FAVORABLE RESOLUTIONS ISSUED BY THE TAX ADMINISTRATION SERVICE.

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Favorable rulings issued by the Tax Administration Service.

On Thursday, May 31, 2018, the extract of the main favorable resolutions issued to taxpayers of the current year, which derive from real and concrete consultations that seek to clarify the taxpayer's obligations or powers of the authority, were published on the Tax Administration Service's website. We believe that these provisions may be of interest to you if you are in any of the situations mentioned below:

1. 11/IVA/2018-Applicable rate. Purchase of vegetable twine for hydroponic greenhouse tutorship systems; the import should not be subject to VAT.

2. 19/IVA/2018-Applicable rate. Chantilly whipping cream and aerosol whipping cream will not pay VAT on importation, since they are products intended for food.

3. 1/IVA/2018, 2/IVA/2018-RF, 3/IVA/2018, 4/IVA/2018, 5/IVA/2018, 6/IVA/2018, 7/IVA/2018, 8/IVA/2018, 9/IVA/2018, 10/IVA/2018-RF -Applicable rate. Chemical products used as agricultural fertilizer are not subject to import VAT.

4. 12/VAT/2018, 13/VAT/2018, 14/VAT/2018, 15/VAT/2018, 16/VAT/2018, 17/VAT/2018, 18/VAT/2018, 21/VAT/2018 -Applicable rate. VAT exemption for the importation of hydroponic greenhouses and equipment to produce controlled temperature and humidity in them or to protect crops from natural elements.

5. 20/IVA/2018-Applicable rate. The importation of a non-industrialized vegetable product, specifically the merchandise called "COCONUT FIBER", is exempt from VAT.

6. 01/LISR/2018-Intereses. Interest accrued on an investment in an "International Bond" issued by the International Bank for Reconstruction and Development (IBRD), as well as the exchange rate fluctuation that may occur during its holding, are not subject to income tax.

7. 2/LISR/2018- Deductions. The cost of sales deductible for income tax purposes, in commercial activities of purchase and sale, is determined by applying Article 39, second paragraph of the Law, supplemented by the provisions of Article 80 of its Regulations.

We recommend our clients and friends to review the above assumptions, so that if they find themselves in similar situations, they can take the necessary actions to generate a favorable tax situation.

Sincerely yours,

Mexico City, June 12, 2018