On September 8, 2020, the Federal Executive submitted the economic package for 2021 containing the proposed changes to the General Economic Policy Criteria, Federal Revenue Law, Federal Expenditure Budget, Income Tax Law (LISR), Value Added Tax Law (LIVA), Excise Tax Law (LIEPS), Federal Tax Code (CFF) and The Federal Fees Law, which was sent to the Chamber of Deputies for its review. 

Here is a summary of some of the most relevant proposed changes: 

General Economic Policy Criteria 

To name a few, here are some of the proposed macroeconomic figures: 

Concept	Macroeconomic framework-21  Estimate 2020	Macroeconomic framework-21 Estimate 2021
Gross Domestic Product
Real % growth range	-10.0, -7,0	3.6, 5.6
Inflation (%)
Dec./Dec.	3.5	3.0
Nominal exchange rate (MXN per dollar)
Average	22.0	22.1
Interest rate (Cetes 28 days, %)
Nominal end of period	4.0	4.0
Petroleum (Mexican basket)
Average price (dollars/barrel)	34.6	42.1

Federal Revenue Law

Income tax withholding rate by Financial Institutions 

The income tax withholding rate for interests paid by banks was reduced to .97%, since for 2020; the current rate is 1.45%.

Surcharge rate 

For 2021, the surcharge rates for extensions granted for the payment of tax assessments will be the same as in 2020, in accordance with the following: 

• .98% per month on outstanding balances 

•  Installment payments: 

 Up to 12 months: 1.26% per month 

 More than 12 and up to 24 months: 1.53% per month 

 Installment payments greater than 24 months and deferred installment payments:    1.82% per month.

Income Tax Law (LISR) 

Legal entities must be authorized to receive deductible donations and be taxed in Title III of the Income Tax Law (LISR). 

And amendment to sections XI, XVII, XIX and XX, of article 79 of the Income Tax Law was proposed, establishing that associations and corporations engaged in scientific or technological research that grant scholarships or engage in the preservation of fauna and flora, as well as their habitats, may be taxed under the Regime of Legal Entities with Non-Profit Purposes, as long as they are entities authorized to receive donations favoring the transparency of the income received. 

Federations or National Confederation referred to in the General Law on Cooperative Societies 

It is proposed to add in section VIII of article 79 of the LISR the cooperative integration and representation bodies, in order to apply them the Title III of the aforementioned Law, since they have similar characteristics to legal entities with non-profit purposes. 

Entities authorized to receive donations– loss of authorization 

In order to prevent entities authorized to receive donations to be engaged in profit-seeking activities, it is proposed that in the event that the revenue is obtained for activities other than the purposes for which they were authorized to receive donations in a percentage greater than 50% of the total revenue of the fiscal year in question; they will lose the corresponding authorization, which will be determined by a resolution issued and notified by the tax authority. 

Maquiladoras  

It is proposed to amend article 182 of the Income Tax Law, to establish that there are only two transfer pricing methodologies applicable to this sector: the so-called “Safe Harbor” or to request to the tax authorities an Advance Transfer Price Agreement (APA). 

Value Added Tax Law (LIVA) 

Welfare or charitable institutions 

It is proposed to add to section XIV of article 15 of the LIVA, the exemption for professional medical services provided by authorized welfare or charitable institutions. 

Digital services, intermediation 

It is proposed to repeal part II of article 18-B of the LIVA, which excluded from digital services, the intermediation for the sale of used movable goods. Therefore, if approved, those services will pay the corresponding VAT. 

Foreign residents that provide digital services to people located in Mexico through technology platforms 

Foreign residents without a permanent establishment in the country that provide digital services to people located in national territory, should not comply with the following obligations: register in the Federal Taxpayer Registry (RFC), collect the tax within the price and provide the information to the tax authority; as long as they provide their services through digital intermediation platforms and such platforms withhold the 100% of the tax. 

Foreign residents without a permanent establishment in Mexico that provide digital intermediation services between third parties 

These taxpayers could publish on their website, application, platform or any other similar media, the selling price of the goods or services offered by the vendors, service providers or grantors of the temporary use or benefit of the goods, without indicating the Value Added Tax (VAT) expressly and separately, as long as they are published with the legend “VAT included”. 

Excise Tax Law (LIEPS) 

Complementary excise tax charges for automotive fuels 

It is proposed to adjust from January 1, 2021, the current fee applicable to automotive fuels (gasoline, diesel and non-fossil fuels) decreasing or increasing it, depending on the economic variables referred to in the provision itself. 

