifying them. This tax shall be
creditable for the holders to whom the trustee distributes said gain, provided that the gain is includible in
gross income for said holders, and income tax shall not to be withheld from them on said gain.
INCOME TAX ON UNDISTRIBUTED TAXABLE INCOME
VIII. When taxable income for the year derived from the income generated by the properties held in trust
exceeds the amount distributed to the holders of the participation certificates through 15 March of the
immediately subsequent year, the trustee shall pay income tax on the difference. This tax is calculated by
applying the rate set forth in article 9 of this statute to that difference, and the trustee shall pay it for the
account of the holders of said certificates, without identifying them, within fifteen days following that date.
The tax paid may be credited by the holders of said certificates who subsequently receive the income
derived from said difference, provided that such income is includible in gross income for them. Income tax is
not to be withheld from them on said difference.
TAX ON DISPOSITIONS OF PARTICIPATION CERTIFICATES
IX. Holders of participation certificates shall be subject to income tax on their gains from disposing of said
certificates. This tax shall be calculated by reducing the average per-certificate cost of each certificate
disposed of from income that they receive in the disposition.
AVERAGE COST OF PARTICIPATION CERTIFICATES
The average cost per participation certificate shall be calculated on the basis of all of the certificates of the
same issuing trust held by the transferor on the date of the disposition, even if the seller does not sell all
such certificates.
AVERAGE COST
To calculate the average cost per participation certificate, the verified acquisition cost of all of the
aforementioned certificates of the same issuing trust held by the transferor on the date of the disposition,
updated from the month of the acquisition thereof through the month of the sale, shall be divided by the total
number of said certificates owned by the transferor.
If the transferor does not dispose of all of the participation certificates of a single issuing trust that the
transferor holds on the date of the disposition, for the purpose of calculating the average per-certificate cost
in subsequent dispositions in accordance with this section, the verified acquisition cost of the certificates
shall be the average per-certificate cost determined in accordance with the calculation used in the
immediately preceding disposition, and the acquisition date shall be that of said disposition.
WITHHOLDING BY THE PURCHASER
The purchaser of participation certificates shall withhold from the transferor, 10% income tax on the gross
income that the transferor receives for such certificates, without any deductions, unless the transferor is a
Mexican resident legal entity or is exempt from paying tax on income derived from the goods, rights, credits,
or securities that make up the property of the trust that issued the certificates.
DISTRIBUTIONS GREATER THAN TAXABLE INCOME
When a trustee delivers to the holders of the participation certificates an amount greater than the taxable
income for the year generated by the properties held in trust, the difference shall be considered a capital
reimbursement. The difference shall be reduced from the verified acquisition cost of said certificates
belonging to the holders who receive the difference. Said difference shall be updated from the month in
which it is delivered until the month in which the holder transfers part or all of the certificates that he has in
the disposition immediately subsequent to the delivery.
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CAPITAL REIMBURSEMENTS ACCOUNT
For the purposes of the preceding paragraph, the trustee shall keep a Capital Reimbursements Account;
and the trustee shall give the holders of the participation certificates a certificate for the capital
reimbursements that the holders receive, except in the case of participation certificates placed among the
general investing public.
EXEMPT DISPOSITIONS OF PARTICIPATION CERTIFICATES
X. When investment certificates are placed among the general investing public and are disposed of through
the recognized markets referred to in article 16-C(I) and (II) of the Federal Fiscal Code, foreign residents
who do not have a permanent establishment in Mexico and Mexican resident individuals shall be exempt
from income tax on the gain that they earn on the disposition of said certificates made through those
markets.
DEFERRAL OF THE TAX ON GAINS FROM CONTRIBUTIONS OF IMMOVABLE PROPERTY
XI. Persons who, in their capacity as settlors, contribute real properties to a trust and receive participation
certificates for the total or partial value of said properties may defer payment of the income tax on the gain
earned on the disposition of such properties derived from the contribution that they make to the trust
corresponding to each certificate of participation that they receive for such properties until they transfer
each such certificate. The amount of the tax corresponding to each certificate sold shall be updated for the
period from the month of the contribution of the real properties to the trust until the month in which the
certificates are transferred.
DEFERRED TAX
For the purposes of the preceding paragraph, the tax shall be calculated by applying the rate set forth in
article 9 of this statute to the gain earned in the disposition of the real properties, and shall be paid within
fifteen days following the disposition of the corresponding participation certificates.
GAINS FROM CONTRIBUTIONS OF IMMOVABLE PROPERTY
The gain on the disposition of the real properties derived from a settlors contribution to a trust
corresponding to each certificate of participation received for said properties shall be calculated in
accordance with this Law. For this purpose, the sale price of said properties shall be the value assigned to
them in the indenture of the aforementioned certificates, and the resulting gain shall be divided by the
number of participation certificates, which is determined by dividing the aforementioned value by the par
value of the individual participation certificate.
PAYMENT OF DEFERRED TAX
The deferral of the tax payment referred to in this section shall end when the trustee disposes of the real
properties. The settlor who contributed said properties shall pay this tax within fifteen days after the day on
which said properties are transferred.
INCLUSION IN GROSS INCOME OF GAINS FROM CONTRIBUTIONS OF IMMOVABLE PROPERTY
BY LEGAL ENTITIES
For taxpayers to whom Title II of this Law applies, the gain shall be includible in gross income in the year in
which the certificates are transferred or the trustee transfers the properties held in trust. Said taxpayers
shall update the gain for the period from the month in which the properties were contributed to the trust until
the month in which the certificates or the real properties are transferred. Tax paid in accordance with this
section shall be considered an estimated tax payment for said year.
ACQUISITION COST OF PARTICIPATION CERTIFICATES RECEIVED IN EXCHANGE FOR
CONTRIBUTIONS OF IMMOVABLE PROPERTY
Settlors who receive participation certificates for their contribution of real properties to a trust shall consider
the verified acquisition cost of each such certificate to be the value assigned to said real properties in the
indenture of the aforementioned certificates divided by the number of certificates number which is
obtained by dividing said value by the par value of the participation certificate individually and the
acquisition date shall be the date on which the settlors receive the certificates for the aforementioned
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contribution. The gain derived from the disposition of the certificates referred to in this paragraph shall be
calculated in accordance with (VII) of this Article.
IMMOVABLE PROPERTY LEASED TO THE SETTLOR THAT CONTRIBUTED SUCH PROPERTY
XII. When a settlor contributes real properties to a trust and the real properties are immediately leased to
said settlor by the trustee, the settlor may defer the payment of the income tax on the gain obtained from the
disposition of the properties until the lease agreement ends, provided that the term thereof does not exceed
10 years, or until the trustee disposes of the contributed real properties, whichever occurs first. When the
lease agreement ends or the real properties are disposed of by the trustee, the tax on the gain shall be paid.
This tax shall be calculated by applying the rate set forth in article 9 of this statute to the gain, updated for
the period from the month in which the goods were contributed to the trust until the month in which the lease
agreement ends or the goods are disposed of by the trustee.
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The amounts described in the preceding paragraph shall be divided in equal amounts to be distributed in
two periods during the fiscal year.
TOP AMOUNT OF THE INCENTIVE FOR INVESTMENT PROJECTS
III. In the case of for investment projects in domestic cinematographic productions the incentive shall not
exceed 20 million pesos per taxpayer and investment project.
TOP AMOUNT OF THE INCENTIVE FOR INVESTMENT PROJECTS FOR DISTRIBUTION OF
DOMESTICS CINEMATOGRAPHIC FILMS
In the case of investment projects for distribution of domestic cinematographic films, the tax incentive shall
not exceed 2 million pesos per taxpayer and investment project. In cases where two or more taxpayers
distribute the same domestic cinematographic film, the Inter-institutional Committee may award the same
amount to only two of the taxpayers.
PUBLICATION IN THE FEDERAL REGISTER
IV. The Inter-institutional Committee shall publish, no later than the last day of February of each fiscal year,
the amount of the incentive allocated during the previous year, as well as the names of the taxpayers and
the investment projects in domestic cinematographic productions and distribution of domestic
cinematographic films selected to receive the tax benefit.
GENERAL RULES
V. Taxpayers shall comply with the general rules regarding the incentive, published by the Inter-institutional
Committee.
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productions.
