With a view to the beginning of the last quarter of fiscal year 2022, at FRALLA we consider that it is the opportune moment to carry out a pre-closing of the annual ISR in order to estimate the fiscal result of the year and, where appropriate, take the pertinent measures.

Here are some points that we consider relevant for the review of the “pre-closing” of fiscal year 2022 considering what the tax authority has recently prioritized in its reviews:

I. ISR Determination 2022 – OCT

a.) Annual closure of 2022

In FRALLA we  are at your service so that we can review together with your internal teams: i) the  predetermination of the fiscal result  of the year 2022, ii) the  cumulative income, iii) the  authorized deductions, iv) the determination of the  PTU, v) the  profit coefficient for provisional ISR payments for 2023 (in case of not being in the RESICO regime),  vi) determination of the  annual adjustment for inflation and exchange gains / losses, or vii) any other operation that could have an impact on the determination and payment of the 2022 ISR.

Likewise, we put at your disposal our services for the purpose of reviewing the operations and transactions carried out in this fiscal year in order to identify those that could have special treatment such as merger, spin-off, sale of any fixed asset, shares, distribution of dividends in kind or without payment, loans for business reasons. , among others; and likewise verify the documentary support of any corporate act carried out recorded in minutes of the meeting considering the changes to the current tax legislation.

b.) Limitation on the deduction of interest

As we have mentioned in various communications, as part of the reform of tax legislation in 2020, a limitation was included on the deduction of interest that exceeds 30% of the adjusted tax profit. This restriction applies to groups or related parties whose accrued interest exceeds $20,000,000. Likewise, as part of this limitation, it is established that the non-deductible interest determined in a year may be deducted in the following 10 years until exhausted and for which they must be added to the net interest of the following year.

For the presentation of the 2022 annual income tax return in FRALLA we can help our clients determine if some of the non-deductible interest calculated for the year 2020 or 2021 can be deducted in the year 2022 or, in the determination of the non-deductible interest of the fiscal year 2022 and its effects on the annual adjustment for inflation.

c.) Exchange rate gain

As part of the reform of the tax legislation for 2022, it was established that, for income tax purposes, the exchange gain may not be less than that which would result from considering the exchange rate to solve obligations published in the Official Gazette of the Federation, so we consider it relevant to begin estimating the effect that for the year 2022 could have under this new provision.

d.) Operations with foreign entities or figures

Within the reform to the tax legislation of the year 2020, some modifications were approved that their entry into force was deferred for the year 2021 in terms of the recognition of the effects that could detonate having a structure abroad that involves foreign entities or figures, as well as operations through a structured agreement with related parties abroad with income subject to REFIPRE or hybrid mechanisms.

In this regard, in FRALLA we would be able to review the current structure (s) maintained, as well as the foreign entities or figures that are part of it, in order to determine the applicable tax treatment,  withholding rates, business ratio and materiality in the operations carried out.

In terms of operations carried out with residents abroad, in FRALLA we are at your disposal in order to review the withholding rates used, issuance of the annual CFDI of payments with source of wealth in Mexico and, where appropriate, the tax withheld from the resident abroad, review of the tax residence certificates of the year of the operation,  CFDI’s issued abroad based on the facilities provided through miscellaneous rule, origin of the flow, contracts concluded, materiality and business reason of each operation.

 

II. Tax receipts

As part of the reforms to the tax provisions for 2022, the following topics were incorporated in terms of digital tax receipts:

a.) Vouchers for returns, discounts or bonuses.

As part of the 2022 Tax Reform, the provision was added that establishes that in the case of CFDI’s that protect expenditures without having the justification and documentary support that proves the refunds, discounts or bonuses before the tax authorities, said vouchers may not be reduced from the taxpayer’s tax receipts, a situation that may be verified by the tax authorities in the exercise of their powers of verification,  Therefore, we recommend reviewing those operations for which these receipts of expenditures were issued and, where appropriate, verify the documentation that supports them.

b.)Tax receipts of income

We also recommend a reconciliation between the receipts issued and the income declared in the monthly and fiscal year interim payments, in order to determine if there are tax receipts that need to be canceled or if the declared income should be adjusted. Also, review those CFDI’s that had been issued with the key Payment in a Single Exhibition “PUE” and that their payments had been in several subsequent months.

c.) Payroll tax receipts

We recommend also reviewing the issuance of payroll tax receipts in order to verify that the keys assigned in the vouchers to the concepts of income and deductions are in accordance with the catalog established by the tax authorities.

d.) CFDI with Door Card Complement

As noted in various communications issued by our Firm,the CFDI was updated to version 4.0. , however, there is a period of coexistence with version 3.3. , which runs from January 1 to December 31, 2022.  As of  January 1, 2023, only the issuance of the CFDI in its version 4.0. with version 2.0 of the Carta Porte complement will be valid.

In FRALLA we help our clients  in the review of the criteria that must be considered either in  the issuance  of the CFDI with complement consignment letter, or the reception of the same by their suppliers of transport services, logistics, among others.

 

III. Documentation Support and Certification of Liabilities

Within the reform of the tax legislation in force as of 2021, it is foreseen that legal entities must have the supporting documentation of the Contribution Capital Accounts (CUCA) and the Net Fiscal Profit Account (CUFIN), as well as the minutes of the meeting when they involve contributions in kind or capitalization of liabilities,  reimbursements, dividend payments in kind, or without payment, among others. This documentation includes account statements, appraisals, loan agreements, etc.

In terms of tax losses to be amortized, we recommend reviewing that the authorized deductions comply with tax requirements, making crosses with CFDI’s, reviewing  the materiality and deliverables received in the operations carried out.

In FRALLA we help our clients in the review and  issuance of  our recommendations for the determination of fiscal accounts (CUCA,  CUFIN and  tax losses) in order to review, confirm and, where appropriate, complement the supporting documentation that must be available for these purposes.

With regard to the capitalization of liabilities, it was included that there must be a certification that guarantees the accounting existence of the liability and the  corresponding value; such certification must be issued by a Public Accountant Registered with the SAT.

In FRALLA we have public accountants registered with the tax authorities who would be able to issue the corresponding certification for the capitalization of liabilities, as well as the opinion of share purchase and sale operations.

 

IV. Other relevant topics

a.) VAT Review – En FRALLA we help our clients in the review of the business ratio, business cycle, origin of the flow for expenses and investments, destination and crossing with taxed, exempt and non-object activities, among other related issues, as well as in the request for refund of this tax.

b.) Controlling Beneficiary – Werecommend to our readers to check that the reliable, complete and updated information of their controlling beneficiaries is obtained and kept as part of their accounts, in the form and terms that the tax authorities have indicated through general rules.

In this sense, in FRALLA our services include supporting the internal teams of the legal or accounting area to determine the information that must be taken as part of the accounting regarding the controlling beneficiaries of the entities, companies or trusts, as well as to check that the documentation and information that is held has all the necessary requirements in case it is requested by the tax authorities.

 

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Mexico City, Mexico

September 2022