Federal Tax Code (CFF) 

Business reason 

It is proposed to remove the reference to “The tax effects generated in terms of this article shall in no case have any criminal consequences”, contained in Article 5-A, paragraph seven of the CFF. The objective is to specify that the article will be limited to the determination of contributions and their accessories, irrespective of any criminal investigation. 

Tax mailbox hours  

It is proposed to add a third paragraph to article 13 of the CFF, specifying that the schedule of the Central Zone of Mexico rules the operation of the tax mailbox.  

Sales with deferred or installment payments 

It is proposed to amend the second paragraph of article 14 of the CFF, to specify that invoices issued to the general public shall be considered in some cases as sales with deferred or installment payments. 

Corporate spin-off 

It is proposed to add a fifth paragraph to article 14-B of the CFF, in order to establish that if a corporate spin-off results in the creation of concepts or items that were not registered prior to the split, it will be considered alienation. 

Cancellation and temporary restriction of digital stamp certificates  

The initiative proposes that sections IV and X of article 17-H Bis of the CFF should be incorporated into article 17-H of the aforementioned Tax Code, so that the digital stamp certificates of the EFOS (taxpayers celebrating non-existent operations) and tax loss transmitters may be cancelled and not temporary restricted. 

Additionally, it is proposed to amend the sixth paragraph of article 17-H of the CFF, so that the authority has 10 days to issue its response to clarification requests submitted by taxpayers. It is also proposed to amend article 17-H Bis of the CFF, in order to establish a limit of 40 business days to submit the request to correct or clarify the irregularities detected in the temporary restriction of the digital stamp certificates. 

Messages of interest  

It is proposed to amend sections I and II of article 17-K of the CFF, so that the tax authority may send through the tax mailbox, messages such as benefits, facilities, invitations to programs, aspects related to the taxpayer’s tax situation and information for the fulfillment of its tax obligations; all of the above through the means of contact registered by the taxpayer, such as email and cell phone. 

Refund of favorable balances 

It is proposed to add a paragraph to article 22 of the CFF, so that in the event that the taxpayer or the address given by the latter, are not located in the Federal Taxpayer Registry, the refund request would be considered as unfiled.  The authority clarifies that the latter is not considered as a collection procedure that interrupts the limitation period. 

With regard to section IV of article 22-D of the CFF, it is established that in the event that the tax authorities have several refund requests from the same taxpayer regarding the same type of contribution, the latter shall decide whether to inspect each or all of the requests, issuing the respective resolution or resolutions. 

Additionally, section VI of article 22-D of the CFF is amended to extend from 10 to 20 business days the tax authority’s term to issue and notify the resolution to verify the provenance of the refund request. For this purpose, it is proposed to add a transitory article so that in relation to pending refund requests, the applicable provision will be the one in force at the time they were submitted. 

Joint liability in corporate spin-off and permanent establishment  

Section XIX of article 26 of the CFF is added to establish that they are considered as jointly liable, companies resident in Mexico or foreign residents with a permanent establishment in the country operating with related parties residing abroad, for which effective control exists or that are effectively controlled by related parties residing abroad, in terms of the provisions established for preferential tax regimes; when residents abroad constitute under such transactions, a permanent establishment in Mexico. 

It is important to mention that the joint liability shall not exceed the contributions caused in the aforementioned transactions by such foreign resident as a permanent establishment in the country. 

Federal Taxpayer Registry (RFC) 

The initiative proposes that the information related to the identity, address and tax status should be provided in the Federal Taxpayer Registry. It is also established that taxpayers must keep an updated single email address and phone number. 

It is proposed to amend section VI, subsection B, of article 27 of the CFF, so that legal entities; when making any modification or incorporation of their members, are required to include associates and others, whatever name they are designated with. 

According to subsection C of article 27 of the CFF, the addition of section XII is proposed, so that the authority may suspend or reduce taxpayers’ obligations when it is confirmed that those taxpayers have not carried out any activity in the previous three years.  

The addition of section IX, subsection D, is proposed, so that taxpayers who submit the notice of cancellation in the RFC by total liquidation of assets, by total ceasing of transactions or by company merger, in order for it to be authorized, shall not be subject to the exercise of  powers of examination, shall be free of tax assessments, shall not be included on the lists issued in relation to articles 69, 69-B and 69-B Bis of the CFF and its declared income and withheld taxes shall be consistent with those indicated on the invoices issued. 

Electronic invoices (CFDIs) 

It is proposed to amend the first paragraph of article 29 of the CFF, to establish that an electronic invoice must be issued when deferred or installment payments are made, when goods that are not intended for sale are exported and when the alienation is made under a  gratuitous title. 

