Follow-up to Economic and Fiscal Reform Package 2011
On the 8th of September of this, the head of the Ministry of Finance submitted to Congress of the Union:
- Measure of Income
- Project Expenditure Budget of the Federation for 2011
- The Broad Economic Policy Criteria
This package highlights the following:
- No substantive changes are proposed to the legislation, regulations and procedures governing the existing fiscal framework and the exercise of spending. Are not considering the creation of new taxes or increased rates of existing taxes. It provides a miscellaneous tax for the second time in this Administration.
- Estimaque total revenue was 3.9% real increase as approved CONR en2010 spectrum. Among these, oil revenues will be higher at 4.5% as approved in 2010, and it is anticipated that in 2011 the fundraising taxed non-oil-ria is the highest in at least the last 30 years as a proportion of GDP to be located at 10.3 %
- For 2011, excluding the investment in Pemex, is superior in net elgasto 62.5 billion pesos in 2011 (Mmp2011) or 2.1% in real terms for 2010 as approved. This, as a result of higher budget revenues and a reduction in the deficit target. Meanwhile, Pemex physical investment in 2011 will remain at the same level as a proportion of GDP than approved in 2010 (2.0% of GDP)
- It proposes a policy of public spending aimed at strengthening public safety, promote social development and strengthen economic growth.
- Shares and contributions to the states will increase by 6.8% and 2.7% respectively, with respect to that approved for 2010.
- It keeps the recharge rate, and the new treatment of interest will apply until 2012. Therefore, the annual retention rate for this item will be of 0.60% in 2011.
The list of concepts that are the basis for determining the flat tax only report annually, and continues the prohibition to apply the tax credit for excess deductions against income tax for the year.
2011 Tax Reform supported by Deputies
On October 19, 2010, the Chamber of Deputies approved a number of opinions to implement fiscal reforms leading to 2011, highlights of which are discussed below: MITL
- It approved amendments to the Income Tax Law to create Chapter VIII of TituloVII, called "The First Job Development" to provide fiscal stimulus provided in the order listed, in order to support employers who recruit young people in his first work in jobs newly created, consisting of:
- Provide an additional deduction on income taxes, equivalent to the following:
| Concept | Amount | |
| Base salary quote | $ 459.68 | |
| By: | Number of working days in the period | 31 |
| Like: | SBC period | $ 14,250.08 |
| By: | Effective income tax rate | 30% |
| Like: | Result | $ 4275.02 |
| SBC period | $ 14,250.08 | |
| Less: | Result | 4275.02 |
| Like: | Results Section I of Article 230 | $ 9975.06 |
| Between: | Effective income tax rate | 30% |
| Like: | Results section II 230 | $ 33,250.20 |
| By: | Percent | 40% |
| Like: | Maximum amount of additional deduction for the period | $ 13,300.08 |
- The deductibility be applicable to workers earning up to eight times the current monthly minimum wage in the relevant geographical area.
- The new post must remain at least 36 continuous months after they are created.
- The maximum amount to be deducted from the second year is reduced by 25%.
- It gives investors an incentive to the theater, consisting of a tax credit equivalent amount in the year concerned, to contribute to national projects, against income tax for the year and interim payments of that year in charge at the year in which the credit is determined. It will not be accumulated for income tax purposes, and in no case exceed $ 50'000, 000.00 to be distributed among the candidates in 2011, or $ 2'000, 000.00 for each taxpayer and / or project. The stimulus only applies to independent producers, whose delivery will be made by an Inter-Agency Committee, which will be responsible for reviewing the submitted projects.
LIESPS
- In the case of processed tobacco approve a fee of $ 0.35 per cigarette sold or imported, that is, the price of packs containing 20 cigarettes will increase $ 7.00 (ARTICLE 2, Section I, paragraph c) of the LIESPS)
- IESPS increase by 25% to energy drinks.
The reform package was sent to the Senate for further analysis, added, or, if approved.
Senate Approves LIF 2011
The Plenum of the Senate approved on Tuesday the Revenue Act of 2011. With 75 votes in favor, 6 against and 1 abstention this law will give additional resources to the Mexican Government 60 000 511 million pesos. Thus the total revenue will amount to 3 billion 438 000 895 500 000 pesos.
Senators endorsed the increase to the IEPS to tobacco, with 35 cents per cigarette, as well as a rate of 25% for energy drinks.
