The Most Relevant of the 2019 ILF

On December 15th, 2018, the Federal Executive Branch presented the economic package for the fiscal year 2019, which included the initiative for the Income Law of the Federation (ILF), which were approved by the Legislative Branch and sent for publication in the Official Gazette of the Federation, on December 28th, 2018.

So among the most relevant issues are the following:

• VULNERABLE OPERATIONS. It is established that the taxable subjects who are not up to date in complying with their obligations for the period from July 1st, 2013 to December 31st, 2018, will be able to implement self-regularization programs, prior authorization from the Tax Administration Service (TAS), as well as waiving the fines that have been fixed before.

• DONATIONS GRANTED TO NOT DONEE INSTITUTIONS. Civil organizations and trusts authorized to receive donations will be considered to comply with the authorized corporate purpose when granting donations to civic organizations or trusts that do not have the authorization to receive donations and whose exclusive purpose is to carry out rescue and reconstruction work in cases of natural disasters.

• CINEMATOGRAPHY. The fiscal stimulus cannot be applied jointly with other tax treatments that grant fiscal benefits or incentives.

• MODIFICATION OF DIESEL CREDIT. The benefit granted to taxpayers that import or acquire diesel or biodiesel, consisting of allowing the crediting of an amount equivalent to the Special Tax on Production and Services (STPS) that the transferors have caused, allowing their crediting only against the Income Tax that is caused in the year, and no longer against the provisional payments or against withholdings to third parties of STPS. Likewise, it is pointed out that, in case of not doing said accreditation, the right to do it later will be lost.

• INCOME TAX WITHHOLDING FOR BANKING INSTITUTIONS. Annual withholdings of income tax by financial institutions increased from 0.46 to 1.04. Taxpayers who are subject to fines for infractions derived from non-compliance with federal tax obligations other than payment obligations, will pay 50% of the corresponding fine if they carry out said payment, after the tax authorities start the enforcement of its verification powers and, up until before the final minutes of the domiciliary visit is issued or the comments report is notified, as long as, in addition to said fine, the omitted contributions and their accessories are paid. In addition, when the corresponding infractions are commented on and the taxpayers correct their fiscal situation after the final report of the domiciliary visit is issued, the comments report or the provisional resolution are notified, referred in article 53-B, first paragraph, section I of the Federal Fiscal Code, but before the respective final decision is notified, the taxpayers will pay 60% of the fine that corresponds to them, and must also comply with the payment of the omitted contributions and their related charges.

• ELIMINATION TO UNIVERSAL COMPENSATION. Where they can only choose to offset the amounts they have in their favor against those who are compelled to pay for their own debt, provided that both derive from the same tax, including its related charges, and in the case of the Value Added Tax, it enforces the taxpayers to consider only these options:
• Prove the balance in favor against the tax charged, if there is any.
• Request its refund.

Through this limitation, it is sought to fight against tax avoidance practices by offsetting balances in favor, originated by the recognition of taxes that were transferred to the taxpayer, which corresponds to taxes previously caused and that had to be notified by their suppliers and many times this is not the case, either due to an evasion of a payable tax, or because fictitious accreditations are made with nonexistent operations tax receipts.

Therefore, the reasons given do not justify the compensation limitation between federal taxes and violate the taxpayers’ fundamental rights, so there is the possibility of interposing a defense mean against them.