Reminder that, during the month of February 2024, residents in Mexico and non-residents with a permanent establishment in the country who generated income subject to preferential tax regimes (REFIPRE) or in entities whose income is subject to such regimes during the 2023 fiscal year are obligated to file the “Informational Declaration of Foreign Entities Subject to Preferential Tax Regimes”.

In general terms, income subject to a REFIPRE is considered to be income not taxed abroad or taxed at an income tax rate lower than 75% of the tax that would be levied and paid in Mexico.

Filing the aforementioned declaration is also obligatory for taxpayers conducting operations through foreign transparent entities for tax purposes and foreign legal entities, without solely this fact implying that income subject to REFIPRE is being generated.

It is advisable to carefully analyze investments, assets held, or operations carried out during the 2023 fiscal year through vehicles/structures in other jurisdictions such as Corporations, Limited Partnerships, Trusts, Limited Liability Companies, among others, in order to determine whether there is an obligation to file this Informational Declaration, as failure to comply with this obligation may result in significant penalties.

Current tax legislation provides a provision whereby taxpayers filing the aforementioned Informational Declaration outside the established timeframe may still consider it duly filed; however, this provision is subject to certain conditions and the validity of the legislation that gives rise to it. Therefore, to avoid any contingencies, we highly recommend that the informational declaration be duly filed during the month of February 2024.

At FRALLA, we have a specialized department to analyze the structures in which taxpayers resident in Mexico or non-residents with a permanent establishment in the country participate, and for which they may be obligated to file this Informational Declaration, providing guidance for its proper completion and filing.

*                *                *                *

February 2024

Mexico City, Mexico