Additionally, the Income Tax Law was modified to provide a fiscal stimulus to employers who hire workers in their first job, and the fiscal stimulus to the production stage. In terms of incentives and exemptions referred to those listed on the previous page entitled "Tax Reform 2011 supported by deputies" in the same terms. The voting results are as follows:
| Draft Decree: | Pro | Against | Abstentions |
| Various provisions are added to the Income Tax Law (first job) | 85 | 3 | |
| Is added to Article 226 bis of the Income Tax Law (stimulus to film industry) | 93 | ||
| Reform, adds and repeals several provisions of the Federal Law | 88 | 4 | |
| That reforms and adds various provisions of the LIESPS (25% IESPS to energy drinks) | 84 | 7 | |
| Draft decree to reform article 2 of the LIESPS (increase of 35 cents per cigarette) | 70 | 10 | 3 |
| Law issued by the Federal Revenue for fiscal year 2011 | 75 | 6 | 1 |
Article 1 Income Act
In the fiscal year, the Federation collects revenues from the concepts and the estimated amounts listed below:
| A. Government Revenue | 2010 | 2011 | Variation |
| I. Taxes: | 1,403,562.40 | 1,575,119.50 | 171,557.10 |
| 1. Income tax | 641,884.40 | 688,965.20 | 47,080.80 |
| 2. Rate Business Tax | 53,195.10 | 60,605.30 | 7410.20 |
| 3. Value added tax | 483,898.70 | 555,677.10 | 71,778.40 |
| 4. Special tax on production and services: | 50,704.50 | 69,920.80 | 19,216.30 |
| a. Gasoline, diesel for automotive combustion: | -12,214.90 | -9,631.30 | 2583.60 |
| i) Article 2nd.-A, Section I | -35,994.90 | -34,160.60 | 1834.30 |
| ii) Article 2nd.-A, fraction II | 23,780.00 | 24,529.30 | 749.30 |
| b. Alcoholic beverages and beer: | 26,499.40 | 27,719.90 | 1220.50 |
| i) Alcoholic Beverages | 6240.90 | 5371.50 | -869.40 |
| ii) Beer and soft drinks | 20,258.50 | 22,348.40 | 2089.90 |
| c. Processed tobacco | 23,449.90 | 42,059.90 | 18,610.00 |
| d. Games of chance and lotteries | 2536.80 | 2490.50 | -46.30 |
| e. Public telecommunications networks | 10,433.30 | 7213.20 | -3,220.10 |
| f. Energy drinks | 0.00 | 68.60 | 68.6 |
| 5. Possession or use tax on vehicles | 21,067.90 | 17,182.80 | -3,885.10 |
| 6. New car tax | 4027.10 | 4787.00 | 759.90 |
| 7. Tax on services of public interest expressly declared by law, involving concessionaires directly owned assets of the Nation | 0.00 | 0.00 | |
| 8. Oil yields tax | 2424.50 | 1501.30 | -923.20 |
| 9. Taxes on foreign trade: | 27,911.90 | 22,810.60 | -5,101.30 |
| a. The import | 27,911.90 | 22,810.60 | -5,101.30 |
| b. The export | 0.00 | 0.00 | 0 |
| 10. Tax on cash deposits | 13,079.70 | 19,304.10 | 6224.40 |
| 11. Accessories | 12,467.70 | 23,545.30 | 11,077.60 |
| II. Social security contributions: | 155,390.40 | 169,423.00 | 14,032.60 |
| 1. Contributions and payments to workers by employers retained for the National Housing Fund for Workers | 0 | 0 | 0 |
| 2. Contributions for Social Insurance by employers and employees | 155,390.40 | 169,423.00 | 14,032.60 |
| 3. Fees System Retirement Savings by employers | 0 | 0 | 0 |
| 4. Fees for the Institute of Security and Social Services for State Employees by those workers | 0 | 0 | 0 |
| 5. Contributions for Social Security Institute for the Mexican Armed Forces in charge of the military | 0 | 0 | 0 |
| TOTAL | 1 ', 558,952.80 | 1 ', 744,542.50 | 185,589.70 |
Final Thoughts
Revenue Act
From the above analysis we can conclude the following:
It is considering the prohibition of applying the tax credit for excess deductions (credit IETU) against income tax for the year. Example:
| Concept | 2009 | 2011 | |
| Taxable income | $ 35,000.00 | $ 35,000.00 | |
| Less: | Authorized deductions | 90,000.00 | 90,000.00 |
| Like: | Excess deductions | 55,000.00 | 55,000.00 |
| By: | Factor | 0170 | 0175 |
| Like: | Tax Credit for excess Flat Tax deductions | 9350.00 | 9625.00 |
Calculating the tax credit for excess deductions
| Concept | 2009 | 2011 | |
| Taxable income | 15,000.00 | 15,000.00 | |
| Less: | Tax Rate | 28% | 30% |
| Like: | ISR own exercise | 4200.00 | 4500.00 |
| By: | Tax Credit for excess Flat Tax deductions | 4200.00 | 0.00 |
| Like: | Income tax payable | 0.00 | 4500.00 |
Amparo before the earlier provision
- IETU. The reform that prohibits the accreditation of the flat tax credit against income tax caused in the exercise, is unconstitutional Content-nal Revenue Act, whose purpose is to list the income tax does not regulate itself.
- Point IETU legality. There is a special rule governing the accreditation (Art. 11 LIETU), it was not repealed, so the general rule should not be over specified.
- The list of concepts that are the basis for determining the flat tax only report annually. With this we take a step in the administrative simplification, we are only waiting for the SAT publish the option to speed up VAT refunds through the filing of the DIOT.
Law on Income Tax
- Includes two new fiscal stimulus. In particular, the first job will serve most of the taxpayers, it can serve as an additional deduction for income tax purposes and whose purpose is to encourage the allocation of jobs to young people and recent graduates.
IEPS Law
- It continues to punish consumers by raising the price snuff the pack of 20 cigarettes by $ 7 pesos more. It also increases the tax by 25% the consumption of energy drinks (red bull, monster, etc.).. This has caused various reactions businessmen in the area, especially the cigar, who have threatened to withdraw their business in Mexico.
In the comparison of the Revenue Act of 2011 versus 2010 clearly show an increase in taxes most representative (ISR, flat tax, VAT), same situation is happening in social security contributions. If these concepts there was no increase in rates and not the SAT has increased the tax base, why increase?
Is not that the authority will be made more aggressive control programs against cotribuyentes? (Delays in VAT refunds, IDE, audit the outsourcing jointly between the SAT and IMSS). The inability of the SAT to increase our tax revenue is expressed, a situation that leads to legal uncertainty over the course of next year (2011) as it did in 2010, when he issued the decree to control the dollars, the same that caused the closure of a large number of centers and homes were changes in formality and operated under the rules dictated by the relevant authorities.
