Doing Business

Doing Business in Mexico 2015

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147 Doing Business in Mexico 2015 • Payments made to any type of person or legal entity or contract located in a PTR, unless the taxpayers can demonstrate the transaction was carried out at fair market value. Losses Carry back or carry forward An operating loss declared for tax purposes can be carried forward and deducted from otherwise taxable profits of the ten subsequent years. Such deductible loss carried forward will also be indexed (increased) for inflation. Operating loss carry back are not allowed. Losses carried forward may be increased by the percentage increase in the National Consumer Price Index between the seventh and twelfth months of the fiscal year in which they are incurred, and thereafter up to the sixth month of the fiscal year in which they are applied. Tax loss carry-forwards are a right of the specific taxpayer and cannot be transferred to another entity. In the case of mergers, operating loss carried forward of the merged entity are lost, and in the case of carry forward of the surviving entity certain limitations apply. In the case of a spin-off, tax loss carry forward can be divided between the surviving entity and the spun-off entity(ies) in proportion to: a. The inventories and accounts receivable transferred in the case of commercial entities; b. The fixed assets transferred, in all other cases. Tax computation Net income Net income for tax purposes is defined as the difference between taxable revenues and allowable deductions. The operating loss carryover from prior years and profit sharing paid may be deducted from net income to arrive at taxable income, to which the tax rate is then applied. See Appendix III for a sample tax calculation. Tax rates The corporate tax rate is 30% for 2014. Lower rates may apply to certain primary economic activities. Tax credits A foreign tax credit is allowed for income tax paid directly or indirectly in foreign countries on foreign-source income, as described in Chapter 18. In addition, a credit is provided for investing in qualifying film production activities. Consolidation As from 2014, the tax consolidation regime has been eliminated. However, the regime remains in place for groups that opted to consolidate as from 2010 and have therefore been consolidating for less than five years, with the obligation to deconsolidate when the 5-year period elapses. 15

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