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MEXICAN INCOME TAX LAW IN ENGLISH

TITLE I

GENERAL PROVISIONS

Article 1. Individuals and corporations are obligated to pay income tax in the following cases:

I. Residents in Mexico, with respect to all their income, regardless of the location of the source of wealth from which it derives.

II. Residents abroad who have a permanent establishment in the country, with respect to the income attributable to such permanent establishment.

III. Residents abroad, with respect to income from sources of wealth located in national territory, when they do not have a permanent establishment in the country, or when having one, such income is not attributable to it.

For the purposes of this Law, a permanent establishment is considered to be any place of business in which business activities are carried out, partially or totally, or in which independent personal services are rendered. It shall be understood as permanent establishment, among others, branches, agencies, offices, factories, workshops, facilities, mines, quarries or any place of exploration, extraction or exploitation of natural resources.

Notwithstanding the provisions of the preceding paragraph, when a resident abroad acts in the country through an individual or legal entity, other than an independent agent, the resident abroad will be deemed to have a permanent establishment in the country, in connection with all the activities that such individual or legal entity performs for the resident abroad, even if it does not have a place of business in the country, if such person habitually concludes contracts or habitually performs the principal role that leads to the conclusion of contracts entered into by the resident abroad and the latter:

I. They are entered into in the name or on behalf of the same;

II. They provide for the alienation of the property rights, or the granting of the temporary use or enjoyment of an asset owned by the resident abroad or over which he has the right of temporary use or enjoyment, or

III. Oblige the resident abroad to provide a service.

Paragraph with reformed fractions DOF 09-12-2019

For purposes of the preceding paragraph, it will not be considered that there is a permanent establishment in Mexican territory when the activities carried out by such individuals or legal entities are those mentioned in Article 3 of this Law.

Paragraph added DOF 09-12-2019

In the event that a resident abroad performs business activities in the country through a trust, the place where the trustee performs such activities and complies on behalf of the resident abroad with the tax obligations derived from such activities will be considered as the place of business of such resident.

A permanent establishment of an insurance company resident abroad shall be deemed to exist when it receives income from the collection of premiums within the national territory or grants insurance against risks located therein, through a person other than an independent agent, except in the case of reinsurance.

Likewise, a resident abroad will be considered to have a permanent establishment in the country, when acting in the national territory through an individual or legal entity that is an independent agent, if the latter is not acting in the ordinary course of its business. For these purposes, it is considered that an independent agent is not acting in the ordinary course of business, among others, when it is located in any of the following cases:

Amended paragraph DOF 09-12-2019

I.It has stocks of goods or merchandise, with which it makes deliveries on behalf of the resident abroad.

II. Assume risks of the resident abroad.

III. Act subject to detailed instructions or to the general control of the resident abroad.

IV. Exercises activities that economically correspond to the resident abroad and not to his own activities.

V. Receive their remuneration regardless of the results of their activities.

VI. Performs transactions with the foreign resident using prices or amounts of consideration different from those that would have been used by unrelated parties in comparable transactions.

It is presumed that an individual or legal entity is not an independent agent when it acts exclusively or almost exclusively on behalf of foreign residents who are its related parties.

Paragraph added DOF 09-12-2019

In the case of construction, demolition, installation, maintenance or assembly services in real estate, or for projection, inspection or supervision activities related thereto, it will be considered that there is a permanent establishment only when such services have a duration of more than 183 calendar days, consecutive or not, in a twelve-month period.

For the purposes of the preceding paragraph, when the resident abroad subcontracts with other companies the services related to construction of works, demolition, installations, maintenance or assemblies in real estate, or for projection, inspection or supervision activities related to them, the days used by the subcontractors in the development of these activities will be added, if applicable, for the computation of the aforementioned term.

Income attributable to a permanent establishment in the country will be considered to be income derived from the business activity carried out or income from fees and, in general, from the rendering of an independent personal service, as well as income derived from the sale of merchandise or real estate in Mexican territory, carried out by the head office of the person, by another establishment of the person or directly by the resident abroad, as the case may be. Tax must be paid on such income under the terms of Titles II or IV of this Law, as applicable.

Income obtained by the head office of the company or any of its establishments abroad is also considered to be income attributable to a permanent establishment in the country, in the proportion in which said permanent establishment has participated in the expenses incurred to obtain such income.

A place of business whose sole purpose is to carry out activities of a preparatory or auxiliary nature with respect to the business activity of the resident abroad shall not be deemed to constitute a permanent establishment. It is considered that a permanent establishment is not constituted when the following activities are carried out, provided that they are of a preparatory or auxiliary nature:

Amended paragraph DOF 09-12-2019

I. The use or maintenance of facilities for the sole purpose of storing or exhibiting goods or merchandise belonging to the resident abroad.

II. The preservation of stocks of goods or merchandise belonging to the resident abroad for the sole purpose of storing or exhibiting such goods or merchandise or having them processed by another person.

III. The use of a place of business for the sole purpose of purchasing goods or merchandise for the resident abroad.

IV. The use of a place of business for the sole purpose of carrying out propaganda activities, providing information, scientific research, preparing for the placement of loans, or other similar activities.

Reformed fraction DOF 09-12-2019

V. The fiscal deposit of goods or merchandise of a resident abroad in a general warehouse nor the delivery of such goods or merchandise for importation into the country.

The preceding paragraph will not be applicable when the resident abroad performs functions in one or more places of business in Mexican territory that are complementary as part of a cohesive business operation, to those performed by a permanent establishment in Mexican territory, or to those performed in one or more places of business in Mexican territory by a related party that is a resident in Mexico or a resident abroad with a permanent establishment in Mexico. The preceding paragraph will also not be applicable when the resident abroad or a related party has in Mexican territory a place of business where complementary functions that are part of a cohesive business operation are carried out, but whose combination of activities results in not having a preparatory or auxiliary nature.

Paragraph added DOF 09-12-2019

The provisions of this article shall also apply in the case of activities carried out through a natural or legal person, other than an independent agent.

Paragraph added DOF 09-12-2019

The benefits of the treaties to avoid double taxation shall only be applicable to taxpayers that prove they are residents of the country in question and comply with the provisions of the treaty itself and the other procedural provisions contained in this Law, including the obligation to submit the information on their tax situation under the terms of Article 32-H of the Federal Fiscal Code or to submit the financial statement report when they are obligated to do so or have exercised the option referred to in Article 32-A of said Code, and to designate a legal representative.

Amended paragraph DOF 12-11-2021

In addition to the provisions of the preceding paragraph, in the case of transactions between related parties, the tax authorities may request the taxpayer resident abroad to prove the existence of legal double taxation by means of a declaration under oath signed by its legal representative, in which he expressly states that the income subject to taxation in Mexico and with respect to which the benefits of the treaty to avoid double taxation are intended to be applied, is also taxed in his country of residence, for which he must indicate the applicable legal provisions, as well as such documentation that the taxpayer considers necessary for such purposes.

In those cases in which the treaties to avoid double taxation establish withholding rates lower than those indicated in this Law, the rates established in said treaties may be applied directly by the withholder; in the event that the withholder applies rates higher than those indicated in the treaties, the resident abroad will have the right to request a refund for the corresponding difference.

The certificates issued by foreign authorities to prove residence will be effective without the need for legalization and it will only be necessary to show an authorized translation when required by the tax authorities.

Article 4-A. For purposes of this Law, foreign tax transparent entities and foreign legal entities, regardless of whether all or part of their members, partners, shareholders or beneficiaries accrue income in their country or jurisdiction of residence, will be taxed as legal entities and will be obligated to pay income tax in accordance with Title II, III, V or VI of this Law, if applicable. For purposes of the foregoing, when they comply with the provisions of Section II of Article 9 of the Federal Tax Code, they will be considered residents of Mexico.

Foreign entities are considered foreign entities, corporations and other entities created or incorporated under foreign law, provided that they have their own legal personality, as well as legal entities incorporated under Mexican law that are residents abroad, and trusts, associations, investment funds and any other similar legal entity under foreign law are considered foreign legal entities, provided that they do not have their own legal personality.

Foreign entities and foreign legal entities are considered fiscally transparent when they are not tax residents for income tax purposes in the country or jurisdiction where they are incorporated or where they have their principal place of business or effective management, and their income is attributed to their members, partners, shareholders or beneficiaries. When they are considered tax residents in Mexico, they will cease to be considered transparent for purposes of this Law.