PUBLICATION IN THE FEDERAL REGISTER
III. The inter-institutional committee described in (I) hereof shall publish no later than the last day of
February of each fiscal year, the amount of the tax incentive distributed during the preceding year, as well
as the taxpayers that were benefited and the projects that were awarded with the same benefit.
GENERAL RULES
IV. Taxpayers shall comply with the provisions of the general rules for obtaining the incentive, published by
the inter-institutional committee described in (I) hereof.
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Artculo 192. INVESTMENTS IN VENTURE CAPITAL
In order to promote venture-capital investments in the country, the tax treatment set forth in article 193 of
this Law shall be available to persons who invest in shares issued by Mexican residents not listed on the
Stock Exchange at the time of investment, as well as in loans extended to finance such entities through
trusts that comply with the following requirements:
I. The trust shall be created in accordance with Mexican law and the trustee shall be a Mexican resident
banking institution authorized to act as such in Mexico.
II. The primary objective of the trust shall be to invest in the equity of Mexican resident legal entities not
listed on the Stock Exchange at the time of the investment and to promote their development by taking part
in their boards of directors, as well as to grant them financing.
III. At least 80% of the trust property shall be invested in the shares that make up the investment in the
equity or in financing granted to the promoted legal entities referred to in (II) above; and the remainder shall
be invested in securities issued by the Federal Government and registered at the National Registry of
Securities or in shares of debt securities mutual funds.
IV. Shares of the promoted legal entities that are acquired shall not be sold before at least two years have
elapsed as of the date of their acquisition;
V. The maximum term of the trust shall be 10 years.
At least 80% of the income received by the trust in the year shall be distributed no later than two months
after the end of the year.
VI. The requirements set forth by the Tax Administration Service though general rules shall be complied
with.
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IV. When the trust beneficiaries are Mexican resident individuals or foreign residents, the trustee shall
withhold the tax corresponding to the type of income delivered to them in accordance with Title IV or V of
this Law, respectively, or, if applicable, in accordance with conventions to avoid double taxation entered into
by Mexico with the countries in which the foreign residents who receive the income reside. The persons
who pay interest to the trustee for the financing granted and the securities held by trust or who acquire
shares of the promoted legal entities from the trustee shall not withhold income tax from the trustee on that
income or those acquisitions.
V. The trustee shall provide a certificate of income delivered and, as applicable, of the tax withheld on said
income, as well as of the reimbursement of contributions to the persons who receive said income or
reimbursements as trust beneficiaries of the trust in question.
VI. When a trust beneficiary assigns its rights in the trust, such beneficiary shall calculate the gains on the
disposition of the properties belonging to the trust and involved in said assignment, in accordance with the
express provisions of article 14 (VI) of the Federal Fiscal Code. Said beneficiary shall consider the verified
acquisition cost of the properties to be the sum of the balance in the beneficiary's Individual Contribution
Account on the date of the disposition, plus the portion corresponding to the beneficiary individually for
those rights in the balances of the income accounts referred to in (II) of this article, and the balance of the
account referred to in the following paragraph, on the same date. If the trust beneficiary, rather than
assigning all of the rights that the beneficiary holds in the trust, assigns only a portion thereof, the verified
acquisition cost of the goods to be disposed of shall be determined as follows: the amount referred to in this
paragraph shall be multiplied by the percentage obtained when the percentage share in the trust
represented by the rights assigned is divided by the percentage share therein represented by all of the
rights that the beneficiary has on the date of the disposition.
For the purposes of the preceding paragraph, the trustee shall keep an account in which it records the
participation corresponding to the trust in the net tax profits of the promoted legal entities by reason of the
investment made in said legal entities, generated as of the date of acquisition of the their shares in the trust
that are part of the balance of said legal entities net tax profit account.
When rights that are assigned have been acquired from third parties, the verified acquisition cost of said
rights shall only be increased or reduced, respectively, by the difference between the balance on the date of
the disposition and the balance on the date of acquisition of the rights, updated through the date of the
disposition, of the income accounts referred to in (II) of this article and of the account referred to in the
preceding paragraph.
VII. When any of the requirements referred to in article 192(IV) and (V) of this Law are not complied with, the
trust beneficiaries shall be subject to tax at the rate set forth in paragraph one of article 9 of this Law on the
tax profit derived from the income received by the trustee, in accordance with article 13 of this Law, starting
in the year immediately following that in which such failure to comply occurs.
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fiscal year in which they distribute to their members the corresponding taxable profit.
In cases where the cooperatives referred to above determine a profit and do not distribute it within two years
following the date when such profit was determined, the tax shall be paid pursuant to this Chapter.
PAYMENT OF DEFERRED TAX
When a production cooperative distributes to its members profits from the taxable profit account, it shall pay
the deferred tax by applying to the amount of profit distributed to each member the tax rate schedule
described in article 152 of this statute.
For purposes of the preceding paragraph, the first profits to be distributed shall be deemed to be the first
profits that were generated.
The tax that corresponds to each member under this section shall be paid by filing a return at the authorized
offices, no later than the 17th day of the month immediately following the month in which taxable profits
were paid. Members of production cooperatives may credit in their annual tax return the tax paid pursuant to
this paragraph.
DISTRIBUTION OF TAXABLE PROFIT
For purposes of this Chapter, a production cooperative shall be deemed to distribute profits to its members
when taxable profit described in this section is invested in financial assets other than accounts receivable
from clients or in resources necessary for the regular operation of the cooperative concerned.
INVESTMENT OF UNDISTRIBUTED TAXABLE PROFIT
For purposes of this Chapter, production cooperatives that do not distribute yields to their members may
only invest such resources in goods that generate more employment or more members.
TAXABLE PROFIT ACCOUNT
II. Production cooperatives shall keep a taxable profit account. This account shall be increased by the
taxable profit for the year and shall be reduced by the amount of taxable profit paid.
UPDATE OF THE BALANCE OF THE TAXABLE PROFIT ACCOUNT
The balance of the account described in this section through the last day of every year, without including
taxable profit thereof, shall be updated for inflation from the month in which it was last updated through the
last month of the relevant year. When profits are distributed out of such account after the update described
in this paragraph, the balance of that account through the distribution date shall be updated for the period
between the month in which it was last updated through the month in which such profits are distributed.
ASSIGNMENT OF THE BALANCE OF THE TAXABLE PROFIT ACCOUNT BY MERGER OR SPIN OFF
The balance of the taxable profit account shall be transferred to one or more corporations in cases of
merger or spin off. In the last case, such balance shall be divided between the original company and the
spun of companies, in the proportion in which equity is divided, as determined in the financial position
statement approved by the members general extraordinary meeting and that served as basis for the spin
off.
CALCULATION OF TAXABLE PROFIT
Taxable profit described in this section shall be determined by the relevant cooperative, pursuant to article
109 of this statute, corresponding to all the members of the cooperative.
ESTIMATED PAYMENTS
III. Income earned by cooperatives shall not be subject to estimated payments of income tax.
YIELDS AND ADVANCES
IV. Yields and advances granted by cooperatives to their members shall be considered income subject to
tax as income from rendering personal dependent services, and shall be subject to the provisions of article
94 and 96 of this statute.
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TEMPORARY PROVISIONS OF THE INCOME TAX LAW of the Decree that amends, enacts and
repeals various provisions of the Value Added Tax Law, the Special Tax on Production and
Services Law, the Federal Fees Law; enacts the Income Tax Law; and repeals the Single Rate
Business Tax Law and the Cash Deposits Tax Law, published in the Federal Register in December
11, 2013, and in force since January 1, 2014
Artculo EIGHTH. 4.9% RATE DURING 2014 ON INTERESTS PAID TO FOREIGN BANKS RESIDING
IN A COUNTRY WITH A TAX TREATY
For purposes of article 166(I)(a)(2) of the Income Tax Law, during fiscal year 2014, interests described in
such provisions shall be subject to a 4.9% rate, provided that the effective beneficiary thereof is a resident
of a country that has an agreement to avoid double taxation in force with Mexico, and the requirements set
forth in such treaty to apply the rates described therein for this item of income are complied with.
TRANSITORY PROVISIONS OF THE INCOME TAX LAW of the Decree that amends, enacts and
repeals various provisions of the Value Added Tax Law, the Special Tax on Production and
Services Law, the Federal Fees Law; enacts the Income Tax Law; and repeals the Single Rate
Business Tax Law and the Cash Deposits Tax Law, published in the Federal Register in December
11, 2013, and in force since January 1, 2014
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III. When the Income Tax Law refers to legal or factual situations concerning prior years, this shall include,
when applicable, years during which the Income Tax Law hereby repealed was in force.
