FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty...

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Transcript of FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty...

Page 1: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

FISCAL REFORMFISCAL REFORM20082008

Page 2: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

IntroductionIntroductionThe “Development National Plan 2007 – 2012”:

– Poverty combat reinforcement,

– Improve access and quality of education and health services,

– Dignified access to housing facility,

– Generate employment through major economic growth (tourism).

– Social and productive impulse, oriented to reduce regional dissimilarity.

Page 3: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

IntroductionIntroduction

This proposition has four sides:This proposition has four sides:

1. Taxable administration improvement to facilitate fulfillment of obligations and improve efficiency combat in tax evasion gaining that those who have to pay do so (Technological Platform).

2. Improve efficiency in public expense and account submission of Federation, States and Municipalities. In doing so, people will have assurance that their taxes are appropriately disbursed.

Page 4: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

IntroductionIntroductionThis proposition has four sides..…This proposition has four sides..…

3. Reinforce federalism. To endow major faculties resources and better incentives to States and Municipalities. Major strength to different government ordinance which will help attend needs of persons. Financial reporting will be the same for 3 levels of government (federal, state, municipal).

4. Establish the basis of taxable system that will permit an increase in tax collection by means of flexible and neutral taxable instruments and in respect to investments.

• IETU (Flat tax) 17.5%.

• IDE (Tax on cash deposits) 2%.

Page 5: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

Alternative sources of IncomeAlternative sources of Income

Generate tax collection of 1.8% of (Gross Internal Product GIP ) in the following three years:

Introduction of Flat Tax (FT).

Tax on cash deposits.

Informality.

Encumber with the “Special tax on Production and Services” the Organization of gambling games, bets and raffles.

Page 6: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

FLAT TAX LAWFLAT TAX LAW

(FT) (FT)

Page 7: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

CONSIDERATIONS:CONSIDERATIONS:

Asset tax elimination

Control tax?

Coexistence with Income tax (minimum 4 years)

Cash flow regime.

For the years 2008 and 2009 estimated to generate

additional income of 1.3% and 1.8% of GIP (Gross

Internal Product) respectively.

FTFT

Page 8: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

FTFT

TAX PAYERS:TAX PAYERS:

Individuals and corporations residents in Mexico and non residents with permanent establishments who realize the following activities:

Commercial and Industrial Independent services Leasing of real property

TAXABLE BASIS:TAXABLE BASIS:

Net cash flow of aforementioned activities (collected income les paid authorized paid deductions)

RATE:RATE: 2008-----16.5%, 2009 ----17 %, 2010-----17.5 %.

Page 9: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

EXEMPTIONS:EXEMPTIONS:

Federation, States, Municipalities and Public Organizations; Political Parties, Unions, Civil Associations, Civil Corporations with scientific, political, religious and cultural means.

Trading and Industry Chambers, Agriculture, Cattle, Fishing and Forest Groupings and Professional Associations.

Organisms that group cooperative corporations, fund administrations or savings banks, and family parents associations.

Non profit entities authorized by Mexican Tax Authorities to receive deductible donations according Income Tax Law.

FTFT

Page 10: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

AUTHORIZED DEDUCTIONS (PAID):

Inventory purchases

Fixed Asset acquisitions, and land.

Administration, trading, distribution and production expenses.

Local and Federal Contributions

Independent Services

Property leasing Refunded deposits or clients advance payments Donations up to 7% from Fiscal Profit or from income in case of individuals New assets acquired in September-December 07 (Deduct a third part each

year) 5% for 10 years of net tax value of assets owned not included in the preceding

paragraph.

FTFT

Page 11: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

NON DEDUCTIBLE DISBURSEMENTS:

Payroll and fringe benefits (tax credit). Social Security and Housing Fund (tax credit). Royalties, interests and derivative financial operations

paid to related parties. Income Tax. Tax on cash deposits. VAT and FT..

FTFT

Page 12: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

Income effectively collected

less: Paid deductions

equal: FMCT Taxable Basis

times: 17.5% tax rate

equal: FMCT for the period

less: Income Tax of the period

Fiscal Credit (Deductions >Income)Taxable payroll at 17.5% creditSocial Security contributions 17.5% credit

equal: Tax payable

less: FMCT Provisional payments

equal: Tax payable (favorable balance)

Page 13: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

1. Flat Tax and Bank Deposits Tax (BDT) Regulations.

2. Presidential Decreea) Inventory- and land purchased before 2008

b) Fiscal Losses as of December 31, 2007– Immediate deduction (2005 to 2007)– 2001 exit of old simplified region

c) “Maquiladoras”

FISCAL REFORM 2008FISCAL REFORM 2008TO DO:TO DO:

Page 14: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

TAX ON CASH BANK TAX ON CASH BANK DEPOSITSDEPOSITS

Page 15: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

New Federal Tax, against informality and Tax Evasion.