The provisions of this article shall not apply to treaties for the avoidance of double taxation, in which case, the provisions contained therein shall be applicable.

Article added DOF 09-12-2019

Article 4-B. Residents in Mexico and residents abroad with a permanent establishment in the country for the income attributable to the same, are obligated to pay the tax in accordance with this Law, for the income they obtain through fiscally transparent foreign entities in the proportion that corresponds to them due to their participation in them. In cases where the foreign entity is partially transparent, taxpayers will only accrue the income attributed to them. In order to determine the amount of the income indicated in this paragraph, the calendar year taxable income of the foreign entity calculated under the terms of Title II of this Law will be considered.

Residents in Mexico and residents abroad with a permanent establishment in the country for the income attributable to the same, are also obligated to pay the tax in accordance with this Law, for the income obtained through foreign legal entities in the proportion that corresponds to them, regardless of their tax treatment abroad. In the event that the foreign legal entities are fiscally transparent, the income will be accumulated under the terms of the Title of this Law that corresponds to the taxpayer and will be taxable in the same calendar year in which they are generated. In these cases, taxpayers may deduct the expenses and investments made by the legal entity provided that they are deductible in accordance with the Title of this Law that corresponds to them, as long as it is done in the same proportion as the income accrued and in compliance with the general rules issued by the Tax Administration Service.

In the event that foreign legal entities are considered tax residents in a country or jurisdiction abroad or in Mexico, the amount of income will be the taxable income of the calendar year of such legal entity calculated under the terms of Title II of this Law and must be accrued by the taxpayer as of December 31 of the calendar year in which they were generated.

The provisions of this article will only be applicable when the Mexican resident has a direct participation in the fiscally transparent foreign entity or foreign legal entity, or when they have an indirect participation involving other fiscally transparent foreign entities or foreign legal entities. In the event that their indirect participation involves at least one foreign entity that is not fiscally transparent, the income obtained through the fiscally transparent foreign entity or foreign legal entity in which the foreign entity that is not fiscally transparent has a participation will be subject to the provisions of Chapter I of Title VI of this Law, if applicable.

Income obtained in accordance with this article will be considered generated directly by the taxpayer. Taxes paid by or through transparent foreign entities or foreign legal entities referred to in this article, shall be considered paid directly by the taxpayer, in the same proportion in which they have accrued the income of such entity or entity.

If the income of the foreign entity or foreign legal entity is subject to a tax established in this Law and such tax has been effectively paid, the same may be credited by the taxpayer under the terms of Article 5 of this Law and other applicable tax provisions. In these cases, the same will be creditable in its totality considering the same proportion in which the income of such entity or legal entity has been accrued.

The taxpayers mentioned in this article must keep an account for each of the foreign tax transparent entities and foreign legal entities under the same terms of article 177 of this Law, in order not to duplicate the accrual of income when such entity effectively distributes a dividend or profit, or when the legal entity delivers such income or makes it available to the taxpayer.

Foreign entities are considered to be partially transparent when the foreign tax law in question attributes a portion of their income to their partners or shareholders, while the remaining portion is attributed to such entity.

The provisions of the preceding paragraphs will be applicable even when the foreign fiscally transparent entity or foreign legal entity does not distribute or deliver the income regulated by this article. In order to determine the proportion of the income corresponding to the taxpayers on the foreign fiscally transparent entities and foreign legal entities, the provisions of the fourth and fifth paragraphs of article 177 of this Law will be considered, regardless of whether the persons obligated in accordance with this article do not have control over such entities or legal entities.

Additionally, the accounting records of the foreign fiscally transparent entity or foreign legal entity, or the documentation that allows verifying its expenses and investments, must be available to the tax authorities. In case of failure to comply with this obligation, the deduction of expenses and investments made by such entity or legal entity will not be allowed.

Article added DOF 09-12-2019

Article 5. Residents in Mexico may credit, against the tax they are required to pay pursuant to this Law, the income tax they have paid abroad on income from a source located abroad, provided that it is income for which they are required to pay the tax under the terms of this Law. The crediting referred to in this paragraph will only proceed provided that the accrued income, received or accrued, includes the income tax paid abroad.

In the case of income from dividends or profits distributed by companies resident abroad to legal entities resident in Mexico, the proportional amount of income tax paid by such companies that corresponds to the dividend or profit received by the resident in Mexico may also be credited. Whoever makes the crediting referred to in this paragraph will consider as accumulated income, in addition to the dividend or profit received, without reducing the withholding or payment of income tax that may have been made for its distribution, the proportional amount of the corporate income tax paid by the company, corresponding to the dividend or profit received by the resident in Mexico, even when the crediting of the proportional amount of the tax is limited in terms of the seventh paragraph of this article. The crediting referred to in this paragraph will only proceed when the Mexican resident entity owns at least ten percent of the capital stock of the foreign resident company, at least during the six months prior to the date on which the dividend or profit in question is paid.

For the purposes of the preceding paragraph, the proportional amount of the income tax paid abroad by the company resident in another country corresponding to the dividend or profit received by the legal entity resident in Mexico will be obtained by applying the following formula:

Where:

MPI: Proportional amount of income tax paid abroad by the foreign resident company in the first corporate level that distributes dividends or profits directly to the legal entity resident in Mexico

D: Dividend or profit distributed by the foreign resident company to the legal entity resident in Mexico without deducting the income tax withholding or payment, if any, that may have been made for its distribution

U: Profit that served as the basis for distributing dividends, after payment of income tax at the first corporate level, obtained by the foreign resident company that distributes dividends to the legal entity resident in Mexico

IC: Corporate income tax paid abroad by the foreign resident company that distributed dividends to the Mexican resident entity

In addition to the provisions of the preceding paragraphs, the proportional amount of the income tax paid by the foreign resident company that distributes dividends to another foreign resident company may be credited if the latter, in turn, distributes such dividends to the Mexican resident entity. Whoever makes the crediting in accordance with this paragraph, must consider as cumulative income, in addition to the dividend or profit received directly by the Mexican resident entity, without reducing the income tax withholding or payment that may have been made for its distribution, the proportional amount of the corporate income tax that corresponds to the dividend or profit received indirectly for which the crediting is to be made, even when the crediting of the proportional amount of the tax is limited in terms of the seventh paragraph of this article. This proportional amount of income tax paid at a second corporate level will be determined in accordance with the following formula:

Where:

MPI2: Proportional amount of income tax paid abroad by the foreign resident company in the second corporate level, which distributes dividends or profits to the other foreign company in the first corporate level, which in turn distributes dividends or profits to the Mexican resident entity

D2: Dividend or profit distributed by the foreign resident company to the foreign resident company that distributes dividends to the Mexican resident entity, without deducting the withholding or payment of income tax that, if applicable, has been made for the first distribution

U2: Profit that served as the basis for distributing dividends after payment of income tax at the second corporate level, obtained by the foreign resident company that distributes dividends to the other foreign resident company that distributes dividends to the Mexican resident entity

IC2: Corporate income tax paid abroad by the foreign resident company that distributed dividends to the other foreign resident company that distributes dividends to the Mexican resident entity

The crediting referred to in the preceding paragraph will only proceed provided that the foreign resident company that has paid the income tax to be credited is in a second corporate level. In order to make such credit, the Mexican resident entity must have a direct participation of at least ten percent in the capital stock of the foreign resident company that distributes dividends to it. The latter company must own at least ten percent of the capital stock of the foreign resident company in which the Mexican resident has an indirect participation, and the latter participation must be at least five percent of its capital stock. The percentages of shareholding indicated in this paragraph must have been maintained for at least six months prior to the date on which the dividend or profit in question is paid. In addition, in order to make the credit referred to in the preceding paragraph, the foreign resident company in which the Mexican resident entity has an indirect participation must be a resident of a country with which Mexico has a comprehensive information exchange agreement.