PROVISIONS RENDERED INEFFECTIVE
IV. As of the entry into force of the Income Tax Law, statutes, regulations, administrative provisions,
resolutions, rulings, interpretations, authorizations or permits of general nature or that were granted
individually, that contravene or oppose to the provisions of such statute are repealed.
PROVISIONS APPLICABLE TO INVESTMENTS NOT FULLY DEDUCTED THROUGH 12-31-2013
V. Taxpayers who prior to the entry into force of the Income Tax Law made investments pursuant to article
38 of the Income Tax Law hereby repealed that were not deducted entirely prior to the entry into force of this
law, shall claim the deduction upon such investments in accordance with Title II, Chapter I, Section II of the
Income Tax Law, only with regard to the balance that under the Income Tax Law hereby repealed is
pending to be deducted, and considering the original amount of the investment determined in accordance
with that statute.
TAX LOSS CARRYFORWARDS THROUGH 12-31-2013
VI. Taxpayers who prior to the entry into force of the Income Tax Law sustained losses pursuant to Title II,
Chapter V of the Income Tax Law hereby repealed that were not carried forward entirely through the entry
into force of this law, shall carry forward such losses pursuant to Title II, Chapter V of the Income Tax Law,
considering only the balance of such losses pending to be carried forward, pursuant to the Income Tax Law
hereby repealed.
VALIDITY OF ADMINISTRATIVE CO-OPERATION AGREEMENT ON FEDERAL TAX MATTERS
VII. Until new administrative co-operation agreements on federal tax matters enter into force, the delegated
authority on income tax matters contained in the administrative co-operation agreements on federal tax
matters entered into by and between the Federal Government through the Ministry of Finance and Public
Credit and the states shall continue in force as well as the annexes and the amendments thereto.
The exercise of delegated authority on income tax matters, pursuant to the agreements in force, described
in the preceding paragraph shall be understood to be referred to the Income Tax Law as of its entry into
force.
Income Tax matters that through the entry into force of this statute are being processed by the state tax
authorities shall be concluded by them under the terms of the Income Tax Law hereby repealed.
STATE GOVERNMENTS REVIEW POWERS
VIII. The States shall keep in force the review powers afforded by the Federal Fiscal Code and the Income
Tax Law hereby repealed, in connection with tax obligations corresponding to fiscal year 2013 and prior
year.
INFORMATION RETURNS UNDER THE INCOME TAX LAW REPEALED
IX. Taxpayers required to file information returns under the Income Tax Law hereby repealed shall submit
the returns for the year ended on December 31, 2013, no later than February 15, 2014.
TERM TO FILE INFORMATION RETURNS AND CERTIFICATES PURSUANT TO THE INCOME TAX
LAW REPEALED
X. The obligation to submit information returns and certificates set forth in articles 86(III), (IV), (VIII), (IX), (X)
and (XIV), 101(VI), 118(III) and (V), 143 last paragraph, 144 and 164 of the Income Tax Law hereby
repealed shall be complied with under the terms of such statute as of January 1, 2014 through December
31, 2016.
INCOME FROM SALES IN INSTALLMENTS IN FINANCIAL LEASE AGREEMENTS
XI. Taxpayers who elected to consider as income earned in the year the portion of the price effectively
collected in a sale in installments, pursuant to article 18(III) of the Income Tax Law hereby repealed, that still
have amounts pending to be included in gross income through the entry into force of this Decree, shall
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abide by the following in connection with sales in installments executed through December 31, 2013:
a) They shall apply the provisions of the Income Tax Law hereby repealed until they include in gross income
the amount pending to be collected out of the price agreed in the disposition, with regard to all sales in
installments.
The tax resulting from the application of the provisions of the second paragraph of article 18(III) of the
Income Tax Law hereby repealed may be paid in two equal parts: 50% in the year in which income is
included in gross income; and 50% in the following year.
The tax that may be deferred pursuant to the preceding paragraph shall be that which corresponds to the
proportion that sales in installments represent with regard to all the transactions performed by the taxpayer
during the relevant period. The tax deferred under this subsection shall be updated from the month in which
the election was made through the made in which payment thereof is made.
b) When a taxpayer disposes of accounts receivable or surrenders them as dation in payment, the amount
pending to be included in gross income shall be considered income earned in the year in which such
disposition or dation in payment takes place, pursuant to the Income Tax Law hereby repealed.
c) In cases of breach to an agreement for sale in installments, the seller shall treat as income earned in the
year, the amounts collected in that year from the purchaser, reduced by the amounts refunded pursuant to
the relevant agreement, in accordance with the Income Tax Law hereby repealed.
TAXPAYERS THAT ELECTED TO INLCUDE THEIR INVENTORIES IN GROSS INCOME
XII. Taxpayers who elected to include in gross income their inventories for purposes of determining the cost
of goods sold, shall continue applying the provisions of article Third (IV), (V), (VI), (VII), (IX) and (XI)of the
Transitory Provisions of the Income Tax Law of the Decree amending, adding, repealing and enacting
various provisions of the Income Tax Law, the Asset Tax Law and Establishes the Employment Subsidy
and for the Leveling of Income, published in the Federal Register in December 1, 2004.
INCLUSION IN GROSS INCOME OF GAINS BY CAPITALS MARKET SECURITIES MUTUAL FUNDS
XIII. Capitals market securities mutual funds that made the election described in article 50 of the Income
Tax Law hereby repealed through December 31, 2013, shall include in gross income gains from
dispositions of shares, interests, and inflation adjustment until the fiscal year in which they distribute
dividends to their shareholders, only with regard to investments in promoted companies.
UPDATE OF GAINS FROM DISPOSITIONS OF SHARES AND INTERESTS
For purposes of the preceding paragraph, capitals market securities mutual funds shall update gains from
the disposition of shares and interests from the month in which those items were earned through the month
in which they are distributed to their members. Mutual funds that made the above-mentioned elections shall
deduct the deductible annual inflation adjustment, updated interests and updated losses sustained in
dispositions of shares, in the year in which they distribute those gains or interests. Deductible interests and
losses from dispositions of shares shall be updated for the period between the month in which interests
were accrued or the losses were sustained through the last month of the year in which the deduction of
those items will be claimed.
MUTUAL FUNDS DISTRIBUTING DIVIDENDS
When capitals market securities mutual funds that elected to make inclusions in gross income as described
in the preceding paragraph distribute dividends, they shall abide by the provisions of article 10 of the
Income Tax Law.
REDUCTION OF THE NET TAX PROFIT
In the cases described in the preceding paragraph, the relevant mutual fund shall reduce from net tax profit,
determined pursuant to the third paragraph of article 77 of the Income Tax Law, for the year in which such
distribution was made, the amount of dividends distributed in accordance with this section.
INVESTMENTS IN PROMOTED MUTUAL FUNDS
The provisions of this section shall apply only to investments in promoted mutual funds made through
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December 31, 2013.
Capitals market securities mutual funds shall abide by the provisions of the Income Tax Law with regard to
gains from dispositions of shares, interests, and annual inflation adjustment in connection with investments
in promoted companies made as of January 1, 2014.
NONDEDUCTIBILITY OF LOSSES FROM NON-COLLECTIBLE CREDITS
XIV. As of January 1, 2014, banking institutions shall not be able to claim the deduction for losses from
non-collectable credits, derived from the creation or increase in global preventive reserves, deducted under
article 53 of the Income Tax Law hereby repealed.
GLOBAL PREVENTIVE RESERVES
When the accumulated balance of the global preventive reserves for which the election described in article
53 Income Tax Law hereby repealed was made, that in accordance with tax provisions or the provisions
issued by the National Banking and Securities Commission, the banking institutions have through
December 31 of the relevant year is lower than the updated accumulated balance of the same reserve
through December 31 of the immediately preceding year, the difference shall be income including in gross
income for the relevant year. The balance of the global preventive reserves that banking institutions have
through December 31, 2013, pursuant to the fourth paragraph of article 53 of the Income Tax Law hereby
repealed may be kept in the accounting account established for that effect by the National Banking and
Securities Commission; and the provisions of this paragraph may not apply until the credits that gave rise to
such reserves are liquidated, breached, renewed or restructured. No later than February 15 of each year,
taxpayers that apply the provisions of this paragraph shall inform about the items that they deducted under
this paragraph in the immediately preceding year, pursuant to the provisions issued by the Tax
Administration Service.
