Régimen Opcional para Grupos de Sociedades

Understanding the Optional Tax Regime for Groups of Companies

Introduction to the Topic

• The speaker introduces a fiscal topic related to Chapter 7 of the Income Tax Law, focusing on the optional regime for groups of companies.

• The aim is to explain essential parts of this regime and provide a practical case study for understanding income tax determination for legal entities under this regime.

Overview of the Fiscal Regime

• This fiscal regime correlates with Financial Reporting Standard 8, which addresses consolidated or combined financial statements effective from January 1, 2013.

• Previously known as the fiscal consolidation regime, it has undergone modifications since its inception.

Structure and Responsibilities

• An example group is introduced: Grupo Carso, which acts as a controlling entity overseeing various subsidiaries with different activities.

• For financial purposes, Grupo Carso must present consolidated financial statements; similarly, in tax matters, it is referred to as "integradora" while subsidiaries are termed "integradas."

Operational Guidelines

• The operational commencement of this tax regime began in 2014. Entities wishing to opt into this system had deadlines for notifying tax authorities (February 15, 2014).

• Current entities opting into this regime must notify by August 15, 2019.

Requirements for Integration

• To qualify as an integradora, a company must be a Mexican resident owning over 80% of voting shares in its integrated companies.

• It’s emphasized that ownership must exceed exactly 80%, meaning at least 80.1% is required; otherwise, integration status is not granted.

Exclusions from the Regime

• Certain entities are excluded from being classified as integradas or integradoras:

• Non-profit organizations,

• Financial institutions,

• Foreign residents,

• Companies in liquidation,

• Civil associations and cooperatives,

• Specific loss-carrying entities unless previously consolidating fiscally.

Annual Closure Determination Process

• Article 64 outlines how annual closure will be determined:

• Integradora and integradas calculate their fiscal results independently.

Understanding Fiscal Results and Integrative Participation

Key Concepts of Fiscal Results

• The fiscal result or loss of an integradora must be adjusted based on the outcomes obtained, which includes summing or subtracting depending on whether there is a profit or loss.

• For a company to be considered integrated, the integradora must own more than 80% of its shares; ownership percentages like 85%, 90%, or 95% determine the level of integral participation.

• Article 64 outlines that the integradora will calculate the fiscal result factor by dividing the integrated fiscal result by the sum of both integradoras' and integradas' fiscal results.

Calculation Methodology for Fiscal Results

• When discussing fiscal results, it refers specifically to positive outcomes (profits), which contribute to determining the integrated fiscal result factor.

• To obtain a specific measure (YER), one must multiply the non-exercised option's ICR by the integral participation percentage, followed by multiplying this product with the integrated fiscal result factor.

Differentiating Integral and Non-integral Participation

• The YER for non-integrable participation is calculated similarly: multiply the non-exercised option's TR by its corresponding non-integrable participation percentage.

• Both integral and non-integral taxes are summed up to derive total tax obligations; this regime allows deferring determined taxes over three exercises as per Article 64.

Practical Application of Fiscal Calculations

• A practical example illustrates three companies: one integradora with income of 100,000 pesos and deductions of 80,000 pesos resulting in a taxable profit of 20,000 pesos.

• The same example shows an integrated company with revenues of 1.4 million pesos against deductions totaling one million pesos, yielding a taxable profit of 400,000 pesos.

Summary of Integrated Company Outcomes

• Another integrated company reports income of one million pesos but has deductions amounting to 1.2 million pesos leading to a zero taxable outcome due to losses carried forward.

Fiscal Result Calculation

Understanding Fiscal Losses and Results

• The discussion begins with a fiscal loss of 200,000 pesos, emphasizing that losses are calculated without updates or participation effects, resulting in a 90% loss rate leading to figures of 360,000 and 180,000.

Determining the Integral Fiscal Result Factor

• To find the integral fiscal result factor, divide the integrated fiscal result (200,000 pesos) by the total sum of fiscal results (380,000 pesos).

• If the integrated fiscal result were negative, it would be considered zero; however, since it's positive at 200,000 pesos, calculations proceed.

Calculating Participation Amounts

• The next step involves calculating both integrable and non-integrable participation amounts based on previous results.

• The formula for determining integrable participation considers taxes from not applying optional regimes (6,000 and 120,000), multiplied by their respective participation percentages (100% for integrators and 90% for integrated).

Non-Integrable Participation Insights

• Non-integrable participation is derived by subtracting integrable percentages from 100%, yielding a non-integrable percentage of 10% for integrated entities.

• The annual declaration tax will be the sum of both integrable and non-integrated amounts.

Tax Deferral Considerations

• The deferred tax amount consists of integrable contributions plus any applicable taxes from non-integrated sources.

• It’s important to note that deferring does not exempt one from paying accessory contributions like updates or surcharges due at deferral time.

Provisional Payments Framework

• Article 71 outlines a similar framework for provisional payments where ICR must first be determined according to Article 14.

• Each entity's ICR is multiplied by its integral participation percentage to derive specific results.

Finalizing Participation Calculations

• For each entity type (integrated or not), calculate their respective participatory contributions using simple subtraction methods to determine non-integral percentages.

• Total provisional payments include both types of participatory contributions as outlined in Article 65 regarding net taxable income related to participatory shares.

Understanding Tax Implications of Integrated Companies

Article 65: Conditions for Integration and Tax Payment

• Article 65 specifies that it will only be added to the relevant participation, whether integrated or non-integrated, contingent upon the payment of deferred income tax (ISR) by the company involved. The balance will increase only after this payment is made.

Article 68: Criteria for Disintegration

• According to Article 68, a company ceases to be considered integrated when it no longer meets the necessary requirements. This includes scenarios such as mergers where obligations regarding tax payments are transferred.

Notification Requirements Post-Disintegration

• In cases of disintegration, the integrating company must notify authorities within fifteen days following any changes in status. This ensures compliance with tax regulations during transitions.

Consequences of Disintegration