In the case of corporations, the amount of the creditable tax referred to in the first paragraph of this article will not exceed the amount resulting from applying the rate referred to in article 9 of this Law to the taxable income resulting in accordance with the applicable provisions of this Law for income received in the year from a source of wealth located abroad. For these purposes, deductions that are attributable exclusively to income from a source of wealth located abroad will be considered at one hundred percent; deductions that are attributable exclusively to income from a source of wealth located in Mexican territory must not be considered, and deductions that are attributable partially to income from a source of wealth in Mexican territory and partially to income from a source of wealth abroad will be considered in the same proportion that the income from the foreign country in question represents with respect to the total income of the taxpayer for the year. The calculation of the crediting limit referred to in this paragraph will be made for each country or territory in question.

Additionally, in the case of corporations, the sum of the proportional amounts of taxes paid abroad that are entitled to be credited in accordance with the second and fourth paragraphs of this article, shall not exceed the crediting limit. The crediting limit will be determined by applying the following formula:

Where:

LA: Creditfor corporate income taxes paid abroad at the first and second corporate levels

MPI: Proportional amount of corporate income tax paid abroad referred to in the third paragraph of this article

MPI2: Proportional amount of corporate income tax paid abroad referred to in the fourth paragraph of this article

T: Rate referred to in Article 9 of this Law

ID: Tax creditable referred to in the first and sixth paragraphs of this article that corresponds to the dividend or profit received by the legal entity resident in Mexico

When the legal entity that in the terms of the preceding paragraphs has the right to credit the income tax paid abroad is spun off, the right to the credit will correspond exclusively to the spun-off company. When the latter disappears, it may transfer it to the spun-off companies in the proportion in which the capital stock is divided as a result of the spin-off.

In the case of individuals, the amount of the creditable tax referred to in the first paragraph of this article will not exceed the amount resulting from applying the provisions of Chapter XI of Title IV of this Law to the income received in the year from a source of wealth located abroad, once the deductions authorized for such income have been made in accordance with the corresponding chapter of the aforementioned Title IV. For these purposes, the deductions that are not exclusively attributable to the income from a source of wealth located abroad must be considered in the aforementioned proportion.

In the case of individuals who determine the tax corresponding to their income from business activities under the terms of Chapter II of Title IV of this Law, the amount of the creditable tax referred to in the first paragraph of this article will not exceed the amount resulting from applying to the total foreign income the rate established in article 152 of this Law. For these purposes, deductions that are not attributable exclusively to income from a source of wealth located abroad must be considered in the aforementioned proportion. For purposes of this paragraph and the preceding paragraph, the calculation of the crediting limits will be made for each country or territory in question.

Individuals residing in Mexico who are subject to the payment of tax abroad by virtue of their nationality or citizenship may make the credit referred to in this article up to an amount equivalent to the tax they would have paid abroad had they not had such status.

When the creditable tax is within the limits referred to in the preceding paragraphs and cannot be totally or partially credited, the credit may be made in the following ten fiscal years, until it is exhausted. For the purposes of this crediting, the provisions on losses of Chapter V of Title II of this Law will be applied, as applicable.

The part of the tax paid abroad that is not creditable in accordance with this article will not be deductible for purposes of this Law.

In order to determine the amount of the tax paid abroad that may be credited under the terms of the second and fourth paragraphs of this article, the respective exchange conversion must be made, considering the last exchange rate published in the Official Journal of the Federation, prior to the last day of the fiscal year to which the profit against which the dividend or profit received by the resident in Mexico is paid. In the other cases referred to in this article, for purposes of determining the amount of tax paid abroad that may be credited, the exchange conversion will be made considering the monthly average of the daily exchange rates published in the Official Gazette of the Federation in the calendar month in which the tax is paid abroad through withholding or remittance.

Taxpayers who have paid income tax abroad in an amount that exceeds the amount provided for in the treaty to avoid double taxation that, as the case may be, is applicable to the income in question, may only credit the excess in the terms of this article once the dispute resolution procedure contained in the same treaty has been exhausted.

No crediting of the tax paid abroad will be allowed when its withholding or payment is conditioned to its crediting under the terms of this Law.

Taxpayers must have proof of payment of the tax in all cases. In the case of taxes withheld in countries with which Mexico has entered into comprehensive information exchange agreements, a withholding certificate will suffice.

Entities resident in Mexico that obtain income from dividends or profits distributed by companies resident abroad, must calculate the proportional amounts of taxes and the limit referred to in paragraph seven of this article, for each fiscal year from which the distributed dividends originate. For purposes of the foregoing, legal entities resident in Mexico will be required to keep a record that allows identifying the fiscal year to which the dividends or profits distributed by the company resident abroad correspond. In the event that the legal entity resident in Mexico does not have elements to identify the fiscal year to which the dividends or profits distributed correspond, the record referred to in this paragraph will consider that the first profits generated by such company are the first to be distributed. Taxpayers must keep all the documentation that proves the information indicated in the record referred to in this paragraph. Mexican residents who do not keep the aforementioned record or documentation, or who do not perform the calculation in the manner indicated above, will not be entitled to credit the tax referred to in the second and fourth paragraphs of this article. The record mentioned in this paragraph must be kept as of the acquisition of the shareholding, but it must contain the information related to the profits in respect of which dividends or profits are distributed, even if they correspond to previous years.

When a resident abroad has a permanent establishment in Mexico and income from a source located abroad is attributable to such establishment, crediting may be made in accordance with the terms set forth in this article, only for that attributable income that has been subject to withholding.

A tax paid abroad will be considered to have the nature of an income tax when it complies with the provisions of the general rules issued by the Tax Administration Service. A tax paid abroad will be considered to be an income tax when it is expressly indicated as a tax included in a treaty to avoid double taxation in force to which Mexico is a party.

The crediting provided for in the first paragraph of this article will not be granted when the tax has also been credited in another country or jurisdiction for a reason other than a crediting similar to that indicated in the second and fourth paragraphs of this article, unless the income for which such tax was paid has also accrued in the other country or jurisdiction where the tax has been credited. The crediting provided for in the second and fourth paragraphs of this article will not be granted when the dividend or profit distributed represents a deduction or an equivalent reduction for the foreign resident entity that makes such payment or distribution.

Paragraph added DOF 09-12-2019

Article 6. When this Law provides for the adjustment or updating of the values of goods or transactions, which due to the passage of time and because of price changes in the country have varied, the following shall apply:

I. To calculate the modification in the value of the goods or operations in a period, the corresponding adjustment factor shall be used in accordance with the following:

a) When the period is one month, the monthly adjustment factor will be used, which will be obtained by subtracting the unit of the quotient resulting from dividing the National Consumer Price Index of the month in question by the aforementioned index of the immediately preceding month.

b) When the period is longer than one month, the adjustment factor will be obtained by subtracting the unit of the quotient resulting from dividing the National Consumer Price Index of the most recent month of the period by the index corresponding to the oldest month of such period.

II. To determine the value of a good or transaction at the end of a period, the restatement factor will be used, which will be obtained by dividing the National Consumer Price Index of the most recent month of the period, by the said index corresponding to the oldest month of said period.

When this Law refers to a legal entity, it is understood to include, among others, corporations, decentralized agencies that predominantly carry out business activities, credit institutions, civil societies and associations and joint ventures when they carry out business activities in Mexico.

In those cases in which reference is made to shares, it will be understood to include equity contribution certificates issued by national credit companies, partnership interests, participations in civil associations and ordinary participation certificates issued on the basis of share trusts that are authorized in accordance with the applicable legislation on foreign investment. When reference is made to shareholders, this will include the holders of the certificates referred to in this paragraph, of the partnership interests and of the participations mentioned above. In the case of companies whose capital is represented by shares, when reference is made in this Law to the proven cost of acquisition of shares, the proportional part represented by the shares in the capital stock of the company in question must be considered.

For the purposes of this Law, the financial system is comprised of Banco de México, credit, insurance and bonding institutions, financial group holding companies, general deposit warehouses, retirement fund administrators, financial leasing companies, credit unions, popular financial companies, variable income investment funds, debt instrument investment funds, financial factoring companies, brokerage firms and foreign exchange houses, whether resident in Mexico or abroad. Multiple purpose financial companies referred to in the General Law of Credit Organizations and Auxiliary Activities that have accounts and documents receivable derived from the activities that must constitute their main corporate purpose, in accordance with the provisions of such Law, that represent at least 70% of their total assets, or that have income derived from such activities and from the sale or administration of loans granted by them, that represent at least 70% of their total income, will be considered to be members of the financial system. For purposes of determining the 70% percentage, assets or income derived from the sale on credit of goods or services of the companies themselves, the sale of credit cards or financing granted by third parties will not be considered. The Tax Administration Service may issue the general rules necessary for the due and correct application of this paragraph.