The accumulated balance of the global preventive reserves shall be updated from the last month of the
immediately preceding year through the last month of the relevant year. In this cases, income includible in
gross income, referred to in the preceding paragraph, may be reduced by the updated excess of the global
preventive reserves pending to be deducted, until depleted, provided that it was not previously deducted
pursuant to article 53 of the Income Tax Law hereby repealed.
For purposes of the calculation of income includible in gross income, described in the preceding paragraph,
the reductions applied against the reserves for punishments ordered or authorized by the National Banking
and Securities Commission shall not be considered.
EXCESS OF GLOBAL PREVENTIVE RESERVES PENDING TO BE APPLIED
Banking institutions that have any excess of the global preventive reserves pending to be applied under
article 53 of the Income Tax Law hereby repealed through December 31, 2013, may deduct such excess
every year, provided that the amount of the losses from non-collectable credits in the relevant year is less
than 2.5% of the annual average balance of the credit portfolio for the year in question. The deductible
amount shall be equal to 2.5% of the annual average balance of the credit portfolio for the year, reduced by
the amount of losses from non-collectable credits deducted in the relevant year.
ELECTION TO DEDUCT WRITE-OFFS, FORGIVENESS, BONUSES OR DISCOUNTS
Once a banking institution has deducted the full amount of any excess of the global preventive reserves
pending to be applied, pursuant to the preceding paragraph, it may deduct, in addition to the provisions of
article 27(XV) of this statute, the amount of write-offs, forgiveness, bonuses or discounts over the credit
portfolio, representing services that accrue interests in their favor, as well as the amount of losses from the
sale of such portfolio and losses from dation in payment. This shall apply only when a double deduction is
not generated eventually, and the transactions were not entered into between related parties.
TAXPAYERS AUTHORIZED TO FILE CONSOLIDATED TAX RETURNS UNDER THE INCOME TAX
LAW REPEALED
XV. Taxpayers who had an authorization to calculate consolidated taxable income pursuant to Chapter VI
of Title II of the Income Tax Law hereby repealed through December 31, 2013, and have complied with the
five-year term described in article 64 of such statute, shall abide by the following:
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DECONSOLIDATION
a) As a result of the repeal of the Income Tax Law, holding companies shall deconsolidate all the
companies of the group, including themselves, and pay the deferred tax pending through December 31,
2013. To this end, they shall apply the procedure described in article 71 of the Income Tax Law hereby
repealed or the following procedure:
AMENDED RETURN FOR DECONSOLIDATION
1. They shall recognize the effect of de-consolidation through the closing of year 2013, by filing an amended
tax return for that year. To this end, they shall add to or subtract from, as applicable, the consolidated tax
profit or the consolidated tax loss of such year the following:
i) The special consolidation items, if any, that they continued calculating for transactions corresponding to
fiscal years prior to 2002, pursuant to the second paragraph of Article Second (XXXIII) of the Transitory
Provisions of the Income Tax Law, published in the Federal Register in January 1, 2002, and that by reason
of the de-consolidation are deemed to be executed with third parties, from the execution date of the
transaction that made them qualify as special consolidation items, calculated pursuant to article 57-J of the
Income Tax Law and other applicable provisions through December 31, 2001.
ii) Tax losses from previous years that the holding company or the controlled companies are able to carry
forward at the moment of de-consolidation, considering for those purposes only those years in which the
losses from those companies were used to calculate consolidated taxable income.
Tax loss carryforwards described in the preceding paragraph as well as those described in the second
paragraph of article 71 of the Income Tax Law hereby repealed, shall include those determined through
December 31, 2012 and those sustained in year 2013.
iii) The amount of losses from the disposition of shares of the holding company or the controlled
companies, when such losses were subtracted to calculate consolidated taxable income for the year in
which they were sustained, provided that such losses were not carried forward by the company that
sustained them.
SPECIAL CONSOLIDATION ITEMS AND TAX LOSSES
For purposes of this subsection, special consolidation items and tax losses from previous years, as well as
losses from dispositions of shares corresponding to the controlled companies or the holding company shall
be added or subtracted, as applicable, in proportion to the consolidated participation for 2013. Special
consolidation items for years prior to 1999 of a holding company or controlled companies shall be added or
subtracted, as applicable, in proportion to the daily average shareholding participation for year 2013. The
participations described in this paragraph shall be those determined under the provisions of the second to
last paragraph of article 68(I) of the Income Tax Law hereby repealed.
Special consolidation items described in the preceding paragraph shall be updated from the last month of
the fiscal year in which the transaction that gave rise to such concepts was executed, in the case of
transactions described in articles 57F(I) and 57G(I) and (II) of the Income Tax Law in force through
December 31, 2001; and from the last month of the period in which an update was made, in the case of
deductions of investments on goods that are the subject matter of such transactions, through the month in
which de-consolidation takes place. Losses from dispositions of shares shall be updated from the month in
which they were sustained through the month in which de-consolidation takes place. Tax loss carryforwards
of controlled companies and holding companies shall be updated from the first month of the second half of
the year in which they were sustained through the month in which de-consolidation takes place.
CONSOLIDATED TAX PROFIT FOR FISCAL YEAR 2013
Once that consolidated tax profit for year 2013 is determined pursuant to this subsection, holding
companies shall pay the corresponding tax, pursuant to article 10 of the Income Tax Law hereby repealed.
Such holding companies shall determine the consolidated net tax profit, and any excess thereof with regard
to the net tax profit for the year, reported in the tax return previous to the tax return that must be filed
pursuant to the first paragraph of this subsection, may increase the balance of the consolidated net tax
profit account for purposes of the procedure described in 3 below.
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TAX PAYABLE BY CONTROLLED COMPANIES
2. Holding companies shall pay the tax pursuant to the first paragraph of article 78 of the Income Tax Law
hereby repealed, in connection with dividends or profits not deriving from the net tax profit account or the
re-invested net tax profit account, and that were paid by controlled companies to other members of the
same consolidation group. The tax shall be determined by applying the rate described in article 10 of said
statute to the result of multiplying the 1.4286 factor by the amount of the dividends or profits, updated from
the month in which they were paid through the month of deconsolidation.
For purposes of the preceding paragraph, holding companies may not take into account dividends or profits
paid in cash or in kind, paid or distributed prior to January 1, 1999 that did not derive from the net tax profit.
Dividends or profits distributed in cash or in kind, described in the preceding section, shall not increase such
account of the company that received them
For purposes of the first paragraph of this section, it shall be possible to elect that the tax be paid by the
controlled company that distributed the dividends or profits, in which case, such payment shall be made
within five months following the month in which the deconsolidation, described in a) hereof, takes place. In
this case, the company that pays the tax may credit the tax pursuant to article 10(I) of the Income Tax Law
in force a s of January 1, 2014, and shall reduce the balance of the net tax profit account through January 1,
2014, by the amount resulting from dividing the tax effectively paid under this paragraph by the 0.4286
factor.
REDUCTION OF THE BALANCE OF THE NET TAX PROFIT ACCOUNT
In cases where the amount to be reduced is greater that the balance of such account, the difference shall be
reduced from the net tax profit account determined in subsequent years, until depleted.
ELECTION TO INCREASE THE BALANCE OF THE NET TAX PROFIT ACCOUNT
Once the tax described in the preceding paragraph is paid, the company that received the relevant dividend
or profit may increase the balance of the net tax profit account by the updated amount of dividends and
profits for which the tax was paid. For these purposes, a controlled company that pays the tax shall issue a
certificate in favor of the recipient of such dividend or profit, which shall include the information described in
general rules issued by the Tax Administration Service.
TERM TO FILE A NOTICE WITH THE TAX ADMINISTRATION SERVICE
The election described above shall be available only if the holding company files a notice with the Tax
Administration Service no later than the last day of February 2014, through a document in writing,
describing the name of each of the companies that will pay the tax, the amount of the dividend or profit and
the tax associated thereto, as well as the name of the company or companies that received the dividend or
profit concerned and that will increased the balance of their net tax profit account by reason of the election
made.