Tax Payers: Individuals and corporations , respect to all deposits in cash in domestic or foreign currency received by Financial Institutions.

“Cash deposits” are not:

1. Electronic and withdrawal bank transfers, securities

2. Foreign Remittances

3. Cash deposits from granted credits

TAX ON CASH / BANK DEPOSITSTAX ON CASH / BANK DEPOSITS

Page 16: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

Tax rate will be 2%

For cash deposits that are more than $25,000.00 , accrued in each month of the period.

The Financial Institutions:

Obligation withhold at the end of the month and pay tax.

Deliver to taxpayer and authorities certificates of tax withheld Lack of funds not available to withhold will generate fiscal credit.

TAX ON CASH / BANK DEPOSITSTAX ON CASH / BANK DEPOSITS

Page 17: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

TAX ON CASH / BANK DEPOSITSTAX ON CASH / BANK DEPOSITS

Creditable Tax Against Income Tax ones own or withheld for the same period.

In case of balance in favor a universal compensation should be applied or a tax return requested.

Creditable vs. advance Income Tax Returns payments.

In force starting July 1, 2008.

Page 18: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

INCOME TAX LAWINCOME TAX LAW

Page 19: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

CORPORATIONS WILL INFORM (to the SAT):CORPORATIONS WILL INFORM (to the SAT):

AMOUNTS HIGHER THAN $600,000 RECEIVED IN CASH OR AMOUNTS HIGHER THAN $600,000 RECEIVED IN CASH OR IN FOREIGN CURRENCY FOR:IN FOREIGN CURRENCY FOR:

LOANS

CONTRIBUTIONS TO FURTHER INCREASE IN CAPITAL STOCK

CAPITAL STOCK INCREASES

Page 20: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

INDIVIDUALSINDIVIDUALS DECLARE IN ANNUAL TAX RETURN AMOUNTS OF $600,000 received (Before a

million) FOR THE FOLLOWING CONCEPTS: LOANS. DONATIONS PRIZES.

IN ADDITION, FISCAL AUTHORITIES, SHOULD BE INFORMED 15 DAYS AFTER THE RECEPTION OF THE PREVIOUS CONCEPTS

NOT TO INFORM LOANS OR DONATIONS IS CONSIDERED AN INCOME OMISSION.

SHARES SOLD THAT EXCEDE 10% OF CAPITAL STOCK IN THE LAST 24 MONTHS ARE TAXABLE.

Page 21: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

FEDERATION FISCAL CODEFEDERATION FISCAL CODE

Page 22: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

FINES ATTRIBUTABLE TO THIRD PARTIES

HARMFUL ACTIVITIES:

a) Advise or counsel the partial or total omission of taxes.

b) Alter books and accounting.

c) Be accomplice or accessory in any way or form not foreseen on fiscal fines

FINE-PENALTY: From $35,000 to $55,000 CONSULTANT AGGRAVATION BY IMPROPER PRACTICE: Penalty

increase from 10% to 20% without exceeding double collection of fees. FINES THAT DO NOT PROCEED. When in written opinion it is

established improper practices or that this could be contrary to that of the fiscal authorities.

Page 23: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

SPECIAL TAX LAW ON SPECIAL TAX LAW ON PRODUCTION AND SERVICES PRODUCTION AND SERVICES

(STLPS)(STLPS)

Page 24: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

20% RATE ON GAMBLING BETTING GAMES AND RAFFLES.CORPORATIONS DEFINED AS NOT LUCRATIVE ARE EXEMPTED.

FACULTY TO FEDERAL ENTITIES TO ESTABLISH LOCAL STLPS ON CONSUMER GOODS::

GASOLINE, DIESEL, ALCOHOLIC, BEVERAGES, TILLED TABACCO AND SOF DRINKS.

ARTICLE 73 OF THE CONSTITUTION IS AMENDED FOR THESE EFFECTS.

S T L P SS T L P S

Page 25: FISCAL REFORM 2008. Introduction The “Development National Plan 2007 – 2012”: –Poverty combat reinforcement, –Improve access and quality of education.

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