México - Español


  • Tipo: Regulatory update
  • Fecha: 21/04/2014

Flashes Fiscales

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La Práctica de Impuestos analiza de manera detallada los efectos que puedan tener en su empresa las diversas disposiciones regulatorias.

Pro-rata expenses 

The Second Chamber of the Supreme Court of Justice of the Nation (SCJN, for it's acronym in Spanish), recently declared unconstitutional Article 32, Section XVIII of the Mexican Income Tax Law in force until December 31, 2013, which prohibits the deduction of "the pro-rata expenses incurred abroad with whom are not taxpayers of income tax".
It is important to note that this declaration of unconstitutionality is not absolute, since the resolution itself limits the taxpayer to meet certain requirements to qualify for the deduction and points out that the tax authority previous to the rejection of this type of expenses, must verify whether such requirements are met, namely:


  1. The expenditure is strictly necessary. For example, if you are facing a pro-rata expense for intra-group services, we must have evidence that the services were effectively rendered and that they have a close relationship with the activity and the taxpayer.

    2. That there is a reasonable relationship between the expenditure incurred and the benefit received or to be received, that is, to have the evidence of the economic benefits obtained. For example, if the expenditure was related to marketing, there should be a direct correlation in sales.

    3. If the expenditure was made between related parties, must prove that the agreed price is within the price range that had used independent parties in comparable transactions, complying with all the transfer pricing rules.

    4. Having the documentation showing that the proportion was based on fiscal elements, technical and financial objectives and not arbitrary or capricious manner by the taxpayer. This means that it should apply a methodology to show that a logical and consistent procedure was performed over time.


Undoubtedly, this decision is relevant; however it cannot be interpreted that result applicable to all pro-rata cases, since the application of the criteria support by the SCJN, will depend of meeting the requirements for it listed, which should be analyzed in detail for each taxpayer, with appropriate specialized advice.


As always, the staff of the Tax and Legal Practice of KPMG in Mexico is at your service to analyze in detail the effects it may have on your business the application of the above provisions.
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