The Simplified Trust Regime (Régimen Simplificado de Confianza or RESICO, per its Spanish acronym) is a new tax regime for individuals and corporations, effective as of January 1, 2022, part of the most recent Tax Reform in Mexico.
In particular, RESICO is aimed at individuals engaged in business activities, professional services, leasing, and primary activities such as Agriculture, Livestock, Fishing, or Forestry (AGAPES, per its Spanish acronym), with an income not exceeding 3.5 million pesos per year and corporations of any activity whose annual income does not exceed 35 million pesos.
It is important to mention that in the case of individuals, the legislation establishes this regime as optional, but for corporations it is considered mandatory if they meet the income requirement and there is no reason to prevent them from being taxed under this regime.
RESICO Taxpayers will be able to accrue their income on a cash flow basis, considering particular rules applicable to individuals and corporations.
Individuals and corporations paying taxes under RESICO will be relieved from filing the following tax obligations:
v Electronic accounting on a month-to-month basis.
v Informative return on Operations with Third Parties (DIOT).
Those receiving income from disposals made during a calendar month to the same RESICO taxpayer may issue a single tax invoice (CFDI) for the total amount of transactions in the month, no later than three days after the last day of the month in question, provided that the following is complied with:
a)Income received comes from sales made to the same RESICO taxpayer.
b)Keeping a monthly electronic record containing information on each of the transactions carried out for which the CFDI will be issued monthly.
c)Considering as the date of the CFDI issuance, the last day of the month for which it is issued.
d)In said CFDI, the information of each operation carried out during the month must be detailed in the service description field.
The option to issue monthly CFDIs may not be changed during the fiscal year in which it was taken, without detriment to the compliance of the other obligations established in the matter of invoices.
RESICO for Individuals
Those Individuals registered in RESICO must file monthly estimated payments no later than the 17th day of the month immediately following the month to which the payment corresponds and will consider the total of their income, which must be supported with collected tax invoices.
These taxpayers will use the income collected and invoiced as a tax basis, being obliged to pay between 1 and 2.5% tax rate, depending on the monthly and annual table published by the Mexican Tax Authorities, determined upon income obtained by cash flow.
Also, RESICO individuals will be obliged to file their annual tax return no later than April of the following year to which the tax corresponds, without considering any deductions.
It is worth mentioning that corporations must withhold 1.25% on the payment amount made to RESICO individuals without considering additional taxes.
Individuals that cannot be in this regime are the following:
vPartners, shareholders, or members of legal entities or when they are related parties.
vResidents abroad with a permanent establishment in the country.
vWith income subject to preferential tax regimes.
vWith income from fees for being advisors, administrators, statutory auditors, general managers or assimilated to salaries.
It is important to note that workers receiving income from wages and salaries will continue to be taxed under their original regime, since there is no option to be taxed through RESICO for such type of income.
RESICO for Corporations
Corporations registered in RESICO must file monthly estimated income tax payments and VAT payments no later than the 17th day of the month immediately following the month to which the payment corresponds. For the tax calculation, in the annual and estimated returns, only the income and expenses effectively obtained or generated will be considered, unlike the general regime in which the income and expenses invoiced are accrued regardless of whether they have effectively materialized.
The annual return is filed in March of the year following the corresponding period.
When the income obtained by a RESICO taxpayer exceeds 35 million pesos, the taxpayer will cease to be taxed under RESICO as of the next tax year and will then be taxed under the general regime.
In addition to the above, other benefits for corporations in RESICO are the following:
vThe income that will be considered for their tax returns will be those effectively collected; that is, the accrual is on a cash flow basis.
vDeductions must be incurred in the fiscal year in question.
vDeduction for investments can be exercised by applying the maximum percentages authorized for RESICO, provided that the total amount of the investment has not exceeded three million pesos. In comparison, some applicable rates are:
· 25% for office furniture and equipment (the limit in the general regime is 10%).
·50% for computer equipment (the limit in the general regime is 30%).
It is to be noted that the following corporations will not be considered for RESICO:
v Legal entities when one or more of their partners, shareholders, or members take part in other commercial companies where they have control of the company or its administration, or when they are related parties.
v Taxpayers carrying out activities through trusts or joint ventures.
v Taxpayers who, due to the activities they carry out, must pay taxes as:
o Credit Institutions in the General Regime.
o Per the Optional Regime for Groups of Companies, Coordinated, Agricultural, Livestock, Forestry and Fishing activities, Non-Profit Entities, or Cooperative Production Companies opting to defer their income.
When individuals or corporations cease to be taxed under the RESICO due to noncompliance with their tax obligations, they may not return to such regime. However, if this is due to exceeding the income limit, they may be taxed under RESICO again, provided that the income obtained in the fiscal year immediately prior to the one in question does not exceed 3.5 million for individuals, and 35 million for corporations and that they are also in compliance with their other tax obligations.
Offering an attractive opportunity for taxpayers with limited income levels, or recently incorporated in Mexico, at JA Del Rio, we can work with you to analyze if your profile is a candidate to be taxed under RESICO. We will gladly evaluate your case in a personalized way and guide you through the steps to register and comply with the obligations of this new regime with multiple benefits.
If you require more information regarding this topic, contact us. We will be pleased to assist you.