Partial Forgiveness Of Mexico City’s Payroll Tax

Mayor of Mexico City published yesterday,
March 15, 2011, a resolution through which
payment of Payroll Tax in Mexico City is
partially forgiven for 2011.

1. Who is entitled to and what is the
amount of the forgiveness?
a) Taxpayers with 1-10 employees are
entitled to 40% forgiveness of the due tax.
b) Taxpayers with 11-30 employees are
entitled to 28% forgiveness of the due tax.
c) Taxpayers with 31-60 employees are
entitled to 20% forgiveness of the due tax.
2. Are there any additional requirements
to be entitled for the forgiveness?
a) During 2011 the number of employees
can not be reduced with respect to the average
of employees of the immediate previous quarter
to that month in which each tax return is filed.
b) Payroll Tax for 2010 must be already
paid in accordance with articles 156 and 159 of the Fiscal Code for Mexico City.
c) Be recorded with the Payroll Taxpayer
Registry of Mexico City’s Treasury Office.
d) Newly created companies will be
entitled to this benefit depending on the number
of employees with which they begin operations
when applying for recordation with Payroll
Taxpayer Registry.
e) Declare under oath to be up to date with
payment of Real Estate Tax, Hospitality Tax
and Water Supply Governmental Fees.
3. Where to apply for and when the
benefits of the forgiveness begin?
a) First, an application should be submitted
with www.finanzas.df.gob.mx.
b) An electronic response (format) will be
produced with a date and hour for an
appointment to formalize the application, file
the required documentation and obtain an
Identification Number (“IN”).
c) The IN will be required to discount the
corresponding percentage of forgiveness in the
2011 monthly Payroll Tax returns.
d) Taxpayers will be entitled to apply the
forgiveness after the IN is obtained; provided
that if the IN is obtained after the 15th day of the
corresponding month, the discount can only be
applied for the next period.
4. Is this forgiveness Constitutional?
The comments contained below refer to
certain provisions that in general terms we have
identified that might have the most significant
impact; however, the constitutionality of other
more specific provisions of the resolution
containing the forgiveness described above
could also be analyzed on a particular basis.
a) Taxpayers with 61 or more employees
are excluded from this benefit; this could be
deemed as contrary to the tax equity law
principle sanctioned by article 31 of the
Mexican Constitution; if a favorable decision is
obtained the consequence would be that the
forgiveness would be applicable
notwithstanding the cap provided in the
resolution.
b) Certain requirements, such as declaring
under oath being up to date with payment of
different taxes than Payroll Tax, could be
deemed as contrary to articles 16 and 31 of the
Mexican Constitution; if a favorable decision is
obtained because of this, the obligation to meet
this requirement would be eliminated.