Derived from the reform to the Federal Act on Revenues of the Federation, as of January 1, 2019, universal compensation is eliminated, allowing only the compensation of amounts in favor against those payable for its own debt, provided both are derived from the same tax, including accessories thereof.

This is why amounts in favor can no longer be compensated against third-party withholdings, regardless of what these are.

Regarding Value Added Tax (VAT), the balance in favor may only be credited against the same tax payable corresponding for the following months until it is depleted, or a refund may be requested.

Balances in favor generated as of December 31, 2018

Based on the new rules of the 6th Resolution on Amendments to the Miscellaneous Tax Resolution for 2018 (RMF 2018) published on January 30, 2019, a facility is established for taxpayers with balances in favor generated as of December 31, 2018 and declared in accordance with tax provisions, which have either not been compensated or the refund thereof has been requested, may opt to compensate said sums against those they are obliged to pay as their own debt, notwithstanding the nature thereof is different.

It is important to consider that this facility shall not apply against taxes withheld and there is still the obligation to file the corresponding compensation notice.

Compensation notices

The compensation notices as to the amounts in favor generated as of December 31,2018 shall be filed through the Tax Mailbox, together with, as the case may be, the exhibits and additional information listed on Exhibit 1-A of the Miscellaneous Tax Resolution for 2018 published on January 30, 2019.

For taxpayers under the jurisdiction of the General Administration for Large Taxpayers (Administración General de Grandes Contribuyentes (AGGC)), the General Administration on Hidrocarbons (Administración General de Hidrocarburos (AGH)), or whose financial statements are under expert opinion, information on the exhibits to be attached shall be loaded on the electronic program F3241 available on SAT’s website, except for remainders to be compensated, in which case form F3241 need not be completed.

The term for filing the compensation notice pursuant to the Federal Tax Code in force is 5 calendar days after filing the return where the compensation is performed; however, based on the 2018 MTR, the use of additional days may be selected for filing the notice according to the sixth digit on the TIN, as follows:

Other considerations

On February 8, 2019 an initiative for a decree in Senate was presented in order to amend the Federal Tax Code, articles 23 and 32-D, and in addition to repeal section VI of the Federal Revenues Act for 2019; the purpose of this is for taxpayers “in compliance” with balances in favor generated in 2019 and later, may elect to compensate said amounts against those they are obligated to pay on their own debt, despite the fact that the nature is not the same.

Said initiative has not been approved or published in an official manner, therefore at this time we are not able to embrace its provisions.

We will be awaiting any publication from the tax authorities in this regard and will share this information with you.

Please contact us if you have any question or comment in this regard.