Global

Details

  • Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 5/19/2014

Mexico - Details of hydrocarbon tax in energy reform proposals 

May 19: Legislative proposals announced by Mexico’s government would, if approved by the Congress and enacted into law, revise the rules for taxation of amounts relating to exploration and extraction of hydrocarbons, effective 1 January 2015.

The hydrocarbon revenue provisions would establish a new tax regime regarding contracts and assignment agreements for the exploration and extraction of hydrocarbon activities.


Under the proposal, the additional revenue from this new law would come exclusively from contracts and assignment agreements, and would be designated to a federal trust (referred to, in English, as the Mexican Petroleum Fund) that would, as recipient of the payments, serve as the administrator of the trust funds.


Among the tax provisions:


  • Contract and assignment agreement holders would not be required to distribute profits to their employees, but, the proposal would allow for other types of incentives of similar characteristics.


  • Foreign entities involved in hydrocarbon extraction and exploitation activities for longer than a 30-day period would be deemed to have a permanent establishment (PE) in Mexico. There also would be attribution rules for determining the 30-day period threshold for similar or identical activities conducted by related parties or by joint projects of which the foreign entity is a party.


  • Wages and salaries paid to individuals for activities performed in Mexico, for a duration of 30 days within a 12-month period, when paid by a foreign entity not deemed to have a PE in Mexico and when related to a hydrocarbon contract or assignment agreement holders, would be subject to Mexican income tax.

Read a May 2014 report [PDF 662 KB] prepared by the KPMG member firm in Mexico.



For more information, contact a tax professional with KPMG in Mexico:


Gabriel Andrade

+528181221849


Roberto Mendoza

+52881221975




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


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.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

 

Share this

Share this

Subscribe

Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)


Already a Subscriber? Login


Not a member? Subscribe now