CALCULATION OF THE PROFIT CORRESPONDING TO THE COMPARISON OF THE BALANCES OF
THE NET TAX PROFIT ACCOUNT
3. Holding companies shall determine any profit resulting from the comparison of the balances of the net tax
profit account, as follows:
They shall compare the balances of the individual net tax profit accounts of the controlled companies and
the holding company in the corresponding participation, with the balances of the consolidated net tax profit
account, including if applicable, the effects described in 1 hereof. In cases where the last balance is greater
than the first one, the individual balance of the controlled companies and the holding company shall be
reduced from the balance of the consolidated net tax profit account. Conversely, if the balance of the
consolidated net tax profit account is lower than the sum of the individual balances of the controlled
companies and the holding company, any difference between those two balances, multiplied by the 1.4286
factor shall be considered profit. Upon such profit, the holding company shall calculate the tax, pursuant to
article 10 of the Income Tax Law hereby repealed, and the balance of the consolidated net tax profit
account shall be reduced by the balance of the individual accounts of the holding company and the
controlled companies, up to zero.
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For purposes of the comparison described herein, only the balances of the individual net tax profit account
of the holding company and the controlled companies, as well as the balance of the consolidated net tax
profit account generated from January 1, 2008 through December 31, 2013, shall be considered.
Income tax to be paid by reason of the deconsolidation shall be equal to the sum of the tax determined
under 1, 2 and 3 hereof.
The procedure described herein shall not apply with regard to items for which a taxpayer has already paid
the deferred tax, referred to in Article Fourth (VI) of the Transitory Provisions of the Income Tax Law,
published in the Federal Register in December 7, 2009; or in article 70-A of the same statute, as well as in
cases where the tax is pending to be paid, pursuant to a payment schedule set forth in the aforementioned
tax provisions.
Holding companies with special consolidation items described in (a)(1)(i) hereof may pay the tax deferred in
connection therewith until the goods that gave rise to such items are transferred to persons that do not
belong to the group, pursuant to the provisions of Title II, Chapter VI of the Law hereby repealed.
PAYMENT OF THE TAX
b) Regardless of the procedure elected to determine the tax resulting from de-consolidation described in (a)
hereof, whenever a holding company, in years 2010, 2011, 2012 or 2013, had elected to apply the
provisions of rule I.3.5.17 of Revenue Ruling for 2009, published in the Federal Register in March 31, 2010;
rule I.3.6.16 of Revenue Ruling for 2010, published in the Federal Register in December 28, 2010; or rule
I.3.6.13 of Revenue Rulings for 2011, 2012, and 2013, published in the Federal Register in July 1, 2011,
December 28, 2011, and December 28, 2012, respectively, shall calculate and pay income tax in
connection with the comparison of the balances of the registry of the consolidated net tax profit account that
was not calculated or paid in the relevant year by reason of the election made.
For purposes of the provisions of the preceding paragraph, holding companies may increase the registry of
the consolidated net tax profit account by the amount resulting from reducing from the amount of tax losses
for which the deferred tax was calculated, described in Article Fourth (VIII)(a) of the Transitory Provisions of
the Income Tax Law, published in the Federal Register in December 7, 2009, or article 71-A(I) of the same
statute, the income tax that corresponded under such provisions.
PAYMENT OF THE TAX BY CONTROLLED COMPANIES
c) The tax determined under a) and b) of this section shall be paid by holding companies in five fiscal years,
pursuant to the following schedule:
1. 25% no later than the last day of May 2014.
2. 25% no later than the last day of April 2015.
3. 20% no later than the last day of April 2016.
4. 15% no later than the last day of April 2017.
5. 15% no later than the last day of April 2018.
Payments described in (2) through (5) hereof shall be made, updated with the factor that corresponds to the
period between the month in which payment described in (1) hereof should have been made through the
month immediately preceding the month in which the relevant payment is made.
PAYMENT OF DEFERRED TAX FOR 2007 AND PRIOR YEARS
d) Companies that were considered holding companies through December 31, 2013, and that through that
date were subject to the payment schedule described in Article Fourth (VI) of the Transitory Provisions of
the Income Tax Law, published in the Federal Register in December 7, 2009, or article 70-A of the Income
Tax Law hereby repealed, shall continue paying the tax deferred by reason of tax consolidation on fiscal
year 2007 and prior years, under such provisions, until payment is completed under that schedule.
CALCULATION, PAYMENT AND RECOVERY OF ASSET TAX FOR DECONSOLIDATION
e) The provisions of Article Third (III) of the Decree amending, adding and repealing various provisions of
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the Income Tax Law, the Federal Fiscal Code, the Law of the Special Tax on Production and Services, and
the Value Added Tax Law, and establishing the Employment Subsidy, published in the Federal Register in
October 1, 2007, shall be abided by so that holding companies determine the asset tax they are required to
pay in connection with the de-consolidation, as well as the asset tax that controlled companies and holding
companies may recover.
BALANCE OF THE NET TAX PROFIT ACCOUNT THROUGH 12-31-2013
The balance of the consolidated net tax profit account through December 31, 2013, if any, after the
de-consolidation described in this section shall have no further tax effect.
TAXPAYERS THAT MAY CONTINUE FILING CONSOLIDATED TAX RETURNS
XVI. Taxpayers who had authorization to calculate consolidated taxable income pursuant to Chapter VI of
Title II of the Income Tax Law hereby repealed through December 31, 2013, and are found within the
five-year period described in the third paragraph of article 64 of such statute, may continue calculating
consolidated taxable income during the fiscal years pending to complete such period, in accordance with
the provisions of such Chapter, as well as Chapter V of Title II of the Regulations of the Income Tax Law
and other provisions in force through December 31, 2013. Likewise, such taxpayers shall comply with the
obligations concerning submission of notices, described in such Chapter VI. The violations and penalties
described in articles 81(XI) and (XII) and 82 of the Federal Fiscal Code in force through December 31, 2013
may be applied to said taxpayers.
PAYMENT OF DEFERRED TAX
For these purposes, once the five-year period has expired, holding companies shall determined the tax
deferred, pursuant to (XV) hereof and pay it in accordance with the following table:
a) 25% in May of the first fiscal year following the conclusion of the five-year period.
b) 25% in April of the fiscal year following the year described in the preceding subsection.
c) 20% in April of the fiscal year following the year described in the preceding subsection.
d) 15% in April of the fiscal year following the year described in the preceding subsection.
e) 15% in April of the fiscal year following the year described in the preceding subsection.
Payments described in b) through e) hereof shall be updated with the updating factor corresponding to the
period between the month in which payment described in a) hereof should have been made through the
month immediately preceding the month in which payment of the relevant installment is made.
TAXPAYERS AUTHORIZED TO FILE CONSOLIDATED TAX RETURNS THAT MAY BE SUBJECT TO
TAX UNDER THE OPTIONAL REGIME
XVII. Taxpayers who had authorization to calculate consolidated taxable income pursuant to Chapter VI of
Title II of the Income Tax Law hereby repealed through December 31, 2013, as of January 1, 2014, may
make the election described in Chapter VI of Title II of the Income Tax Law, without obtaining the
authorization described in article 63 of the Income Tax Law, provided that no later than February 15, 2014,
the relevant integrating company files a notice informing that such election will be made and describing the
name of all the companies that form part of the group, as well as the percentage of integrable participation
that the integrating company has in each integrated company.
For purposes of the preceding paragraph, the group of companies shall meet the requirements described in
articles 60 and 61 of the Income Tax Law, and they shall not fall within the scope of article 62 of such
statute. Integrating companies that do not have the participation described in article 61 of this statute
through January 1, 2014, may make the election described herein, provided that they comply with the
participation described in such articles and are not companies of the type described in article 62 of the same
statute through December 31, 2014. In cases of failure to comply with such participation through this last
date, the integrating company shall exclude the relevant company, pursuant to article 68 of such statute,
considering January 1, 2014, as date of exclusion; and they shall pay income tax deferred in estimated
payment with update for inflation and interests, calculated since the time such payment should have been
made until they are made.
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TAX LOSS CARRYFORWARDS
Companies described in the first paragraph of this section that have tax loss carryforwards under article 57
of the Income Tax Law that were sustained through December 31, 2013, may benefit from this optional
regime for corporate groups, provided that they may carry forward such losses by reasons thereof.
