• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 4/21/2014

Mexico - Supreme Court rejects as unconstitutional, pro-rata expense limitations  

April 21: The Second Chamber of the Supreme Court (Suprema Corte de Justicia de la Nación) recently declared as unconstitutional, a provision of Mexico’s income tax law that prevented taxpayers from claiming a pro-rata deduction for certain expenses.

Article 32, Section XVIII of the Mexican income tax law (effective until 31 December 2013) prohibited the deduction of "pro-rata expenses” if incurred abroad by entities that were not subject to Mexican income tax.

The high court’s declaration of unconstitutionality is not “absolute” because taxpayers still must meet certain requirements to qualify for a deduction of claimed expenses. Also, the high court’s decision cannot be interpreted as applying to all claims for deductions of pro-rata expenses.

Read an April 2014 report (English) or (Spanish) prepared by the KPMG member firm in Mexico: Pro-rata expenses

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