NEW PRESUMPTION[1] IN FAVOR OF THE TAX AUTHORITY: IMPROPER TRANSFER OF TAX LOSSES.
GIL ALONSO ZENTENO GARCIA
The economic package for 2018[2]Among other laws, it included the Decree amending, adding and repealing several provisions of the Federal Tax Code, the Customs Law, the Federal Criminal Code and the Federal Law to Prevent and Punish Crimes Committed in the Area of Hydrocarbons.
Within these reforms, a new article is noteworthy.[3] the purpose of which, according to the Explanatory Memorandum of the initiative, is to presume the "undue commercialization of tax losses".[4].
According to the aforementioned Exhibit, a significant increase in the determination of tax loss carryforwards and unused tax loss carryforwards was observed in fiscal 2016 compared to fiscal 2007 (258% and 180%, respectively).
According to the document being analyzed, this increase[5] is due to losses that are generated without substance or business reason and that, through planning schemes, taxpayers seek to avoid the restrictions of the Law for their reduction.
In order to combat this "tax manipulation", a provision is added to combat the undue transfer of tax losses.
Thus, it is presumed that[6] that a taxpayer that generated a tax loss in any of the cases described below and subsequently participates in restructurings or has changes in its shareholders, in such a way that the person generating the right to its reduction ceases to form part of the group to which it belonged when it obtained it, had as its sole purpose the undue transfer of that loss for its direct or indirect reduction by another person.
For its part, the Chamber of Deputies approved[7] The opinion of the Finance and Public Credit Commission, which fully coincided with the initiative of the Federal Executive.
The Draft Decree was sent to[8] to the Senate and was approved by the United Commissions of Finance and Public Credit and Legislative Studies, Second.
Finally, the Senate approved[9] The Decree in question, only its promulgation and entry into force is pending.
The approved article provides that the authority may presume that an undue transfer of tax losses was made when, from the analysis of the information in its databases, it identifies that the taxpayer entitled to the reduction of such tax losses (who generated them) was part of a restructuring, spin-off or merger of companies, or a change of shareholders and, as a result, such person ceases to be part of the group to which he/she belonged.
The new presumption will be applied when the tax authority notices that the taxpayer is located in any of the following cases:
- a) Obtain a tax loss in any of the three fiscal years following its incorporation, in an amount greater than the amount of its assets, and that half of its deductions[10] derived from transactions with related parties.
- b) Obtain the tax loss, after the three fiscal years following its incorporation, derived from the fact that more than half of its deductions are the result of transactions with related parties and have increased by more than 50% with respect to those incurred in the immediately preceding fiscal year.
- c) Decreases, by more than 50%, its material capacity to carry out its predominant activity, in fiscal years subsequent to the one in which it declared the tax loss, as a consequence of the transfer of all or part of its assets through restructuring, spin-off or merger of companies, or because such assets have been sold to related parties.
- d) Obtain the tax loss and there is a disposal of assets that involves the segregation of the rights over its property, without considering such segregation when determining the proven acquisition cost.
- e) Obtain the tax loss and there is a modification in the treatment of the investment deduction.[11]before at least 50% of the deduction has been taken.
- f) Obtain the tax loss and there are deductions whose consideration is covered by the subscription of debt securities and the obligation acquired is extinguished through a form of payment other than those provided for deductions in the Income Tax Law.
In the event that a taxpayer is found to be in any of the above situations, the tax authority will notify the interested party through its tax mailbox, so that the taxpayer may state the following[12] The Company shall provide the relevant documentation and information to disprove the facts detected or observed.
In the case of taxpayers whose Federal Taxpayer Registry has been cancelled, the notification will be made to the taxpayer who is the holder of the rights and obligations of the company.
In case the rights and obligations have been transferred to another taxpayer, the notification will be made with the last holder of such rights and obligations.
The authority will evaluate the taxpayer's evidence and defenses.[13]The taxpayer shall notify, through the tax mailbox, the resolution stating whether or not the disputed facts have been refuted.
The following may be required[14] additional information to the taxpayer to be provided within ten days following the date on which the notification becomes effective.
Against the resolution issued by the tax authority, an administrative appeal for revocation may be filed.
The authority shall publish[15] a list of taxpayers that have not disproved the facts imputed to them and that, therefore, are definitively presumed to be improperly transferring tax losses.
This publication will have the effect, in addition to confirming the improper transfer of the tax losses obtained by the taxpayer that generated them, the inappropriateness of their reduction by the person who carried them out.
When taxpayers who have unduly reduced tax losses correct their tax situation within thirty days following the publication of the list referred to in this article, they may apply the extension surcharge rates for the corresponding term.
Once the term referred to in the preceding paragraph has elapsed, if the taxpayer does not correct its tax situation, the authority may exercise its powers of verification, without prejudice to the applicable penalties, as well as those imposed by the judicial authorities when criminal liability is incurred.
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We hope that, in the application of this new article, the tax authority will base its presumption on certain and directly and reliably demonstrated facts and not, as in the case of the tax receipts, in which it considers the non-existence of the transaction covered by them, supporting its presumption on other presumed facts, which, of course, in addition to being incorrect, is undue.
[1] Legal figure consisting of the reasoning of the Legislator or the Judge, which starts from a known fact to determine the existence of another fact that is unknown or unknown.
[2] Sent by the Federal Executive in September 2017 to the Chamber of Deputies.
[3] Article 69-B Bis of the Federal Fiscal Code.
[4] The result obtained when the authorized deductions exceed the taxable income for the year.
[5] In the determination and balances.
[6] The presumption is most frequently used by the legislator in the tax field to avoid the authority the obligation to prove directly and reliably the facts objected to.
[7] December 14, 2017.
[8] On the same date.
[9] April 17, 2018.
[10] Items or concepts that the Income Tax Law allows to be deducted from taxable income.
[11] As provided for in the Income Tax Law.
[12] Within 20 working days.
[13] Within a maximum period of 6 months from the expiration of the term for the taxpayer to offer evidence.
[14] By the authority within the first ten days following the beginning of the six months.
[15] On the Tax Administration Service's website and in the Official Gazette of the Federation.
Mexico City, April 24, 2018.
