Yesterday, Sunday June 13th, 2021, the Mexican Tax Administration (“SAT”) published on its website, the first benchmarks on effective income tax rates for certain economic activities carried out by large taxpayers.
This publication is derived from the amendment of article 33 of the Mexican Federal Fiscal Code for the tax year 2021, in which, for the first time in the Mexican tax system, the SAT was granted with the power to make taxpayers aware, on a regular basis, of the benchmarks regarding to profits, deductible concepts or current tax rates for carrying out their activities based on the economic sector or industry to which they belong.
This information, according to the present article, is with the aim that taxpayers measure their possible “tax risks”, which comprises the contingency for non-compliance with the tax provisions that are applicable and that may have an impact on the correct payment of contributions, specifically of income tax.
The effective tax rates are related to 40 activities in five economic sectors: mining, manufacturing, wholesale, retail, financial and insurance services; among which are comprised the automotive and pharmaceutical industries.
With the aim of encouraging voluntary compliance, the SAT invites taxpayers to consult the published effective tax rates, identify the tax related to their economic activity and compare it with their own effective tax rate for fiscal years 2016, 2017, 2018 and 2019, in order to measure their possible tax risks and, where appropriate, correct their fiscal situation to minimize the possibility of initiating formal tax reviews.
The “effective tax rate” referred to by the SAT, as stated on its own website, is the rate calculated on the basis of the information considered in the last annual income tax return for the corresponding tax year, by dividing the amount of income tax caused among the cumulative income in said year.
