Tax reform can be defined as the modification or change of a country's tax regulations. In this way, the law can establish new parameters or statutes that must be complied with by both individuals and corporations. The legislative power is in charge of making all these changes.

What is it for?

A tax reform has three main objectives:

• Contribute to national economic growth.
• Simplification of taxpayers' fiscal procedures.
• Combating tax fraud and tax evasion.

A good tax reform allows the country to improve its economy.

Who needs this SSL certificate?

These are some fundamental changes that were made in the tax reform that you need to know in order to comply correctly with your tax obligations and forget about any problems:

CSR for individuals or employees

The Simplified Reliance Regime for individuals consists of reducing the payment of ISR to a range between 1 and 2.5% of their income. It is aimed at all individuals whose annual income is below 3.5 million pesos.

CSR for legal entities or companies

The Simplified Trust Regime is designed for companies with annual revenues of less than 35 million pesos. This regime seeks to provide more liquidity to companies so that they can invest capital in immediate expenses. This regime for legal entities will be applied gradually during the first months of 2022.

Notification of cash deposits

Now, cash deposits in excess of 15 thousand pesos will have to be reported. Financial institutions are the ones that must report it to the tax authorities.

Topics that may interest you:

The fiscal closing and what you should take into account

Senate approves multilateral convention

Tax closure and companies

The closing of the fiscal year is essential to obtain valuable information on financial profits or losses. At the close of the fiscal year, trends, strengths and weaknesses can be analyzed in order to establish objectives and add prevention strategies for the following year. In this sense, the fiscal year represents an extremely essential information document for the continuous growth of corporations.

Considerations to take into account

Some of the indicators that the SAT monitors very closely and that should be reviewed at the close of this fiscal year are:

• Increase in cost of goods sold
• Unusual deductions
• Decrease in the profitability ratio
• Effective rates out of parameter
• Operations with no business reason
• Recurring tax losses
• Decrease in accounting income

Obligations and considerations for a fiscal closing

• Update the corporate books with the decisions made during the fiscal year, as well as integrate the file for the controlling beneficiary. Submit notice of update of the shareholding structure. 

• To file notices before the RFC.

• Submit the corresponding informative declarations for considerations received in cash, local or foreign currency or gold or silver pieces, transactions with related parties, loans from abroad, relevant transactions, reportable schemes.

• Regarding payments abroad in the case of application of treaties to avoid double taxation, review compliance with requirements, including obtaining proof of tax residency. 

• In the case of transactions with related parties, the transaction has been agreed at market value; there are current contracts, tax receipts and other documents that support the transactions.

• Check that labor obligations such as PTU and social security payments have been complied with and that the respective CFDIs have been issued. 

• Perform cross-checking of income tax withholdings paid vs. stamped in the payroll.

• Cross-reference CFDIs issued and received that support accrued income and authorized deductions so that the amounts declared are duly supported.

• Correction of CFDIs, including the elimination of duplicate CFDIs.   

• To credit provisional payments made during the year, withholdings made by third parties (financial institutions), tax paid abroad or tax paid on the distribution of dividends, as the case may be.  

• Updating of tax attributes such as CUCA and CUFIN.

• Review the history of tax loss carryforwards.

• Review of applicable tax incentives and requirements to be complied with.

If you require advice on the subject, the specialists at Ecovis can help you.