Amended paragraph DOF 18-11-2015, 12-11-2021

In the case of newly created multiple purpose companies, the Tax Administration Service, by means of a particular resolution that considers the compliance program submitted by the taxpayer, may establish for the first three fiscal years of such companies, a percentage lower than that indicated in the preceding paragraph, in order to be considered as part of the financial system for the purposes of this Law.

For the purposes of this law, social welfare is considered to be the disbursements made to satisfy contingencies or present or future needs, as well as the granting of benefits in favor of workers or partners or members of cooperative societies, aimed at their physical, social, economic or cultural improvement, which allow them to improve their quality of life and that of their families. In no case shall be considered social welfare the expenditures made in favor of persons who do not have the character of workers or partners or members of cooperative societies.

For the purposes of this Law, securities depositories are considered to be credit institutions, investment fund operating companies, investment fund share distribution companies, brokerage firms and institutions for the deposit of securities in the country granted by the Federal Government in accordance with the provisions of the Securities Market Law, which provide securities custody and administration services.

Amended paragraph DOF 18-11-2015

For the purposes of this Law, interest, regardless of the name by which it is designated, is considered to be the yield of credits of any kind. It is understood that, among others, are interests: yields on public debt, bonds or debentures, including discounts, premiums and prizes; premiums on repurchase agreements or securities loans; the amount of commissions corresponding to the opening or guarantee of credits; the amount of the considerations corresponding to the acceptance of a guarantee, the granting of a guarantee or liability of any kind, except when such considerations must be made to insurance or bonding institutions; the gain on the sale of bonds, securities and other debt securities, provided that they are those that are placed among the general investing public, in accordance with the general rules issued for such purpose by the Tax Administration Service.

In financial factoring transactions, the gain derived from the credit rights acquired by financial factoring companies and multiple purpose financial companies will be considered as interest.

In financial leasing contracts, interest is considered to be the difference between the total payments and the original amount of the investment.

The assignment of rights over the income from granting the temporary use or enjoyment of real estate will be considered as a financing transaction; the amount obtained from the assignment will be treated as a loan, and the rents accrued under the contract must be accrued, even when these are collected by the acquirer of the rights. The consideration paid for the assignment will be treated as a credit or debt, as the case may be, and the difference with the rents will be treated as interest. The amount of the credit or debt will generate the annual adjustment for inflation under the terms of Chapter III of Title II of this Law, which will be cumulative or deductible, as the case may be, considering for its quantification, the discount rate taken for the assignment of the right, the total of the rents covered by the assignment, the value paid for such rents and the term determined in the contract, under the terms established in the Regulations of this Law.

When credits, debts, transactions or the amount of payments of financial leasing contracts are adjusted by applying indexes, factors or in any other way, including the use of investment units, the adjustment will be considered as part of the interest.

The treatment established by this Law for interest will be given to the exchange gains or losses accrued by the fluctuation of foreign currency, including those corresponding to the principal and interest itself. The exchange gain and loss may not be less than or exceed, respectively, that which would result from considering the exchange rate to settle obligations denominated in foreign currency payable in the Mexican Republic established by the Bank of Mexico, published for such purpose in the Official Gazette of the Federation, corresponding to the day on which the corresponding gain or loss is received or suffered.

Amended paragraph DOF 12-11-2021

The treatment established in this Law for interest will be given to the gain from the sale of the shares of the investment funds in debt instruments referred to in the Investment Funds Law.

Amended paragraph DOF 18-11-2015

TITLE II

OF LEGAL ENTITIES

GENERAL PROVISIONS

Article 9. Entities must calculate income tax by applying a 30% rate to the taxable income obtained in the fiscal year.

The taxable income for the year will be determined as follows:

I.The taxable income will be obtained by deducting from the total accumulated income obtained in the fiscal year, the deductions authorized by this Title and the employee profit sharing paid in the fiscal year, in the terms of Article 123 of the Political Constitution of the United Mexican States.

II.The taxable income for the year will be reduced, if applicable, by the tax loss carryforwards from previous years.

The tax for the fiscal year shall be paid by means of a tax return to be filed with the authorized offices within three months following the date on which the fiscal year ends.

In order to determine the taxable income referred to in paragraph e) of section IX of Article 123, paragraph A of the Political Constitution of the United Mexican States, workers' profit sharing paid in the year and tax losses pending application from previous years will not be reduced.

For the determination of the taxable income in the matter of employee profit sharing, taxpayers must deduct from the taxable income the amounts that would not have been deductible under the terms of section XXX of Article 28 of this Law.

Article 10. Entities that distribute dividends or profits must calculate and pay the tax corresponding to such dividends or profits, applying the rate established in Article 9 of this Law. For these purposes, the dividends or profits distributed will be added to the income tax payable under the terms of this article. In order to determine the tax to be added to the dividends or profits, these must be multiplied by the factor of 1.4286 and the rate established in Article 9 of this Law will be applied to the result. The tax corresponding to the distributed profits referred to in Article 78 of this Law will be calculated in accordance with the terms of said precept.

In the case of the distribution of dividends or profits through the increase of corporate shares or the delivery of shares of the same legal entity or when they are reinvested in the subscription and payment of the capital increase of the same person within 30 calendar days following their distribution, the dividend or profit will be deemed to have been received in the calendar year in which the reimbursement is paid due to the reduction of capital or liquidation of the legal entity in question, under the terms of Article 78 of this Law.

There is no obligation to pay the tax referred to in this article when the dividends or profits come from the net tax profit account established in this Law.

The tax referred to in this article shall be paid in addition to the tax for the year referred to in Article 9 of this Law, shall be considered a final payment and shall be paid to the authorized offices no later than the 17th day of the month immediately following the month in which the dividends or profits were paid.

When the taxpayers referred to in this article distribute dividends or profits and as a consequence thereof pay the tax established in this article, they may credit such tax in accordance with the following:

I. The crediting may only be made against the income tax of the year payable by the legal entity in the year in which the tax referred to in this article is paid.

The amount of the tax that cannot be credited in accordance with the preceding paragraph may be credited against the tax for the year and against the provisional payments of the same in the following two years. When the tax for the year is less than the amount that would have been credited in the provisional payments, only an amount equal to the latter will be considered creditable against the tax for the year.

When the taxpayer does not credit in a fiscal year the tax referred to in the fourth paragraph of this article, when it could have done so in accordance with the same, it will lose the right to do so in subsequent fiscal years up to the amount in which it could have done so.

II.For the purposes of Article 77 of this Law, in the year in which the tax is credited in accordance with the preceding section, taxpayers must reduce the net taxable income calculated in accordance with the terms of said provision, the amount resulting from dividing the tax credited by the factor 0.4286.

For the purposes of this article, dividends or distributed profits shall not be considered as distributed dividends or profits, the participation of workers in the profits of the companies.

Entities that distribute the dividends or profits referred to in Article 140 sections I and II of this Law, will calculate the tax on such dividends or profits by applying the rate established in Article 9 of this Law to such dividends or profits. This tax will be definitive.

In the case of interest derived from loans granted to corporations or permanent establishments in the country of residents abroad, by persons resident in Mexico or abroad, who are related parties of the person paying the loan, taxpayers will consider, for purposes of this Law, that the interest derived from such loans will have the tax treatment of dividends when any of the following events occur:

I. The debtor formulates in writing an unconditional promise of partial or total payment of the credit received, at a date determinable at any time by the creditor.

II. Interest is not deductible in accordance with the provisions of Section XIII of Article 27 of this Law.

III.In case of default by the debtor, the creditor has the right to intervene in the management or administration of the debtor company.

IV. The interest to be paid by the debtor is conditioned to the obtainment of profits or its amount is fixed based on such profits.

V. The interest derives from loans backed by credits, even when granted through a financial institution resident in the country or abroad.

