Extensive obligations and benefits, New Fiscal Regime of Incorporation
The 2014 Restatement of Fiscal Laws, already approved by Congress, will come into effect on January 1 of 2014, and without doubt one of the most significant changes to the same was the one levied on individuals, which to be more specific translates into the elimination of what up to December 31 of 2013 is called “Regimen Intermedio” (Intermediate Regime) and “Regimen de Pequeños Contribuyentes” (REPECO - Regime for Small Taxpayers – as per its acronym in Spanish), replacing both with a new REGIME OF INCORPORATION.
Small and medium entrepreneurs, who until today operate their business under the fiscal scheme of “persona física” (individual) and pay taxes under the REPECO regime; or else to those who are about to start operations in 2014 and may choose for the new regime of incorporation.
Who may pay taxes under this regime?
Individuals with commercial activities, who sell goods or lend services that do not require a professional degree, and with annual income of up to two million pesos.
Who may NOT pay taxes under this regime?
· Those carrying out activities related to real estate, real estate capital stock or real estate businesses or financial activities.
· Dedicated to construction, development, remodeling or improvement of dwellings or habitation housing.
· Income by commission, mediation, representation agencies, brokerage consignment and distribution except that they do not exceed 30% of the total income.
· Those who carry out activities through trust agreements or joint-venture
Obligations of the Individuals:
· To register with the RFC.
· Keep their accounting through electronic means. (new)
· Keep receipts that meet fiscal requirements for their expenses and investments.
· Pay with check or electronic means the expenses or the expenditures above 2,000.00 pesos
· Issue digital facturas through the Internet. (new).
· Calculate every two months the taxable base, based on income and allowed deductions. (new).
· Determine the IVA to pay or balance in favor of IVA every two months.(new).
· File bimonthly final returns of ISR, IVA and IEPS taxes.
· File bimonthly informative returns of operations with third parties. (new).
· Assess, deduct and pay the taxes of their workers.
· File informative returns with regard to the payment of taxes deducted from their workers.
· The mentioned returns are filed through the Internet, at the SAT page (new).
· You may opt for this option for up to 10 years.
· Gradual annual discounts on the Income Tax, year 1 – of 100%, year 2 – of 90% and so successively up to year 10.
· This regime now shall be able to issue deductible fiscal receipts, limitation that they had in competition with regard to taxpayers of the general regime.
Aspects to pay Attention to:
· The fact that during the first year there is a reduction of 100% on the Income Tax (ISR) does not mean that returns must not be filed.
· In order to be able to Access the benefit of discount on ISR, you must be current in the filing of your tax returns.
· Not to miss two consecutive bimonthly tax returns or five throughout the first 6 years.
· The reduction of taxes only applies to ISR; this is, IVA and IEPS that would accrue must be paid every two months.
· If the business is transferred, the acquirer may no longer opt for the incorporation regime.
· At some businesses of sale to the public of items subject to IEPS, the trader shall have the obligation to file bimonthly returns for this tax.
As you must have observed, these micro and small tradesmen shall now have an administrative charge and fiscal obligations very similar to those of the general regime and of a legal entity; as brought forth by the initiative of Fiscal Restatement, this meets a homogeneous system and without preferred regimes. Furthermore, these taxpayers shall need to make a technological investment sufficient to be able to issue fiscal receipts and keep a digital accounting system. Still to come are the rules and possible additional administrative conveniences in the bylaws and the miscellaneous resolution for 2014.
Many questions remain in the air, such as: does this regime really incentivizes informal business to incorporate? Is this a regime that stimulates small entrepreneurs?
Very important shall be that each taxpayer takes additional control and administrative measures on their business; important to mention is that each case is very different and shall require a professional assessment in order not to fall into omissions which would result into requirements and/or fines, or even lose the benefits of the regime.
What Notarios Decide is Critical
Under Mexican Income Tax Law, Notarios are jointly liable with the seller for all taxes due on the sale of real property in Mexico. If Hacienda (the equivalent to the Treasury Department in the US) decides the Notario did not calculate these taxes correctly, the Notario may be required by the tax authorities to make up the difference. Obviously, when they are doing dozens of transactions each year, very possibly involving millions of U.S. dollars, Notarios have to be very careful and will generally take a conservative approach.
Legal disclaimer. The materials on this website and the opinions and answers provided are for informational purposes only, and do not constitute and should not be relied upon as legal advice, the material is not guaranteed to be correct, complete or up-to-date.