On October 30, 2023, the Federal Government issued a Decree granting various tax benefits to certain taxpayers to contribute to the restoration of damages and the reintegration of economic activity following the material damages that occurred on Tuesday, October 24, as a result of severe rains caused by Hurricane Otis in the state of Guerrero, especially in the municipality of Acapulco de Juárez.
Taxpayers who have their tax domicile, agency, branch, or establishment in the affected areas of the municipalities of the state of Guerrero.
Affected areas declared as natural disaster
On November 2nd, 2023, the Security and Citizen Protection Department published the Natural Disaster Declaration indicating the affected areas (municipalities) in the state of Guerrero, which will subsequently be eligible for the benefits of the decree:
Municipalities of Apaxtla, Arcelia, Chilpancingo de los Bravo, Cuetzala del Progreso, Eduardo Neri, Florencio Villarreal, General Heliodoro Castillo, Juan R. Escudero, Leonardo Bravo, Mochitlán, San Marcos, Tecoanapa y Tlapehuala, Acatepec, Ayutla de los Libres, Azoyú, Chilapa de Álvarez, Cocula, Copala, Cuajinicuilapa, Cuautepec, Igualapa, Juchitán, Malinaltepec, Marquelia, Quechultenango, San Luis Acatlán, Tixtla de Guerrero, Tlacoachistlahuaca, Tlacoapa y Xalpatláhuac, Coyuca de Catalán, Cutzamala de Pinzón, Petatlán, Pungarabato, Técpan de Galeana, Tlalchapa, Acapulco de Juárez, Atoyac de Álvarez, Benito Juárez, Coyuca de Benítez, San Miguel Totolapan, Atlamajalcingo del Monte, Ajuchitlán del Progreso, Iliatenco and Metlatónoc.
I. Immediate Deduction of assets
Deduction of 100% on investments made between October and December 2023, in new or used fixed assets, provided that these fixed assets are used exclusively and permanently in the affected areas and are intended for replacement, reconstruction, or rehabilitation.
This benefit does not apply to automobiles, armored car equipment, airplanes, or unidentifiable individual fixed assets.
The benefit only applies to the amounts invested that are additional to damage insurance recoveries.
II. Deferral of Tax Payments
Tax payments of October, November, and December 2023, can be deferred into three installments payable during the months of January to March 2024, related to:
a.Income tax (ISR) withholdings for workers in the affected areas.
b. Definitive payment of value-added tax (VAT) and Special Tax on Production and Services (IEPS) for acts or activities related to their tax domicile, agency, branch, or establishment located in the affected areas.
Payments made within the established deadline will not incur late fees, surcharges, or penalties, and no tax interest guarantee will be required.
If any of the partialities are not paid in full or in part, the benefits granted will be considered revoked, and tax authorities will demand the payment of the entire outstanding amounts with applicable restatement and surcharges.
III. Monthly Income Tax payment exemption
The obligation to make monthly Income Tax (IT) payments for October, November, and December 2023, for the fourth quarter of 2023, is exempted as long as the income is related to the tax domicile, agency, branch, or establishment located in the affected areas.
This benefit applies to:
- Corporate entities subject to Title II or VII of the Income Tax Law.
- Individuals with business and professional activities.
- Individuals earning income through technological platforms.
- Individuals with rental income.
- Individuals in the RESICO tax regime.
This benefit also implies a deferral, as it only exempts the monthly payment obligation, and the annual return payment obligation remains.
IV. Deferral of tax obligations for RIF and Technological Platform taxpayers
- Individuals continuing to pay taxes under the Simplified Tax Incorporation Regime (RIF) can defer the submission of Income Tax returns to the fifth and sixth bimesters of the 2023 fiscal year.
- Individuals earning income from the sale of goods or provision of services through technological platforms or software applications can defer the payment of Income Tax for October, November, and December 2023.
- The aforementioned returns must be submitted no later than February 2024, as long as the income is related to the tax domicile, agency, branch, or establishment located in the affected areas.
Payments made within the established deadline will not incur late fees, surcharges, or penalties.
V. Other Benefits
- VAT refund requests submitted until December 2023 for balances in favor generated prior to that month will be processed within 20 business days, which is half the regular processing time.
- Taxpayers exclusively engaged in agricultural, livestock, fishing, or forestry activities, subject to the provisions of Title II, Chapter VIII of the Income Tax Law, who opt to make semi-annual income tax pre-payments during the second half of 2023, may choose to submit monthly VAT returns for that semester without being considered in breach of the requirements established in that administrative facilities resolution regarding semi-annual IT payments.
- Taxpayers who, prior to October 2023, have been authorized to make installments for omitted contributions and accessories, can defer the installments due in October 2023 and subsequent months, resuming the payment program on February 2024.
- Individuals with residential properties in the affected areas will not consider as taxable income, economic or monetary support received from corporate entities or authorized trusts, as long as they are not from related parties and are intended for the reconstruction or rehabilitation of their residential properties.
It is considered that civil organizations and authorized trusts receiving deductible donations under the law fulfill the authorized social purpose when providing donations for the reconstruction or rehabilitation of affected individuals’ homes.
The aforementioned benefits apply to those with their tax domicile, agency, branch, or establishment within the affected areas.
It should be noted that those with their tax domicile outside the affected areas but have a branch, agency, or establishment within these areas, or vice versa, will only enjoy the benefits of the decree for income, assets, withholdings, the value of acts or activities, and expenses attributable to the branch, agency, or establishment or those attributable to the fiscal domicile located in the affected areas.
Finally, the Tax Administration Service (SAT) must issue the necessary general rules for the proper application of the decree.