For the purposes of this section, secured loans are considered to be transactions whereby a person provides cash, goods or services to another person, who in turn provides cash, goods or services directly or indirectly to the first mentioned person or to a related party of the first mentioned person. Also, transactions in which a person grants financing and the credit is secured by cash, cash deposits, shares or debt instruments of any kind, of a related party or of the borrower itself, to the extent that it is so secured, are also considered to be secured loans. For these purposes, it is considered that the loan is also secured under the terms of this section, when its granting is conditioned to the execution of one or several contracts that grant an option right in favor of the lender or a related party of the lender, the exercise of which depends on the partial or total nonpayment of the loan or its accessories by the borrower.

The set of financial transactions derived from debt or those referred to in Article 21 of this Law, entered into by two or more related parties with the same financial intermediary, where the transactions of one of the parties give rise to the others, with the primary purpose of transferring a defined amount of resources from one related party to the other, will be treated as backed credits as referred to in this section. This treatment will also apply to debt securities discount transactions that are settled in cash or in goods, which in any way fall under the circumstances described in the preceding paragraph.

Transactions in which financing is granted to a person and the loan is secured by shares or debt instruments of any kind owned by the borrower or by related parties of the borrower that are residents of Mexico, when the lender cannot legally dispose of them, will not be considered as secured loans, except in the case that the borrower fails to comply with any of the obligations agreed in the respective loan agreement.

Financing transactions other than those previously referred to in this article, which derive interest payable by legal entities or permanent establishments in the country of residents abroad, when such transactions lack a business reason, will also be treated as secured loans.

Paragraph added DOF 12-11-2021

Within the month following the date on which the liquidation of a company is completed, the liquidator must file the final tax return for the liquidation year. The liquidator must file monthly provisional payments on account of the tax for the liquidation year, no later than the 17th day of the month immediately following the month to which the payment corresponds, under the terms of Article 14 of this Law, until the total liquidation of the assets is carried out. The assets of establishments located abroad will not be considered in such provisional payments. At the end of each calendar year, the liquidator must file a tax return no later than January 17th of the following year, in which it will determine and pay the tax corresponding to the period from the beginning of the liquidation until the last month of the year in question and will credit the provisional and annual payments made previously corresponding to the aforementioned period. The last return will be for the year of liquidation, will include the assets of the establishments located abroad and must be filed no later than the month following the month in which the liquidation ends, even if twelve months have not elapsed since the last return.

For the purposes of this Law, it will be understood that a legal entity resident in Mexico is liquidated when it ceases to be a resident of Mexico under the terms of the Federal Tax Code or in accordance with the provisions of a treaty to avoid double taxation in force entered into by Mexico. For these purposes, all assets that the legal entity has in Mexico and abroad will be considered disposed of and their value will be considered to be the market value at the date of the change of residence; when such value is not known, the appraisal carried out for such purposes by the person authorized by the tax authorities will be used. The tax determined must be paid within 15 days following the date of the change of tax residence.

For the purposes of the preceding paragraph, a legal representative must be appointed who meets the requirements established in Article 174 of this Law. Such representative must keep at the disposal of the tax authorities the supporting documentation related to the payment of the tax on behalf of the taxpayer, during the term established in the Federal Tax Code, counted as of the day following the day in which the tax return was filed.

The legal representative appointed under the terms of this article will be jointly and severally liable for the taxes payable by the legal entity resident in Mexico that is being liquidated.

When business activities are carried out through a trust, the trustee shall determine under the terms of Title II of this Law, the tax result or loss of such activities in each fiscal year and shall comply on behalf of all the trustees with the obligations set forth in this Law, including the obligation to make provisional payments.

The trustee shall issue to the trustees or settlors, as the case may be, a tax receipt evidencing the income and withholdings derived from the business activities carried out through the trust in question.

The trustees will accrue to their other income for the year, the portion of the tax result of such year derived from the business activities carried out through the trust that corresponds to them, in accordance with the provisions of the trust agreement, and will credit in that proportion the amount of the provisional payments made by the trustee. The tax loss derived from the business activities carried out through the trust may only be reduced from the tax profits of subsequent years derived from the activities carried out through the same trust under the terms of Chapter V of Title II of this Law.

When there are tax losses pending to be reduced upon termination of the trust, the restated balance of such losses will be distributed among the trustees in the proportion corresponding to them according to the terms of the trust agreement and may be deducted in the year in which the trust is terminated up to the restated amount of their contributions to the trust not recovered by each of the trustees individually.

For the purposes of the preceding paragraph, the trustee shall maintain a capital contribution account for each of the trustees, in accordance with the provisions of Article 78 of this Law, in which the cash and property contributions made to the trust by each of them shall be recorded.

Deliveries of cash or property from the trust made by the trustee to the trustees will be considered repayments of contributed capital until such capital is recovered and will reduce the balance of each of the individual capital contribution accounts maintained by the trustee for each of the trustees until the balance of each such account is exhausted.

For purposes of determining the tax profit or loss for the year derived from the business activities carried out through the trust, the deductions will include that which corresponds to the assets contributed to the trust by the trustor when he/she is also the trustee and does not receive any consideration in cash or other assets for them, considering as acquisition cost thereof the original amount of the updated investment not yet deducted or the average cost per share, depending on the asset in question, that the settlor has at the time of its contribution to the trust, and that same acquisition cost must be recorded in the trust accounting and in the contribution capital account of the corresponding party. The settlor who contributes the assets referred to in this paragraph may not deduct such assets in the determination of its tax profits or losses derived from its other activities.

When the assets contributed to the trust referred to in the preceding paragraph are returned to the settlors who contributed them, they will be considered reintegrated at the tax value they have in the trust's accounting at the time they are returned, and at that same value they will be considered reacquired by the persons who contributed them.

The provisional income tax payments corresponding to the business activities carried out through the trust will be calculated in accordance with the provisions of Article 14 of this Law. In the first calendar year of operations of the trust or when no profit coefficient results in accordance with the above, the profit coefficient for the purposes of the provisional payments will be considered to be that which corresponds under the terms of Article 58 of the Federal Fiscal Code, to the preponderant activity carried out through the trust. For such purposes, the trustee will file a tax return for its own activities and another one for each of the trusts.

When any of the trustees is an individual resident in Mexico, he/she will consider as income from business activities the portion of the taxable income or profit derived from the business activities carried out through the trust that corresponds to him/her in accordance with the terms of the contract.

Foreign residents who are trustees are considered to have a permanent establishment in Mexico for the business activities carried out in Mexico through the trust and must file their annual income tax return for their share of the taxable income or profit for the year derived from such activities.

In cases where no trustees have been appointed or cannot be identified, it will be understood that the business activities carried out through the trust are carried out by the settlor.

The trustees or, as the case may be, the settlor, shall be liable for the breach of the obligations to be performed by the trustee on their behalf.

Article 14. Taxpayers shall make monthly provisional payments on account of the tax for the fiscal year, no later than the 17th day of the month immediately following the month to which the payment corresponds, in accordance with the bases indicated below:

I. The profit coefficient corresponding to the last twelve-month period for which a tax return was or should have been filed shall be calculated. For this purpose, the taxable income of the year for which the coefficient is calculated shall be divided by the nominal income of the same year.

Entities that distribute advances or income under the terms of Section II of Article 94 of this Law, will add to the taxable income or reduce the tax loss, as applicable, the amount of the advances and income, if any, distributed to their members under the terms of the aforementioned section, in the year for which the coefficient is calculated.

In the case of the second fiscal year, the first provisional payment will include the first, second and third month of the fiscal year, and the tax profit ratio of the first fiscal year will be considered, even if it has not been twelve months.

When in the last twelve-month fiscal year there is no profit ratio in accordance with the provisions of this section, the profit ratio corresponding to the last twelve-month fiscal year for which such ratio exists shall be applied, provided that such fiscal year is not more than five years prior to the year for which the provisional payments must be made.

II. The tax profit for the provisional payment will be determined by multiplying the profit coefficient that corresponds in accordance with the previous section, by the nominal income corresponding to the period from the beginning of the fiscal year until the last day of the month to which the payment refers and, if applicable, the following concepts will be deducted:

a) The amount of employee profit sharing paid in the same fiscal year, under the terms of Article 123 of the Political Constitution of the United Mexican States. The aforementioned amount of employee profit sharing must be reduced, in equal parts, in the provisional payments corresponding to the months of May through December of the fiscal year. The decrease referred to in this paragraph will be made in the provisional payments of the fiscal year in a cumulative manner and the amount that is decreased in terms of this paragraph will in no case be deductible from the taxpayer's cumulative income, in accordance with the provisions of Section XXVI of Article 28 of this Law.