ASSESSMENT OF DECONSOLIDATION EFFECTS FOR CONTROLLED COMPANIES
XVIII. Holding companies that in year 2013 elected to determine their deferred income tax pursuant to the
provisions of article 71-A of the Income Tax Law hereby repealed, may elect to determine the effects of
de-consolidation, pursuant the following:
a) They shall determine the tax deferred in years 2008 through 2013, applying the provisions of article 71-A
of the Income Tax Law hereby repealed, and pay the tax pursuant to article 70A thereof.
b) They shall determine the asset tax that must be paid by reason of de-consolidation, as well as the tax that
holding and controlled companies may recover. To this end, they shall apply the provisions of (XV)(e) of this
transitory article.
c) When in years 2010, 2011, 2012 or 2013 a holding company had elected to apply rules I.3.5.17 of
Revenue Ruling for 2009, published in the Federal Register of March 31, 2010; I.3.6.16 of Revenue Ruling
for 2010, published in the Federal Register of December 28, 2010; or rule I.3.6.13 of Revenue Ruling for
2011, 2012 and 2013, published in the Federal Register of July 1, 2011, December 28, 2011 and December
28, 2012, they shall determine and pay income tax by reason of de-consolidation associated to the
comparison of the balances of the registries of the consolidated net tax profit account that was not
determined and paid in the relevant year.
For purposes of the preceding paragraph, holding companies may increase the registry of the consolidated
net tax profit account by the amount resulting from reducing the income tax that corresponded to them
pursuant to the provisions described above from the tax losses for which the deferred tax was determined,
pursuant to Article Fourth (VIII)(a) of the transitory provisions of the Income Tax Law, published in the
Federal Register in December 7, 2009 or article 71-A(I) of the same statute.
ELECTION TO PAY ASSSET TAX AVAILABLE TO CONTROLLED COMPANIES
XIX. Holding companies may pay the tax described in (XV)(e) or (XVIII)(b) of this article, as applicable,
pursuant to the provisions of (I) through (V) of the sixth paragraph of article 70-A of the Income Tax Law
hereby repealed, considering the update described in the seventh paragraph thereof.
TAX LOSS CARRYFORWARDS
XX. For purposes of article 62(IX) of the Income Tax Law, tax losses that were not entirely carried forward
and that were sustained pursuant to the rules of article 61 of the Income Tax Law hereby repealed shall be
considered
COMPLIANCE BY LEGAL ENTITIES SUBJECT TO THE SIMPLIFIED REGIME
XXI. Legal entities that were subject to tax pursuant to the provisions of Title II, Chapter VII of the Income
Tax Law hereby repealed prior to the entry into force of this statute, shall comply with the obligations
generated through December 31, 2013, pursuant to the Income Tax Law hereby repealed on account of
their members.
As of the entry into force of this statute, individuals or legal entities that are members of legal entities
described in the preceding paragraph shall meet individually the obligations set forth in this statute,
pursuant to the relevant Title.
PARTNERSHIPS AND ASSOCIATIONS
EDUCATIONAL ACTIVITIES
GOVERNED
BY
CIVIL
LAW
AND
ENGAGED
IN
XXII. Partnerships and associations governed by civil law and engaged in educational activities that are
authorized under the General Law of Education or whose studies are recognized under said law as valid for
official purposes, as well as institutions created by executive order or by law whose legal purpose is
teaching that do not have authorization to receive deductible donations, as well as partnerships and
associations governed by civil law organized for sports purposes, as of the entry into force of this Decree
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shall meet the obligations set forth in Title II of the New Income Tax Law. However, they shall determine the
distributable balance generated prior to the entry into force of this Decree, pursuant to Title III of the Income
Tax Law hereby repealed, and their partners or members shall consider such distributable balance as
income, when the aforementioned legal entities deliver it to them in cash or in goods.
FACILITATING MEASURES FOR TAXPAYERS SUBJECT TO THE REGIME FOR AGRICULTURAL,
LIVESTOCK, FORESTRY AND FISHING ACTIVITIES
XXIII. The Tax Administration Service, through general rules, may provide facilitating measures and
verification measures, concerning compliance with tax obligations for taxpayers subject to the regime for
agricultural, livestock, forestry and fishing activities. Facilitating measures concerning verification of
expenditures associated to temporary rural workers, livestock feeding and minor expenses shall not exceed
10% of their own income with a limit of 800,000.00 pesos.
INITIAL BALANCE OF THE CAPITAL CONTRIBUTIONS ACCOUNT
XXIV. For purposes of article 78 of the Income Tax Law, taxpayers who began operations prior to January
1, 2014, may consider as the initial balance of the capital contributions account, the balance of such
account through December 31, 2013, pursuant to article 89 of the Income Tax Law in force through that
date.
CALCULATION OF THE NET TAX PROFIT FOR YEARS 2001 THROUGH 2013
XXV. For fiscal years 2001 through 2003, the net tax profit shall be calculated pursuant to the Income Tax
Law in force in the relevant fiscal year. Likewise, for such period, dividends and profits received shall be
added, and distributed dividends shall be subtracted, in accordance with the law in force in such years.
When the sum of income tax paid in the relevant year, non-deductible items for purposes of that tax and,
when applicable, employees profit sharing, both for the same year, is greater than taxable income for such
year, the difference shall be reduced from the sum of net tax profits through December 31, 2013 or, when
applicable, from the net tax profit determined in subsequent years, until depleted. In the last case, the
amount reduced shall be updated from the last month of the year in which it was determined through the last
month of the year in which it is reduced.
For purposes of the preceding paragraph, income tax shall be income tax paid pursuant to article 10 of the
Income Tax Law in force through December 31, 2013; and non-deductible items shall not include those
described in article 32(VIII) and (IX) of the Income Tax Law in force through December 31, 2013.
Net tax profits obtained, dividends or profits received and dividends or profits distributed in cash or in kind
shall be updated from the last month of the year in which they were obtained, the month in which they were
received or the month in which they were paid, as applicable, through December 31, 2013.
TAXPAYERS SUBJECT TO THE SMALL TAXPAYERS REGIME THROUGH 12-13-2013
XXVI. Taxpayers who were subject to tax under Title IV, Chapter II, Section III of the Income Tax Law
hereby repealed though December 31, 2013, and that as of January 1, 2014, do not meet the requirements
to be subject to tax under Title IV, Chapter II, Section II of the Income Tax Law shall pay the tax under
Section I of the Chapter last mentioned.
ESTIMATED PAYMENTS
For purposes of the estimated payments to be made during the first year, pursuant to such Section I,
described in the preceding paragraph, the profit quotient shall be the one that corresponds to its main
activity, pursuant to article 58 of the Federal Fiscal Code.
DEDUCTION OF INVESTMENTS
Taxpayers described in the first paragraph of this section may deduct investments made during the time
they were subject to tax under Title IV, Chapter II, Section III of the Income Tax Law hereby repealed as of
the date in which the begin to be subject to tax under Section I described in the preceding paragraph,
provided that they were not previously deducted, and they have supporting documentation concerning such
investments that meets applicable tax requirements.
INVESTMENTS PENDING TO BE DEDUCTED
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In cases of fixed assets, the investment pending to be deducted shall be determined by reducing from the
original amount of the investment, the amount resulting from multiplying such amount by the sum of the top
percentages authorized by the Income Tax Law hereby repealed to deduct the relevant investment, that
correspond to the years in which the taxpayer had such assets.
ORIGINAL AMOUNT OF THE INVESTMENT
In the first year in which they pay tax under Title IV, Chapter II, Section I of the Income Tax Law, the original
amount of the investment in goods shall be subject to the percentage set forth in this Law for the relevant
good, in the proportion that represent, with regard to all the year, the months elapsed since tax is paid under
such Section I.
INCOME FROM CREDIT TRANSACTIONS
Taxpayers that earned income from credit transactions that were not subject to payment of tax under the
second to last paragraph of article 138 of the Income Tax Law hereby repealed, and that stop being subject
to tax under Title IV, Chapter II, Section III of the Income Tax Law hereby repealed, in order to do so under
Title IV, Chapter II, Section I of the Income Tax Law, they shall include such items in gross income for the
month in which they are collected in cash, in kind or in services.
