Mexico.- On Thursday it was reported that Prodecon and the Committee on Budget and Public Account of the Chamber of Deputies agreed on a collaboration agreement. This goes hand in hand with the proposal that does not involve the creation of a new tax or a higher fee.
The intention is to update the VAT Law which has been overtaken by the digital economy. Current legislation presents practical problems in collecting the tax. As stated in a statement, the Convention takes into account OECD recommendations and the experience of other countries. Collection is expected to be through a retention mechanism, establishing as an alternative a register for platforms to calculate and pay their tax.
Marketing of tax receipts for non-existent transactions It also proposes to establish a withholding tax of 10% only for VAT purposes in the provision of services. This is intended to significantly discourage billing schemes for non-existent transactions, as the aforementioned withholding tax, being applied by the payer of the service, would directly impact the way companies that invoice operations operate Simulated. Comments from cameras, business associations and professionals received during the public consultation at the end of 2018 are taken into account, including that retention does not apply to specific services such as telephony, internet, hosting, restaurants, hospitals, banks, among others.
It is also intended to implement agile methods of accreditation and refund of VAT. Anti-avoidance rule to discourage aggressive tax planningIt is proposed to create a general rule that discourages tax avoidance, which consists in the use of contracts, acts, businesses and legal strategies in order to reduce or eliminate the tax payment of taxes. An anti-elusive general rule seeks to lift the veil to legal transactions that are essentially without economic and financial substance. It should be noted that Mexican tax legislation does not provide for an anti-avoidance rule; although the OECD, the SAT and the Federal Courts recognize it as an inherent tool in the audit. Therefore, in order to ensure the legal certainty of tax payers, its regulation is proposed.