For the purposes of the preceding paragraph, the reduction of employee profit sharing shall be made up to the amount of the tax profit determined for the corresponding provisional payment and in no case shall the profit coefficient determined under the terms of section I of this article be recalculated.

b) The legal entities that distribute advances or yields in the terms of section II of Article 94 of this Law, will reduce the tax profit with the amount of the advances and yields that they distribute to their members in the terms of the mentioned section, in the period from the beginning of the fiscal year and up to the last day of the month to which the payment refers. A tax receipt must be issued stating the amount of the advances and yields distributed, as well as the tax withheld.

c) The tax loss from prior years pending application against taxable income, without prejudice to the reduction of such loss against taxable income for the year.

Reformed fraction DOF 09-12-2019

III. The provisional payments will be the amounts resulting from applying the rate established in Article 9 of this Law, on the taxable income determined under the terms of the preceding section, and the provisional payments of the same period made previously may be credited against the tax payable. The withholding made to the taxpayer during the period may also be credited against such provisional payments, under the terms of Article 54 of this Law.

In the case of the liquidation period, in order to calculate the corresponding monthly provisional payments, the profit coefficient for the purposes of such provisional payments will be considered to be that which corresponds to the last return that at the end of each calendar year the liquidator had filed or should have filed under the terms of Article 12 of this Law or that which corresponds in accordance with the provisions of the last paragraph of Section I of this Article.

The nominal income referred to in this article will be the cumulative income, except for the annual cumulative inflation adjustment. In the case of loans or transactions denominated in investment units, interest as accrued, including the corresponding adjustment to the principal because the loans or transactions are denominated in such units, will be considered nominal income for the purposes of this article.

Taxpayers that initiate operations as a result of a merger of companies in which a new company arises, will make provisional payments in such year as of the month in which the merger occurs. For the purposes of the foregoing, the profit ratio referred to in the first paragraph of Section I of this Article will be calculated considering jointly the profits or tax losses and the income of the merging companies. In the event that the merging companies are in their first fiscal year of operation, the coefficient will be calculated using the items indicated corresponding to said fiscal year. When there is no coefficient in the terms of this paragraph, the provisions of the last paragraph of section I of this article will be applied, considering the provisions of this paragraph.

Taxpayers that initiate operations as a result of the spin-off of companies will make provisional payments as of the month in which the spin-off occurs, considering, for that year, the profit coefficient of the spin-off company in that year. The coefficient referred to in this paragraph will also be used for the purposes of the last paragraph of Section I of this Article. The spin-off company will consider as provisional payments effectively paid prior to the spin-off, the totality of such payments made in the fiscal year in which the spin-off occurred and they cannot be assigned to the spun-off companies, even when the spin-off company disappears.

Taxpayers must file the provisional payment returns whenever there is tax payable, credit balance or when it is the first return in which there is no tax payable. Taxpayers must not file provisional payment returns in the year of initiation of operations, when they have filed the notice of suspension of activities provided for in the Regulations of the Federal Tax Code or in cases where there is no tax payable or credit balance and it is not the first return with this characteristic.

In order to determine the provisional payments referred to in this article, taxpayers shall be subject to the following:

a) Income from a source of wealth located abroad that has been subject to income tax withholding and income attributable to its establishments located abroad that are subject to income tax in the country where these establishments are located will not be considered.

b) Taxpayers who consider that the profit coefficient to be applied to determine provisional payments is higher than the profit coefficient of the year to which such payments correspond may, as from the second half of the year, request authorization to apply a lower coefficient. When as a result of the authorization it appears that the provisional payments have been paid in a lower amount than the amount that would have corresponded to them, surcharges will be paid for the difference between the payments made applying the lower coefficient and those that would have corresponded to them if such coefficient had not been applied, by means of the respective supplementary return.

Subsection amended DOF 12-11-2021

Article 15. Taxpayers subject to a reorganization proceeding may reduce the amount of the debts forgiven in accordance with the agreement entered into with their recognized creditors, under the terms established in the Bankruptcy Law, from the losses pending reduction that they have in the fiscal year in which said creditors forgive the aforementioned debts. When the amount of the forgiven debts is greater than the tax loss carryforwards, the resulting difference will not be considered as taxable income, unless the forgiven debt arises from transactions between and with related parties referred to in Article 179 of this Law.

CHAPTER I

OF INCOME

Article 16. Entities resident in Mexico, including joint ventures, will accrue all income in cash, goods, services, credit or of any other type, obtained during the year, including income from their establishments abroad. The annual cumulative inflation adjustment is the income obtained by taxpayers from the real decrease in their debts.

For the purposes of this Title, income obtained by the taxpayer from capital increases, payment of losses by its shareholders, premiums obtained from the placement of shares issued by the company itself or from using the equity method to value its shares, as well as income obtained from the revaluation of its assets and capital are not considered income for purposes of this Title.

Income from economic or monetary support received by taxpayers through programs provided for in the federal or state budgets are not considered taxable income for purposes of this Title, provided that the programs have a list of beneficiaries; the resources are distributed through electronic transfer of funds in the name of the beneficiaries; the beneficiaries comply with the obligations established in the rules of operation of such programs, and have a favorable opinion from the competent authority regarding compliance with tax obligations, when they are obliged to request it under the terms of the tax provisions. The expenses or disbursements made with the economic support referred to in this paragraph, which are not considered accruable income, will not be deductible for purposes of this tax. The federal or state agencies or entities in charge of granting or administering the economic or monetary support, must make available to the general public and keep updated in their respective electronic media, the list of beneficiaries referred to in this paragraph, which must contain the following data: corporate name of the beneficiary legal entities, the amount, resource, benefit or support granted for each one of them and the territorial unit.

Paragraph added DOF 30-11-2016

Other income that will not be considered accruable for purposes of this Title, are the considerations in kind in favor of the contractor referred to in articles 6, section B and 12, section II of the Income Law on Hydrocarbons, provided that for the determination of the income tax payable by the contractor, the value of the mentioned considerations when these are disposed of or transferred to a third party is not considered as deductible cost of goods sold in the terms of article 25, section II of this Law. The income obtained from the sale of the goods received as consideration will be accruable under the terms established in this Law.

Paragraph added DOF 30-11-2016

Entities residing abroad, as well as any entity that is considered a legal entity for tax purposes in its country, that have one or more permanent establishments in the country, will accrue the total income attributable to such permanent establishments. The simple remittance obtained from the head office of the legal entity or from another establishment of the legal entity will not be considered as income attributable to a permanent establishment.

For taxpayers under this Title, income from dividends or profits received from other legal entities resident in Mexico will not be taxable.

For the purposes of Article 16 of this Law, it is considered that income is obtained, in those cases not provided for in other articles of this Law, on the dates indicated in accordance with the following in the case of:

I. Sale of goods or rendering of services, when any of the following events occurs, whichever occurs first:

a) The tax receipt is issued to cover the price or consideration agreed upon.

b) The good is materially shipped or delivered or when the service is rendered.

c) The total or partial price or consideration agreed upon is collected or payable, even if it comes from advances.

In the case of income from the rendering of independent personal services obtained by corporations or civil associations and income from the supply of potable water for domestic use or domestic garbage collection services obtained by decentralized agencies, concessionaires, permit holders or companies authorized to provide such services, it is considered that such income is obtained at the time the agreed price or consideration is collected.

II. Granting of the temporary use or enjoyment of goods, when all or part of the consideration is collected, or when such consideration is payable to the person making the grant, or when the tax receipt is issued to cover the price or consideration agreed upon, whichever occurs first.

III. Obtaining income from financial leasing contracts, taxpayers may choose to consider as income obtained in the year the total of the agreed price or the portion of the price payable during the year.

In the case of forward sales under the terms of the Federal Tax Code, taxpayers will consider as income obtained in the year the total of the agreed price.

The option referred to in the first paragraph of this section must be exercised for all the contracts. The option may be changed without requirements only once; in the case of the second and subsequent changes, at least five years must elapse from the last change; when the change is intended to be made before such period elapses, the requirements established for such purpose in the Regulations of this Law must be complied with.