PRODUCTION COOPERATIVES
XXVII. Production cooperatives that prior to the entry into force of the Income Tax Law were subject to tax
pursuant to Title II, Chapter VII-A of the Income Tax Law hereby repealed and that elected to defer the tax
for the years shall continue applying the provisions of article 85-A of the Income Tax Law hereby repealed
until the tax deferred is paid, only with regard to income earned through December 31, 2013.
As of the entry into force of this Decree, individuals that are members of the legal entities described in the
preceding paragraph shall not comply individually with the obligations set forth in the new Income Tax Law.
The cooperative shall calculate and pay the tax as a single legal entity, pursuant to said law.
Taxpayers described in the first paragraph of this section that under the Income Tax Law hereby repealed
included income in gross income, when effectively received, and that have income pending to be collected
through the entry into force of this law, shall continue applying the provisions of the Income Tax Law hereby
repealed until they effectively receive the amounts pending to be collected, only with regard to income
earned through December 31, 2013.
PAYMENT OF DEFERRED TAX BY PRODUCTION COOPERATIVES
XXVIII. Production cooperatives that were subject to tax pursuant to Title II, Chapter VII-A of the Income
Tax Law hereby repealed, and that deferred the tax for years prior to January 1, 2014, shall pay such tax in
the fiscal year in which they distribute to their members the relevant taxable profit. For these purposes, the
deferred tax shall be paid by applying to the profit distributed to the relevant member the tax rate schedule
described in article 152 of the Income Tax Law.
Production cooperatives shall comply with their tax obligations, pursuant to Title II of the Income Tax Law as
of the entry into force of this Decree.
FINANCIAL INTERMEDIARIES NOT REQUIRED TO WITHOLD ON INTERESTS PAID TO
INDIVIDUALS
XXIX. Financial intermediaries shall not withhold on interest income paid to individuals and derived from
instruments and securities described in Article Second (LII) and (LXXII), fifth paragraph, of the Transitory
Provisions of the Income Tax Law, published in the Federal Register in January 1, 2002, and Article Second
(XI) and (XV) of the Transitory Provisions of such statute, published in the Federal Register in December
30, 2002, until the interest rate is or may be revised, in accordance with the conditions established in the
issuance thereof.
ADDITIONAL TAX ON DIVIDENDS AND PROFITS
XXX. The additional tax set forth in articles 140, second paragraph, and 164(I) and (IV) of this statute shall
only apply to profits generated as of 2014 and distributed by Mexican resident legal entities or permanent
establishments. To this end, legal entities and permanent establishments making such distributions shall be
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required to keep a net tax profit account with profits generated through December 31, 2013, and begin
another net tax profit account for profits generated as of January 1, 2014, pursuant to article 77 of this
statute. Should legal entities or permanent establishments fail to keep those two accounts separately or to
identify such profits, said profits shall be deemed to be generated as of 2014.
EARLIEST MONTH OF THE PERIOD TO UPDATE AMOUNTS IN SCHEDULES
XXXI. For purposes of the last paragraph of article 152 of the Income Tax Law, the earliest month of the
period shall be December, 2013.
GAINS AND LOSSES FROM DISPOSITIONS OF SHARES AND SECURITIES
XXXII. For purposes of articles 129(a) and 161, ninth paragraph, of this statute, in cases of dispositions of
shares issued by Mexican companies or instruments that exclusively represent such shares, through stock
exchanges operating under concession or derivatives market recognized pursuant to the Stock Exchange
Act; dispositions of shares issued by foreign companies quoted in such stock exchanges or derivatives
markets; dispositions of instruments representing stock indexes sold in such stock exchanges or
derivatives markets; or dispositions of shares issued by Mexican companies or instruments that exclusively
represent such shares, provided that the disposition of such shares or instruments is performed through
stock exchanges or derivatives markets located in recognized markets, described in article 16C(II) of the
Federal Fiscal Code, of countries that have an agreement to avoid double taxation with Mexico; and the
acquisition of such shares or instruments was performed prior to the entry into force of this statute, instead
of considering the average acquisition cost described in article 129(a), in order to determine gains or losses
from the disposition of shares of instruments for each issuing company or instruments that represent said
stock indexes, taxpayers may elect to determine such gains or losses by reducing from the sale price of the
shares or instruments reduced by commissions for intermediation paid in connection with the disposition
thereof, the average acquisition price from the last twenty two closing prices of such shares or instruments,
prior to the entry into force of this statute. If the last twenty two closing prices are irregular with regard to the
behavior of the relevant shares in the six prior months, concerning the number, volume and value of
transactions, instead of taking the twenty two closing prices, the values observed in the last facts of the six
preceding months shall be considered. When this procedure is elected, the average acquisition value of the
shares or instruments may be updated from December 31, 2013, through the month immediately preceding
the date of the first disposition.
GAINS AND LOSSES FROM DISPOSITIONS OF SHARES OF MUTUAL FUNDS
XXXIII. For purposes of the third paragraph of article 88 and the twelfth paragraph of article 151 of this
statute, in cases of acquisitions of shares issued by capitals market securities mutual funds executed prior
to the entry into force of this statute, instead of considering the price of the capitals market securities
investment assets on the acquisition date, described in the third paragraph of article 88 of this statute, in
order to determine gains or losses from the disposition of such shares, taxpayers may elect to determine
such gains or losses by reducing from the price of the capitals market securities investment assets on the
sale date of the shares of such investment funds, the average value resulting in the last twenty two closing
prices of the capitals market securities investment assets prior to the entry into force of this statute. If the
last twenty two closing prices are irregular with regard to the behavior of the relevant capitals market
securities investment assets in the six prior months, concerning the number, volume and value of
transactions, instead of taking the twenty two closing prices, the values observed in the last facts of the
capitals market securities investment assets in the six preceding months shall be considered.
ACCELERATED DEDUCTION OF NEW FIXED ASSETS
XXXIV. Taxpayers that, prior to the entry into force of this law, elected to claim the immediate deduction of
new fixed assets, pursuant to Title VII, Chapter II of the Income Tax Law hereby repealed, shall not claim
the deduction of the undeducted portion thereof.
When the goods upon which the immediate deduction was claimed are disposed of, lost or cease to be
useful, taxpayers shall calculate the deduction for the amount resulting from applying to the original amount
of the investment, adjusted by the update factor corresponding to the period between the month in which
the relevant goods was acquired through the last month of the first half of the period in which the deduction
described in article 220 of the Income Tax Law hereby repealed was claimed, the percentages
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corresponding to the number of years elapsed since the deduction was claimed and the percentage of
immediate deduction applied upon the relevant good, pursuant to the table set forth in article 221 of the
Income Tax Law hereby repealed.
For purposes of employees profit sharing, taxpayers that elected to claim the immediate deduction of
goods, described in this section, shall consider the deduction of such assets that would have corresponded,
in the amount resulting from applying to the original amount of the investment, the percentages set forth in
articles 34, 35, 36 and 37 of the Income Tax Law.
TAX INCENTIVE FOR COMMERCIAL CORPORATIONS ENGAGED IN CONSTRUCTING OR
ACQURING REAL ESTATE
XXXV. Commercial corporations that took the tax incentive described in article 224A of the Income Tax Law
hereby repealed through December 31, 2013, shall abide by the following:
1. Shareholders that contributed real estate to the corporation shall include in gross income the gain from
the disposition of the goods so contributed, when any of the following situations takes place:
a) They dispose of the shares of such corporation, in the proportion that such shares represent with regard
to all the shares received by the shareholder for the contribution of the real property to the corporation,
provided that such gain was not included in gross income previously.
b) The corporation disposes of the contributed goods, in the proportion that the part being transferred
represents of such goods, provided that such gain was not included in gross income previously.
If any of the situations described in the two preceding subsections has not taken place through December
31, 2016, the shareholders described in this section shall include in gross income the full amount of the
gains from the disposition of the contributed goods that were not included in gross income previously.
2. The gains that are included in gross income under this section shall be updated from the month in which
they were earned through the month in which they are included in gross income.
DEDUCTION OF THE COST OF LAND
XXXVI. Taxpayers that prior to the entry into force of this statute elected to deduct the acquisition cost of
pieces of land in the year in which they were acquired, pursuant to article 225 of the Income Tax Law hereby
repealed, shall include in gross income the full disposition value of the relevant piece of land at the moment
in which ownership thereof is transferred, instead of the gain described in article 20(IV) of the Income Tax
Law hereby repealed.
