By Oscar Ortiz*
The year 2023 arrived without a tax reform, but this does not mean that there are not various compliance issues on the agenda, not only tax, but also legal and labor, that companies and taxpayers must attend to, especially in an environment like the current, in which compliance management and the use of technology are a fundamental part of a successful business strategy.
But why is a tax reform not necessary in Mexico? The answer has different edges, but the most relevant is related to a trend that has been presented in various countries worldwide by governments, which is focused on continuing to promote and boost tax collection through the use of technology. . Although it could be considered that this is relatively new, it is relevant to see what is happening in other markets, not only in Latin America, but also globally, where, due to factors such as the increase in inflation, the fluctuation of the exchange rate, as well as the political environment, the tax authorities have evolved in a very relevant way in terms of how to establish an adequate tax compliance strategy.
In the case of Mexico, it is relevant to consider that these collection processes in the current year will be based on the 2023 Control and Collection Master Plan, which is based on four key elements: a) authority management; b) control actions; c) economic sectors to review; and d) concepts and behaviors to be reviewed, in accordance with what was published by the Tax Administration Service (SAT) on January 29, 2023.
Key issues your company should be focused on
Based on the previously described scenario, we were able to identify the issues that will challenge companies in Mexico during 2023, and that are generating operational and financial impacts.
1. Tax management
Inspection will continue to be the axis of additional collection, which means documenting and managing a greater number of documents. This is where the use of technology is positioned as a very important tax management tool, due to the high levels of information that are required and that allow the authority to detect some discrepancies that have to be explained by the taxpayers, with based on reports ranging from electronic invoices, electronic accounting, income, pre-filled declarations, etc.
This scenario puts companies in an arduous task of managing reliable and timely information. The foregoing shows that companies are showing a clear intention to invest in the transformation of tax technology, despite the trend of budget cuts they may be facing. According to our latest reports, 61% of organizations say that their Tax department’s strategies now focus on investing in data[1]; while according to a survey we conducted, 84% of organizations plan to invest $2 million or more in tax technology, with an average of $3.6 million planned over the next three years[2].
2. Multilateral instrument and international tax policy
In this matter there is a very relevant dynamic motivated by the Organization for Economic Cooperation and Development (OECD), which has occurred at an accelerated pace. In this sense, it is important to highlight that Mexico has implemented the OECD recommendations, the most recent example is the Multilateral Instrument, which has the purpose of modifying existing bilateral tax treaties without the need for negotiations with each contracting state separately.
3. Transfer Prices
In this item there are two modifications that are relevant for 2023, the most important has to do with the changes in the dates of the presentation of the local informative return (local file). This represents for companies to prepare in advance the information to be reported, in a scenario in which the effects of volatility in the markets and the pandemic brought many financial adjustments.
4. Controlling Beneficiary
One year after the entry into force of this tax obligation, which is part of accounting, one of the biggest challenges that companies may be facing is that although these rules emanate from international obligations, Mexican regulations are different, for This replicates what has been reported in other countries, it is not applicable to the laws in Mexico.
5. Labor reforms
In recent years, various reforms have been carried out in our country in this area, which They range from subcontracting to decent vacations, which have a labor origin. However, the effects generated as a result of its implementation are of a fiscal nature. A very clear example is the payment of Profit Sharing (PTU), the result of the subcontracting reform, a point on which inspections are being carried out by the authority, aimed at validating compliance with this obligation.
As can be seen, in most of these key issuesthe coincident factor is the challenge of documenting the information that companies have to report as part of proper compliance management, and everything that this represents for them in terms of operations and sanctions. For this reason, the tax function of companies and professionals in this area have to turn to see technology as a great ally and begin to diversify the profiles of those who make up these areas, because the tax trend as it is now known is here to stay. .
*Óscar Ortiz is Lead Partner of Taxes and Legal Services, EY Mexico
Editor’s Note: This text belongs to our Opinion section and reflects only the author’s vision, not necessarily the High Level point of view.
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