It is added to section V, of article 29-A of the CFF, that the data (quantity, unit of measure and class of goods or description of the service or use or benefit they hold) shall be established on the electronic invoices, using the catalogues included in the technological specifications issued by the SAT to fill the requirements that the invoices must contain. 

Obligation to keep the accounting records and other documents 

It is added to article 30 of the CFF that the information and documentation required to implement agreements reached out as a result of a litigation procedure contained in tax treaties to avoid double taxation must be conserved through the life of the Company or contract. 

Similarly, it is proposed to add as part of the accounting records that must be kept within a specific period, any information and documentation that proves increases or decreases in share capital, as well as the distribution of dividends or profits. In addition, documentation in cases of corporate breakups and mergers must be conserved. 

Tax assistance and dissemination 

Section I of article 33 of the CFF is amended to specify that tax authorities can assist taxpayers and citizens in general.  The authorities will need to provide printed or digital support material when the explanation of tax provisions is complex, in order for the citizen to gain a better understanding. 

With the addition of section i), the authority will periodically provide taxpayers with specific parameters regarding the usefulness, deductible expenses or effective fees of the income tax, in order to measure tax risks, without being considered to be initiating its powers of examination. Its development will be defined by general rules issued by the SAT. 

Precautionary seizure 

It is proposed to amend section III of article 40 of the CFF, in order to include that third parties related to taxpayers and/or joint obligors are subject to precautionary seizure when they resist the exercise of the powers of the tax authorities. 

Use of technology  

It is added to the first paragraph of article 45 of the CFF, that the authority may use technological tools to collect information on taxpayers’ assets during the audit procedures (camera and video cameras, recorders, cell phones, etc.). 

Tax report review 

Article 52-A of the CFF is amended to specify that the authorities’ reviews to tax reports issued by public accountants shall be carried out in the established order, with the exception of foreign trade contributions.  Likewise, such reviews must be carried out exclusively with the public accountant, without any legal representation. 

Deadline to submit reports or documents 

It is proposed to amend article 53 of the CFF, in order to extend the terms established in subsections b) and c), in the case of reports whose content is difficult to provide or difficult to obtain.  

Electronic reviews on foreign trade 

It is proposed to amend the last paragraph of article 53-B of the CFF by establishing that the period to conclude the electronic review is 6 months and 2 years in electronic reviews on foreign matters when an international verification is carried out. 

Tax secrecy  

It is proposed to amend article 69 of the CFF, in order to establish the obligation to safeguard the images and any material collected by the tax authority. It is also proposed to establish, as an exception to the reserve of information, the obligation to provide information required by the Public Prosecutor’s Office and the Police regarding investigations of specific criminal acts. 

Conclusive agreements  

It is proposed to amend article 69-C of the CFF to limit the request of adoption of a conclusive agreement at any time once the inspection has started and within 15 business days following the issuance of the final audit report or the notification of the document with the observations or the draft resolution. It is proposed to add a third paragraph containing a number of cases in which the request of adoption of a conclusive agreement will not be applicable. 

Transfer pricing fines 

It is proposed to amend articles 75 and 76 of the CFF, in order to consider as aggravating the non-compliance of the tax provisions on transfer pricing, such as failure to obtain supporting documentation with related parties, failure to apply transfer pricing methods or failure to submit master, local and country-by-country information statements. 

This proposal would eliminate the benefit of reducing fines by 50% under article 76 of the CFF. 

Presumption of smuggling 

It is proposed to include as a new legal assumption of presumption of smuggling: the omission to return, transfer or modify the customs regime of temporarily imported goods under a maquila or export programme.  

Documents in language other than Spanish  

It is proposed to amend article 123 of the CFF in order to establish that any information and documentation submitted by taxpayers to the SAT in a language other than Spanish must be accompanied with their respective translation. 

Personal notification  

It is proposed to amend article 137 of the CFF, to empower the notifier to use technological tools to collect images or material that serves as evidence of such diligence, which will be protected by tax secrecy. 

Notification by posting on the bulletin board 

It is proposed to amend the first paragraph of article 139 of the CFF, in order to reduce the time limit for notification by posting on the bulletin board from 15 to 6 days, as well as to establish that such notification may be made on the SAT’s website or personally in the tax authority’s offices. 

Abandonment of property 

It is proposed to amend article 196-A of the CFF to establish that the notification to taxpayers, mentioning that the period of abandonment has elapsed, may be made in any of the ways established in article 134 of the CFF. 

The proposed changes to the tax provisions for 2021 are aimed to combat tax fraud by strengthening better audit procedures, so it is vitally important to be attentive to their discussion and approval.  We will be reporting the approved changes in a timely manner. 

At LR Garcia we have experts who can support you in fulfilling your tax obligations, so we remain at your service.