Dear clients and friends:
We would like to inform you of a recent case law approved by the Mexican Supreme Court of Justice that could have important implications for your tax affairs.
The case law approved on March 15, 2023, establishes that Value Added Tax (VAT) paid trough offsetting is not creditable. This means that while it is possible to offset the principal amount of a transaction, the VAT must be paid in cash in order for it to be creditable. If VAT is paid through an offset, it would be considered as an additional expense for the company and could not be credited.
It is worth noting that this ruling can be applied retroactively, which means that the tax authority could review previous transactions and deny VAT refunds based on this ruling. Therefore, it is important that you review your business transactions and the impact this ruling could have on them.
If you have any questions or comments regarding the content of this alert, please do not hesitate to communicate with your usual contact at the firm.
Tax Consultancy & Litigation
Arturo Bañuelos / arturo.banuelos@ecrubio.com
Edmundo Hernández / edmundo.hernandez@ecrubio.com
Fernando Holguín / fernando.holguin@ecrubio.com
Felipe Mendoza / felipe.mendoza@ecrubio.com
Franco Herrera / franco.herrera@ecrubio.com