When in terms of the first paragraph of this section, the taxpayer has opted to consider as income obtained in the year only the portion of the agreed price payable and sells the documents pending collection, or gives them in payment, it must consider the amount pending accrual as income obtained in the year in which the sale or payment is made.

In the event of noncompliance with financial lease contracts, in respect of which the option has been exercised to consider as income obtained in the year only the portion of the price payable, the lessor will consider as income obtained in the year, the amounts payable in the year from the lessee, reduced by the amounts that have already been returned in accordance with the respective contract.

In the case of financial leasing contracts, income derived from any of the options referred to in Article 15 of the Federal Tax Code will be considered income obtained in the year in which they become due.

IV. Income derived from debts not covered by the taxpayer, in the month in which the statute of limitations period expires or in the month in which the period referred to in the second paragraph of section XV of Article 27 of this Law expires.

Taxpayers that enter into real estate construction contracts will consider the income from such contracts as accruable on the date on which the estimates for work performed are authorized or approved for collection, provided that the payment of such estimates takes place within the three months following their approval or authorization; otherwise, the income from such contracts will be considered accruable until they are actually paid. Taxpayers that enter into other work contracts in which they are obligated to execute said work in accordance with a plan, design and budget, will be considered to obtain the income on the date on which the estimates for work executed are authorized or approved so that they may be collected, provided that the payment of said estimates takes place within the three months following their approval or authorization; Otherwise, the income from such contracts will be considered accruable until they are effectively paid, or in cases where they are not required to present them or the periodicity of their presentation is greater than three months, the quarterly progress in the execution or manufacture of the goods referred to in the work will be considered accruable income. The accruable income from work contracts referred to in this paragraph will be reduced by the portion of the advances, deposits, guarantees or payments for any other concept, which had been previously accrued and which is amortized against the estimate or progress.

The taxpayers referred to in the preceding paragraph will consider as accumulable income, in addition to those indicated therein, any payment received in cash, goods or services, whether in the form of advances, deposits or guarantees for the fulfillment of any obligation, or any other.

For the purposes of this Title, the following are considered accruable income, in addition to those indicated in other articles of this Law:

I. The income determined, including presumptively by the tax authorities, in the cases in which it is applicable according to the tax laws.

II. The gain derived from the transfer of ownership of property by payment in kind. In this case, in order to determine the gain, the value of the property in question on the date on which its ownership is transferred by payment in kind will be considered as income, according to the appraisal performed by a person authorized by the tax authorities, and the deductions allowed by this Law for the case of disposal may be reduced from such income, provided that the requirements established therein and in the other tax provisions are complied with. In the case of merchandise, as well as raw materials, semi-finished or finished products, the total income will be accrued and the value of the cost of what is sold will be determined in accordance with the provisions of Section III, Chapter II, Title II of this Law.

III. Those coming from constructions, installations or permanent improvements in real estate, which in accordance with the contracts by which their use or enjoyment was granted, are for the benefit of the owner. For these purposes, the income is considered to be obtained at the end of the contract and in the amount that at that date the investments have according to the appraisal made by a person authorized by the tax authorities.

IV. The gain derived from the sale of fixed assets and land, securities, stocks, shares, partnership interests or equity contribution certificates issued by national credit companies, as well as the realized gain derived from the merger or spin-off of companies and the gain derived from the reduction of capital or liquidation of commercial companies residing abroad, in which the taxpayer is a partner or shareholder.

In cases of capital reduction or liquidation of corporations resident abroad, the gain will be determined in accordance with the provisions of Section V of Article 142 of this Law.

In the case of mergers or spin-offs of companies, the gain derived from such acts will not be considered cumulative income when the requirements established in Article 14-B of the Federal Tax Code are met.

V. Payments received for recovery of a loan deducted for uncollectible.

VI. The amount recovered from insurance, bonds or third party liabilities, in the case of losses of the taxpayer's property.

VII. The amounts that the taxpayer obtains as indemnification to compensate him for the decrease in his productivity caused by the death, accident or illness of technicians or managers.

VIII. The amounts received to incur expenses on behalf of third parties, unless such expenses are supported by tax receipts in the name of the party on whose behalf the expense is incurred.

IX. Interest accrued in favor during the fiscal year, without any adjustment. In the case of delinquent interest, as of the fourth month, only the interest actually collected will be accrued. For these purposes, income from late payment interest received after the third month following the month in which the debtor is in default is considered to cover, in the first instance, the late payment interest accrued in the three months following the month in which the debtor is in default, until the amount received exceeds the amount of accrued late payment interest accrued for the last mentioned period.

For the purposes of the preceding paragraph, delinquent interest charged will accrue until such time as the interest actually charged exceeds the amount of delinquent interest accrued in the first three months and up to the amount by which it exceeds the amount of delinquent interest.

X. The annual adjustment for inflation that is accruable under the terms of Article 44 of this Law.

XI. The amounts received in cash, in local or foreign currency, for loans, contributions for future capital increases or capital increases greater than $600,000.00, when the provisions of article 76, section XVI of this Law are not complied with.

XII. The consolidation of the bare ownership and usufruct of a property.

The income accruable under this section will be the value of the usufruct right determined in the appraisal to be performed by a person authorized by the tax authorities, at the time the bare ownership and usufruct of an asset is consolidated. For such purposes, the bare owner must make such appraisal, accrue the income and file the corresponding tax return.

Notaries, brokers, judges and other notaries before whom the public deed has been granted through which the operation of dismemberment of the attributes of the property was carried out, must inform the tax authority of such situation within thirty days following the date on which the referred operation was carried out, through a declaration, in accordance with the general rules issued by the Tax Administration Service for such purpose.

Fraction added DOF 12-11-2021

In the case of interest accrued by residents in Mexico or residents abroad with a permanent establishment in the country in favor of residents abroad, whose rights are transferred to a resident in Mexico or a resident abroad with a permanent establishment in the country, it will be considered taxable income when they receive such rights, except in the case in which it is demonstrated that the residents abroad paid the tax referred to in Article 166 of this Law.

Article 19. In order to determine the gain from the sale of land, securities representing the ownership of goods, except in the case of merchandise, as well as raw materials, semi-finished or finished products, as well as other securities whose yields are not considered interest under the terms of Article 8 of this Law, of gold or silver pieces that have had the character of national or foreign currency and of the pieces called troy ounces, taxpayers will subtract from the income obtained from their sale the original amount of the investment, which may be adjusted by multiplying it by the updating factor corresponding to the period from the month in which the acquisition was made up to the month immediately prior to that in which the sale is made.

The adjustment referred to in the preceding paragraph is not applicable to determine the gain on the disposal of shares and certificates of deposit of goods or merchandise.

In the case of assets acquired as a result of a merger or spin-off of companies, the original amount of the investment will be considered to be the value of its acquisition by the merged or spun-off company and the date of acquisition will be considered to be the date that would have corresponded to the latter.

In the case of assets in which only the usufruct or the bare ownership is disposed of, the gain will be determined by subtracting from the price obtained the original amount of the investment in the proportion of the price that corresponds to the transferred attribute according to the appraisal that must be performed by a person authorized by the tax authorities. The proportion referred to in this paragraph will be calculated by dividing the price of the transferred attribute by the value corresponding to the totality of the property, the quotient obtained will be multiplied by one hundred and the product will be expressed as a percentage.

Paragraph added DOF 12-11-2021

In the case of derivative financial transactions, the cumulative gain or deductible loss shall be determined in accordance with the following:

I. When a transaction is settled in cash, the difference between the final amount received or delivered as a result of the settlement or, as the case may be, of the exercise of the rights or obligations contained in the transaction, and the previous amounts, if any, paid or received as agreed for entering into such transaction or for having subsequently acquired the rights or obligations contained therein, as the case may be, shall be considered as gain or loss, as the case may be.

II. When a transaction is settled in kind with the delivery of merchandise, securities or currency, it will be considered that the goods subject to the transaction were disposed of or acquired, as the case may be, at the price received or paid in the settlement, plus the initial amount paid or received for entering into such transaction or for having subsequently acquired the rights or obligations set forth in the securities or contracts in which the transaction is recorded, as the case may be.

