Mexico – Obligation to File Informative Returns and | KPMG | GLOBAL

Mexico – Obligation to File Informative Returns and Preferential Tax Regimes

Mexico – Obligation to File Informative Returns and

This GMS Flash Alert reports on the obligation taxpayers have to file an “informative return” in 2017 related to fiscal year 2016 when receiving any kind of income from tax haven jurisdictions.

1000

CONTACTS

Related content

flash-alert-2017-066

Individuals qualifying as tax residents of Mexico will be required to file an “informative return” (“declaración informativa”) in 2017 related to fiscal year 2016 when:

  • receiving any kind of income from territories listed in the Transitory Provisions of the Mexican Income Tax Law (hereinafter, “Tax Havens” 1);
  • performing operations through pass-through foreign figures (defined below) and entities.

For Mexican tax purposes, foreign figures or entities are considered to be pass-through when:

  • they are not income tax taxpayers in the country in which they were established or in which they have their main administration; and 
  • their income is attributed to their members, partners, shareholders, or beneficiaries. 

In addition, Mexican tax law considers the following to be “foreign figures”: trusts, associations, investment funds, and any other similar legal vehicle established under foreign law that does not have “legal capacity.”

WHY THIS MATTERS

Some rules eliminated on August 15, 2016, from the Miscellaneous Regulations2 had granted an exception for individuals to file an informative return if they were complying with certain requirements.  Since the rule’s abolition, the obligation to submit informative returns has become applicable to more taxpayers.

The informative return should be filed in February regarding income generated in the previous fiscal year.  However, there is a rule within the Miscellaneous Regulations that allows filing it until May. 

Not filing this informative return will presume that the individual has income from a preferential tax regime3 and, in addition, is considered by the tax authorities as a tax offense punishable by a prison sentence of between three months and three years.

Considerations on Filing the Informative Return

Although each case should be examined individually, generally speaking individuals who qualify as tax residents will be obligated to file this informative return if they:

  • receive any income from Tax Havens, such as, but not limited to, interest, rental, dividends, sale of shares, etc., regardless that Mexico has in place a broad information exchange agreement;
  • perform operations through a pass-through foreign entity (e.g., a Limited Liability Partnership in the U.S. where a K-1 form is provided) or a pass-through foreign figure (e.g., a trust);
  • have foreign investments funds in their portfolio.

KPMG NOTE

It is not expected that the Mexican tax authorities will again issue rules providing for an exception to file the informative return; as such, this return should be filed no later than May 31, 2017, to mitigate any risks.

FOOTNOTES

1  Tax haven territories listed in the Transitory Provisions of the Mexican tax law (las disposiciones transitorias de la Ley del Impuesto Sobre la Renta) are noted in the table below:

American Samoa Hashemite Kingdom of Jordan Republic of Guyana
Anguilla Hong Kong Republic of Honduras
Antigua and Barbuda Independent State of Western Samoa Republic of Liberia
Archipelago of Svalbard Island of Qeshm Republic of Maldives
Aruba Islands of Guernsey, Jersey, Alderney, Great Sark, Herm, Little Sark, Brecqhou, Jethou,Lihou (Channel Islands)  Republic of Mauritius
Ascension Republic of Nauru
Azores
Islands
Republic of Panama
Barbados Isle of Man
Republic of San Marino
Belize Kindom of Switzerland
Republic of Seychelles
Bermuda Kingdom of Tonga
Republic of the Marshall Islands
British Virgins Islands Kirbati
Republic of Trinidad and Tobago
Brunei Darussalam Labuan
Republic of Tunisia
Campione d’Italia Macao
Republic of Vanuatu
Canary Islands Madeira
Republic of Yemen
Canary Islands Special Zone Malta
Saint Helena
Cayman Islands Montserrat
Saint Kitts and Nevis
Christmas Island Nertherlands Antilles
Saint Lucia
Cocos or Keeling Islands Niue Saint Pierre and Miquelon
Commonwealth of Dominica Norfolk Island Saint Vincent and the Grendadines
Commonwealth of Puerto Rico Pacific Islands Solomon Islands
Commonwealth of the Bahamas Patau State of Bahrain
Cook Islands Pitcairn State of Kuwait
Democratic Socialist Republic of Sri Lanka Principality of Andorra State of Qatar
Eastern Republic of Uruguay Principality of Liechtenstein Sultanate of Oman
Falkland Islands
Principality of Monaco Tokelau
Free Zone of Ostrava
Republic of Albania Trieste
French Polynesia
Republic of Angola Tristan da Cunha
Gibraltar
Republic of Cape Verde
Turks and Caicos Islands
Greenland
Republic of Costa Rica
Tuvalu
Grenada
Republic of Cyprus
United Arab Emirates
Guam
Republic of Dijbouti
United States Virgin Islands

2  Resolución Miscelánea Fiscal .

3  Having preferential tax regime income means that the taxable income will be what is generated by the foreign entity/figure, although such income may not have been distributed/paid to the individual. 

United States Virgin Islands

The information contained in this newsletter was submitted by the KPMG International member firm in Mexico.

© 2017 KPMG Crdenas Dosal S.C., a Mexico civil partnership and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Connect with us

 

Request for proposal

 

Submit