It is a reality the negative economic impact that companies and individuals around the world are facing as a consequence of the COVID-19 pandemic. Nevertheless, the Mexican Government has decided not to grant any fiscal or tax incentives in connection with federal taxes, such as income tax, VAT or excise taxes. The purpose of this document is to point out some alternatives that could be explored by the taxpayers, which could provide additional cash flow in the short and midterm. 

Legal Entities 

  • Request for authorization to decrease the amount of advance payments, which unfortunately would be available until July. 
  • Review and analysis of the calculation of FX effects arising from accounts kept in foreign currency, for purposes of both the annual tax return and the advance payments. 
  • Review and analysis of the various items that are being included or excluded for purposes of computing the annual inflationary effect. 
  • Calculation of the cost of goods sold, including the analysis of its possible update due to inflationary effects, as well as of the deduction of inventories that could be considered obsolete because of the pandemic. 
  • Deduction of the amount pending deduction in the case of investments that are no longer useful for obtaining income. 
  • Adjustments to the maximum percentages established in the Mexican Income Tax Law that are being considered for the deduction of investments. 
  • Sale and reacquisition of positions held in financial assets. 
  • Review of tax effects resulting from the collection of insurance premiums. 
  • Calculation of losses related with goods due to fortuitous event or force majeure, as well as the deduction of conventional penalties that are caused by the pandemic. 
  • Request for refund of the favorable income tax balance that may have been generated in the 2019 annual tax return. 
  • Regarding value added tax, review of favorable balances that have been generated, as well as the financial projections, to obtain their refund in a reasonable time. 

  • The tax authorities have declared that due to the health emergency and in support of the taxpayers’ economy, the Tax Administration Service (“SAT”) will implement mechanisms to refund within a 3 days period the favorable balances that may be obtained by individuals in their annual tax return for the 2019 fiscal year and whose filing deadline is April 30, 2020. Therefore, we suggest that those individuals that obtain a favorable balance in their 2019 annual tax return, anticipate its filing to the first days of April (as soon as the platform is enabled for such purpose). 
  • As in the case of legal entities, the sale and reacquisition of positions held in financial assets could be carried out. 

  • Considering the speech of the Mexican Government, we consider that the tax authorities will continue, and even increase, their collection intent through the use of their verification powers (audits). Therefore, now more than ever it will be necessary to have solid records and to duly attend these procedures, to avoid major consequences that could significantly impact the tax burden of taxpayers in these difficult times.