When a disposition of a piece of land takes place in any of the years following the year in which the
deduction described in this section is claimed, an additional item shall be included in gross income,
equivalent to 3% of the amount deducted under this section, for each of the years elapsed since the year in
which the piece of land was acquired and until the year immediately preceding the year in which the piece of
land is transferred. For purposes of this paragraph, the amount deducted under this section shall be
updated, by multiplying it by the update factor corresponding to the period between the last month of the
year in which the piece of land was deducted until the last month of the year in which the 3% referred to in
this paragraph is included in gross income.
BENEFIT FOR EMPLOYERS IN CONNECTION WITH NEW POSITIONS FOR FIRST-EMPLOYMENT
WORKERS
XXXVII. Employers that during the validity of Title VII, Chapter VIII, of the Income Tax Law hereby repealed,
opened new positions to be occupied by first-employment workers, under the conditions described in such
Chapter, shall have the benefit described therein for such positions for a period of up to 36 months, in
accordance with article 232 of the Income Tax Law hereby repealed.
REFUND OF ASSET TAX PREVIOUSLY PAID
XXXVIII. Taxpayers that were subject to the asset tax and that in the relevant fiscal year effectively pay
income tax, may continue applying the provisions of Transitory Article Third of the Single Rate Business
Tax Law, published in the Federal Register in October 1, 2007.
POWERS OF THE INTER-INSTITUTIONAL COMMITTEE
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XXXIX. For purposes of article 189 of the Income Tax Law, the Inter-institutional Committee shall publish
the general rules for granting the tax incentive for investment projects in distribution of domestic
cinematographic films no later than January 15, 2014.
INCLUSION IN GROSS INCOME OF DIVIDENDS DISTRIBUTED BY FOREIGN RESIDENTS IN YEARS
PRIOR TO 2014
XL. Mexican resident legal entities that included in gross income dividends distributed by foreign residents
in fiscal years prior to 2014 and that have proportional amounts of income tax paid by foreign companies at
the first and second corporate levels in connection with such income, pending to be credited, shall be
required to keep the record described in article 5 of this statute. Failure to comply with this obligation,
however, shall not result in the loss of the right to credit, as set forth in such article.
FACILITATING
MEASURES
FOR
TRANSPORTATION OF CARGO
TAXPAYERS
ENGAGED
IN
FEDERAL
GROUND
XLI. The Tax Administration Service, through general rules, may provide facilitating administrative and
verification measures with regard to compliance of tax provisions by taxpayers exclusively engaged in
federal ground transportation of cargo, foreign passenger transportation and tourism for up to an amount
equal to 4% of their own income. With regard to the facilitating verification measures, it shall be possible to
establish that upon the amounts spent, an income tax withholding be applied, provided that it does not
exceed 17%.
TAX HAVENS FOR WHICH AN INFORMATION TAX RETURN MUST BE FILED
XLII. The following are territories for which the information return described in Title VI of the Income Tax
Law and Title IV, Chapter II of the Federal Fiscal Code shall be submitted:
American Samoa
Republic of Djibouti
Anguilla
Hong Kong
Republic of Guyana
Republic of Honduras
Archipelago of Svalbard
Aruba
Ascension
Azores Islands
Barbados
Belize
Bermudas
British Virgins Islands
Brunei Darussalam
Campione dItalia
Canary Islands
Canary Islands Special Zone
Cayman Islands
Christmas Island
Cocos or Keeling Islands
Commonwealth of Dominica
Commonwealth of Puerto Rico
Republic of Liberia
Island of Qeshm
Republic of Maldives
Islands of Guernsey, Jersey,
Republic of Mauritius
Alderney, Great Sark, Herm, Little
Sark, Brecqhou, Jethou, Lihou
Republic of Nauru
(Channel Islands)
Republic of Panama
Isle of Man
Republic of San Marino
Kingdom of Swaziland
Republic of Seychelles
Kingdom of Tonga
Republic of the Marshall Islands
Kiribati
Republic of Trinidad and Tobago
Labuan
Republic of Tunisia
Macao
Republic of Vanuatu
Madeira
Republic of Yemen
Malta
Saint Helena
Montserrat
Saint Kitts
Netherlands Antilles
Saint Lucia
Nevis
Saint Pierre and Miquelon
Niue
Saint Vincent and the Grenadines
Norfolk Island
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Salomon Islands
Cook Islands
State of Bahrain
Patau
Hong Kong
Archipelago of Svalbard
Island of Qeshm
State of Kuwait
State of Qatar
Sultanate of Oman
Tokelau
Trieste
Tristan da Cunha
Turks and Caicos Islands
Tuvalu
United Arab Emirates
United States Virgin Islands
Aruba
Ascension
Azores Islands
Barbados
Belize
Bermudas
British Virgins Islands
Brunei Darussalam
Campione dItalia
Canary Islands
Canary Islands Special Zone
Cayman Islands
Christmas Island
Cocos or Keeling Islands
Commonwealth of Dominica
Commonwealth of Puerto Rico
Commonwealth of the Bahamas
Cook Islands
Democratic Socialist Republic of
Sri Lanka
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TRANSITORITORY ARTICLES of the Decree that amends, enacts and repeals various provisions of
the Value Added Tax Law, the Special Tax on Production and Services Law, the Federal Fees Law;
enacts the Income Tax Law; and repeals the Single Rate Business Tax Law and the Cash Deposits
Tax Law, published in the Federal Register in December 11, 2013, and in force since January 1,
2014
Artculo 2. REPEAL OF THE INCOME TAX LAW OF JANUARY 1, 2002, THE SINGLE RATE
BUSINESS TAX LAW AND THE CASH DEPOSITS TAX LAW
As of the entry into force of this Decree, the Income Tax Law of January 1, 2002, the Single Rate Business
Tax Law and the Cash Deposits Tax Law shall be repealed.
October 31, 2013. Mexico City.- Sen. Ral Cervantes Andrade, Presidente.- Rep. Ricardo Anaya Corts,
President.- Sen. Lilia Guadalupe Merodio Reza, Secretaria.- Rep. Magdalena del Socorro Nez Monreal,
Secretaria.- Signatures.
Pursuant to article 89(I) of the Political Constitution of the United Mexican States, and in order to be duly
published and complied with, I hereby issue this Decree at the Residence of the Federal Executive Branch
in Mexico City on the sixth day of December two thousand thirteen..- Enrique Pea Nieto.- Signature.- The
Minister of Homeland Affairs, Miguel Angel Osorio Chong.- Signature.
Repealed(1)
For purposes of this statute and other provisions related thereto, it is important to take into consideration the
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provisions of the following articles of the Decree that amends, enacts and repeals various provisions of
the Value Added Tax Law, the Special Tax on Production and Services Law, the Federal Fees Law;
enacts the Income Tax Law; and repeals the Single Rate Business Tax Law and the Cash Deposits
Tax Law, published in the Federal Register in December 11, 2013, and in force since January 1, 2014.
TRANSITORY ARTICLES
Artculo 2. REPEAL OF THE INCOME TAX LAW OF JANUARY 1, 2002, THE SINGLE RATE
BUSINESS TAX LAW AND THE CASH DEPOSITS TAX LAW
As of the entry into force of this Decree, the Income Tax Law of January 1, 2002, the Single Rate Business
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Tax Law and the Cash Deposits Tax Law shall be repealed.
Repealed (1)
For purposes of this statute and other provisions related thereto, it is important to take into consideration the
provisions of the following articles of theDecree that amends, enacts and repeals various provisions of
the Value Added Tax Law, the Special Tax on Production and Services Law, the Federal Fees Law;
enacts the Income Tax Law; and repeals the Single Rate Business Tax Law and the Cash Deposits
Tax Law, published in the Federal Register in December 11, 2013, and in force since January 1, 2014.
TRANSITORY ARTICLES
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Artculo 1. ENTRY INTO FORCE
This Decree shall enter into force in January 1, 2014.
Artculo 2. REPEAL OF THE INCOME TAX LAW PUBLISHED IN THE FEDERAL REGISTER IN
I-1-2002, THE SINGLE RATE BUSINESS TAX LAW AND THE CASH DEPOSITS TAX LAW
As of the entry into force of this Decree, the Income Tax Law published in the Federal Register in January 1,
2002, the Single Rate Business Tax Law and the Cash Deposits Tax Law shall be repealed.
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