Mexico: Taxpayers challenge monthly tax accounting reporting requirements

Mexico: Monthly tax accounting reporting

A district court issued a judgment—“amparo”—in taxpayer-initiated challenges to the rules requiring taxpayers to provide monthly information accounting statements to the tax authorities. The court judgments effective absolve the subject taxpayers from having to comply with the reporting obligations on a monthly basis. The decisions, however, are not seen as being final, and it is anticipated that the tax authorities will appeal.

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Under Mexico’s legal system, decisions declaring a tax law as “unconstitutional” do not have the effect of invalidating the measure.  Rather, the reach of the court’s injunctive relief—amparo—is limited to those taxpayers who petitioned the court and obtained a favorable ruling. All other taxpayers must comply with the law as written—even though the law may be unconstitutional—until each taxpayer obtains an amparo and invokes the protection of the federal courts.

 

Read an August 2015 report (Spanish) prepared by the KPMG member firm in Mexico: Inconstitucionalidad de la obligación de ingresar mensualmente la contabilidad a través de la página de internet del Servicio de Administración Tributaria

Background

Along with the Mexican tax reform for 2014, the Mexican Congress made several amendments to the tax law—one of which relates to accounting records for tax purposes. Mexican taxpayers are required to maintain electronic accounting books and records and file them on a monthly basis with the tax administration. Accounting books and records for tax purposes must include:

  • Accounting records, including the list of accounts and the vouchers or proof of payments of such records
  • All notices filed with the tax administration concerning the taxpayers’ taxpayer identification (ID) including tax residency modifications, enrollment of branches, modifications to tax obligations, etc.
  • All tax returns including annual returns, estimated returns, information returns, and any other additional return
  • Bank statements and bank reconciliations, including statements relating to investments, credit cards, debit and electronic purses for fuel or food payment granted to the taxpayer’s employees
  • Shares, equity interest, and any other negotiable instrument in which the taxpayer is a party
  • Documentation related to the hiring of employees as well as notices and enrollments before the tax administration and social security concerning employment status
  • Documentation related to imports and exports of goods
  • Documentation and records of all transactions, events or activities that are to be registered in accordance with the internal control system

The tax regulations also provide a detailed explanation as to how taxpayer electronic accounting records are to appear. These rules specific that the accounting books and records:

  • Are to be analytical and made in the month in which the transactions, acts or activities are carried out, at the latest within five days of completion of the transaction, event or activity
  • Are to integrate into the journal, in a descriptive manner, all operations, actions or activities in the chronological order in which they were made, indicating a charge or credit and the name of the accounting account, with the journal also showing the opening balance, transactions for the period and the closing balance
  • Are to provide sufficient information to allow for the identification of each transaction, act or activity with a number assigned to the electronic invoice or the corresponding support documentation, so that the payment and the tax rate for each transaction may be identified
  • Are to allow for identification of fixed assets and capitalized amounts with electronic invoices or corresponding support documentation, so that the acquisition date, the asset description, the original purchase price, the depreciation rate, and the start date for depreciation can be identified
  • Are to include financial statements—i.e., the balance sheet, income statement, statement of change in stockholders’ equity, and the cash flow statement as well as the trial balance and notes to the financial statements
  • Are to be maintained in the Spanish language and amounts designated in Mexican pesos
  • Are to be established by cost centers, and identify the transactions, acts or activities of each branch or establishment, including those that are located abroad
  • Are to include the date of completion of each transaction, the description, the quantity, the method of payment and if the payment was made in installments (or not)
  • Are to allow for identification of deposits and withdrawals from bank accounts opened by the taxpayer and for reconciliation of bank statements 
  • Are to include an inventory records of goods, raw materials and goods in process, so as to allow for the identification of the quantity, type, date of purchase and sale, as well as the increase or decrease of inventory and stock at the beginning and end of each month and at the end of the fiscal year, specifying the date of delivery or receipt, as well as whether it is a refund, donation or destruction, if applicable
  • Are to include records relating to the deferral option for leasing contracts, and to allow for identification of such operations of each fiscal year
  • Are to include the value added tax (VAT) that has been transferred to the taxpayer as well as the VAT paid on the importation of goods, by dividing  the expenses into three categories—(1) exclusively related to taxable activities; (2) exclusively related to non-taxable activities, and (3) related to taxable and non-taxable activities

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