Compliance bulletin helps businesses in Mexico

Compliance bulletin helps businesses in Mexico

Wed 08 Sep 2021

Mazars experts around the world deliver tailored services in audit, accounting, tax, financial advisory, consulting, and legal services.

In Mexico, local experts have created a compliance dashboard with news items to help guide businesses as they navigate issues related to finance, tax, legal, and labour updates.

With the global economy recovering from Covid-19, new government-required procedures and regulations are on the rise. The Mexico compliance bulletin offers advice and insight to help businesses adapt to these changes – and more.

Among the most recent issues are the effective tax rate (ISR) for large taxpayers, the new procedure for the cancellation of the registration of federal taxpayers due to mergers and the requirements for registration as a specialised service provider.

Adopting new requirements for specialised provider registration

With effect from 24 April 2021, individuals and legal entities that provide specialised services or execute specialised works (referred to in Article 15 of the Federal Labour Law in Mexico – in summary, outsourcing of specialised services) were given 90 days to complete the newly issued procedures and complete mandatory registration in order to be able to continue to provide their services. The deadline for registration was subsequently extended to the end of August.  The new regulation sets out revised requirements on the amounts that such businesses must distribute to their employees, and penalties for non-compliance, the liability for which can extend to both the provider of the service and their customer.  There is a range of information required for registration, which must be renewed every three years.  Proof of registration must be provided to the business’s customer.  To help businesses with the procedure and deal with complications such as rejection, cancelation, or renewal, Mazars experts have been available to address doubts and concerns about the required registration.  

For further background on the introduction of these new rules, see here and here.

Cancelling federal taxpayers’ registration for mergers

In response to issues created by Covid-19, the Mexican Government introduced tax reforms that a number of businesses in Mexico have struggled to adhere to. The introduction of electronic submission of documents for relevant businesses saw complications as physical appointments remained necessary and offices had a reduced capacity to meet taxpayers. Mergers were consequently prevented from complying with the requirements to complete the process of filing their merger notice. Mazars experts offer advice on what steps businesses concerned need to take to cancel their federal taxpayers’ registration (see here).

Assessing ISR rates for large taxpayers

In June 2021 the Mexican Tax Administration Service (SAT) issued the 2021 Tax Reform, with the aim of facilitating and encouraging voluntary compliance. Via its portal, the SAT provided benchmark effective tax rates for 40 economic activities relevant for the tax years 2016-2019.  The aim is to encourage larger businesses to proactively review their effective tax rates against the applicable benchmark and deal with any tax corrections that may be required before the Revenue authorities take action.  The likelihood of investigation by the revenue authorities will be higher if the business’s effective tax rate is below the applicable benchmark).  There may be value in pre-empting any investigation by an Authority that initiates an investigation as a result of an assessment against a benchmark without taking account of commercial circumstances applicable to the particular business.   Mazars experts are here to help assess the impact and make any respective corrections for affected businesses.  See here for further information.

To learn more about the issues discussed and other compliance insights offered by Mazars experts, see our Mexico compliance bulletin here.