United States

Jan. 31 deadline for Mexican VAT credit fast approaching

TAX ALERT  | 

In late December 2018, the Mexican government published two separate tax stimulus for certain zones within the northern states (please see the table below for further reference).

  • An income tax credit of one third of the income tax liability of qualifying taxpayers that are residents of the stimulus zone, and
  • A VAT credit of 50 percent of the VAT that taxpayers that carry out activities in the stimulus zone pay or collect. This 50 percent reduction can bring attractive cash-flow savings for qualifying taxpayers.

Those taxpayers that wish to apply the VAT credit need to take action, i.e., file a notice with the Mexican taxing authorities, by Jan. 31, 2019.  Affected clients should contact their Mexican tax advisors immediately to assess whether they need to meet this deadline and how to comply.

States covered by the Stimulus

The following table shows the States and Municipalities within those states where the Stimulus can be applied (the “Stimulus Region”):

State of Sonora, the Municipalities of:

State of Chihuahua, the Municipalities of:

State of Tamaulipas the Municipalities of:

State of Baja California, the Municipalities of:

State of Coahuila, the Municipalities of:

State of Nuevo Leon, the Municipalities of:

San Luis Río Colorado

Janos

Nuevo Laredo

Ensenada

Ocampo

Anáhuac

Puerto Peñasco

Ascensión

Guerrero

Playas de Rosarito

Acuña

 

General Plutarco Elías Calles

Juárez

Mier

Mexicali

Zaragoza

 

Altar

Praxedis G. Guerrero

Miguel Alemán

Tijuana

Jiménez

 

Saric

Guadalupe

Camargo

Tecate

Piedras Negras

 

Nogales

Coyame del Sotol

Gustavo Díaz Ordaz

 

Nava

 

Santa Cruz

Ojinaga

Reynosa

 

Guerrero

 

Cananea

Manuel Benavides

Río Bravo

 

Hidalgo

 

Naco

 

Valle Hermoso

 

 

 

Agua Prieta

 

Matamoros

 

 

 

Caborca

 

 

 

 

 


Before applying the Stimulus, the taxpayer should ensure that its Registered Address is located within the boundary of the above Municipalities (for purposes of the Income Tax Credit) or that the goods and services are delivered and provided within that boundary, for purposes of the Value-Added Tax Credit.

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