Chihuahua, Chih., february 11th, 2020.
Dear clients and friends,
On January 31th 2020, the early edition of Annex 7 to the First Amendment of the Miscellaneous Tax Resolution for 2020 was published on the Tax Administration Service (SAT) website, which has yet to be published in the Federal Official Gazette. The aforementioned Resolution foresees Criteria number 46/IVA/N titled “Retention of the 6% of the value added tax (VAT) pursuant section IV article 1-A Vaule Added Tax Law”.
SAT issued said criteria, as a result of the vague wording of the Value Added Tax Law amendment, which has generated confusion regarding the cases in which such tax should be withheld.
The criteria states that, when either of the legal entities foreseen on Title II or Title III of the Income Tax Law or an individual with business activity, hires services that imply the appointment of personnel; the retention will be required when said services directly benefit the contractor or any related party. On the other hand, the retention will not be required when said services directly benefit the employer of the personnel appointed.
Regardless of the issuance of SAT’s remark, stating that said retention will only be required when the rendering of the services directly benefit the contracting party or any related party; said criteria regarding the retention of VAT is still not clear, and therefore each particular case should be analyzed.
It is important to note that once the Amendments to the Miscellaneous Tax Resolution for 2020 are published on the Federal Official Gazette, we will be informing you SAT’s final criteria regarding this topic.
For more information regarding this topic, please do not hesitate to contact Mr. Sergio Humberto Salas Medrano, Partner of the Fiscal and Administrative Area, at his email ssalas@iclmx.com, as well as Mrs. Ana Gabriela Moreno Luna, at her email amoreno@iclmx.com, and Mr. Fernando Antonio Borunda Bustamante at his email fborunda@iclmx.com.
Lic. Sergio H. Salas Medrano.
Inintegrum Corporación Legal, S.C.