III. When the rights or obligations recorded in the securities or contracts in which a derivative financial transaction is recorded are disposed of before the maturity of the transaction, the difference between the amount received from the disposal and the initial amount, if any, paid for its acquisition will be considered as a gain or loss, as the case may be.

IV. When the rights or obligations set forth in the securities or contracts containing a derivative financial transaction are not exercised at their maturity or during their term, the initial amount, if any, received or paid for entering into such transaction or for having subsequently acquired the rights and obligations contained therein, as the case may be, will be considered as gain or loss, as the case may be.

V. When what is acquired is the right or obligation to carry out a derivative financial transaction, the gain or loss will be determined under the terms of this article, on the date on which the transaction on which the right or obligation was acquired is settled, adding, if applicable, to the initial amount referred to in the preceding sections, the amount paid or received for acquiring the right or obligation referred to in this section. When the right or obligation to perform the derivative financial transaction in question is not exercised within the agreed term, the provisions of the preceding section shall apply.

VI. When the holder of the right granted in the transaction exercises the right and the obligor delivers shares issued by him and which have not been subscribed, treasury shares, such obligor shall not accrue the price or premium received for entering into the transaction or the income received for exercising the right granted, and shall consider both amounts as contributions to its capital stock.

VII. In derivative financial transactions in which differences are settled during their term, the amount of the difference settled shall be considered as the gain or loss, as the case may be, in each settlement. The amount received or paid for entering into these transactions, for having acquired the rights or obligations set forth therein or for having acquired the right or obligation to enter into them, shall be added to or subtracted from the amount of the last settlement to determine the gain or loss corresponding thereto, restated for the period from the month in which it was paid or received and up to the month in which the last settlement is made.

VIII. The cumulative gain or deductible loss of derivative financial transactions referred to the exchange rate of a currency, will be determined at the close of each fiscal year, even in the event that the transaction has not been exercised because its maturity date corresponds to a subsequent fiscal year. For these purposes, the loss or profit will be determined considering the exchange rate of the last day of the fiscal year being declared, as published in the Official Gazette of the Federation.

The amounts accumulated or deducted under the terms of this section in the years prior to the year in which the transaction in question matures, will be reduced or added, respectively, to the net result of the transaction on the maturity date; the result thus obtained will be the cumulative gain or deductible loss of the year in which the maturity occurs.

IX. In the case of derivative financial transactions whereby one party delivers liquid resources to another party and the latter, in turn, guarantees the responsibility of repurchasing the merchandise, securities or shares referred to in the transaction, for an amount equal to the amount delivered by the first party plus a proportional charge, such proportional charge will be considered as interest in favor or chargeable, cumulative or deductible, as applicable.

In the transactions referred to in the preceding paragraph, individually or as a whole, as the case may be, the goods, securities or shares in question shall not be deemed to have been disposed of or acquired, provided that they are returned to the first party no later than the maturity of the aforementioned transactions.

The amounts paid or received for the transactions described in this section will not be restated. The amounts paid and received will be considered credits or debts, as applicable, for the purposes of Article 44 of this Law.

For the purposes of this article, the amounts paid in favor of the counterparty of the derivative financial transaction for acquiring the right contained in the respective contract, without such payment generating any interest for the paying party, are considered initial amounts. Such amounts will be restated for the period elapsed between the month in which they were paid or received and the month in which the derivative financial transaction is settled, reaches its maturity, the right or obligation set forth therein is exercised or the security in which such transaction is recorded is disposed of, as the case may be. The amount paid or received for acquiring the right or obligation to carry out a derivative financial transaction referred to in Section V above, will be restated for the period elapsed between the month in which it is paid or received and the month in which the right or obligation set forth in the transaction on which the right or obligation was acquired is settled or exercised.

The amounts that one of the parties deposits with the other to carry out derivative financial transactions, which represent an asset for the former and a liability for the latter, will give rise to the calculation of the annual adjustment for inflation, in accordance with the provisions of Article 44 of this Law.

The treatment established in this Law for interest will be given to the gain or loss from financial transactions derived from debt.

When during the term of a financial transaction derived from debt referred to in Article 16-A of the Federal Tax Code, differences are settled between the prices of the National Consumer Price Index or any other index, or the interest rates to which such transactions refer, the amount of each difference will be considered as interest in favor or chargeable, as applicable, and these will be the accrued or deductible interest, respectively. When in these transactions an amount has been received or paid for entering into the transaction or acquiring the right or obligation to participate in it, this amount will be added or subtracted, as the case may be, from the amount of the last liquidation to determine the interest in favor or charge corresponding to said liquidation, updating said amount for the period elapsed between the month in which it is paid and the month in which this last liquidation occurs.

In financial transactions derived from debt in which differences are not settled during its term, the accruable or deductible interest will be that which results as gain or loss, in accordance with this article.

For the purposes of this Law, when the same derivative financial transaction refers to several assets, securities or indicators, which make it a debt and capital transaction, the provisions of this Law will apply to debt derivative financial transactions, for the totality of the amounts paid or received for the financial transaction in question.

Article 21. Income received from financial transactions referring to an underlying asset that is not listed in a recognized market in accordance with the provisions of Article 16-C of the Federal Tax Code, including the initial amounts received, will be accrued at the time they become payable or when the option is exercised, whichever occurs first. The amounts disbursed directly related to such transaction, may only be deducted when the net result of the transaction is known at the time of settlement or maturity, regardless of whether the rights or obligations set forth in the contracts entered into for the purposes of this type of transactions are not exercised.

At the time of settlement or maturity of each transaction, the expenditures authorized in this Law referred to in the preceding paragraph must be deducted and the cumulative gain or deductible loss, as the case may be, must be determined, regardless of the time of accrual of the income referred to in the preceding paragraph. When the amounts disbursed are higher than the income received, in terms of the preceding paragraph, the result will be the deductible loss. The result of subtracting from the income received the disbursements in terms of the preceding paragraph, will be the cumulative gain.

Entities that obtain a loss in terms of the preceding paragraph and are related parties of the person that obtained the gain in the same transaction, may only deduct such loss up to an amount that does not exceed the gains, if any, obtained by the same taxpayer that obtained the loss, in other derivative financial transactions whose underlying is not listed in a recognized market, obtained in the same fiscal year or in the following five fiscal years. The part of the loss that is not deducted in a fiscal year will be restated for the period from the last month of the fiscal year in which it occurred until the last month of the fiscal year immediately preceding the fiscal year in which it will be deducted. The portion of the restated loss not deducted in the year in question will be restated for the period from the month in which it was last restated through the last month of the year immediately preceding the year in which it will be deducted. When the taxpayer does not deduct in a fiscal year the loss referred to in this article, when it could have done so in accordance with the provisions of this article, it will lose the right to do so in subsequent fiscal years, up to the amount by which it could have done so.

Individuals who obtain losses in derivative financial transactions whose underlying is not listed in a recognized market will be subject to the provisions of the last paragraph of Article 146 of this Law.

To determine the gain on disposal of shares, taxpayers shall deduct from the income obtained per share, the average cost per share of the shares they dispose of, in accordance with the following:

I. The average cost per share will include all the shares that the taxpayer has of the same legal entity on the date of the disposal, even if not all of them are disposed of. Such cost will be obtained by dividing the original adjusted amount of the shares by the total number of shares held by the taxpayer at the date of the disposal.

II. The adjusted original amount of the shares will be obtained according to the following:

a) The difference resulting from subtracting the balance of the net tax profit account held by the issuing entity as of the date of the disposal of the shares from the balance of the net tax profit account held by the issuing entity as of the date of acquisition, in the terms of Article 77 of this Law, when the first of the balances is greater, in the portion corresponding to the shares held by the taxpayer acquired on the same date, shall be added to the restated acquisition cost of the shares held by the taxpayer of the same legal entity.

In order to determine the difference referred to in the preceding paragraph, the balances of the net tax profit account that the entity issuing the shares being disposed of would have had at the dates of acquisition and disposal of the shares must be restated for the period from the month in which the last restatement was made prior to the date of acquisition or disposal, as the case may be, through the month in which the shares are disposed of.

b) The tax losses pending to be reduced, the reimbursements paid, as well as the difference referred to in the fifth paragraph of Article 77 of this Law, of the legal entity issuing the shares being disposed of, restated, will be subtracted from the result obtained in accordance with paragraph a) above.

The tax loss carryforwards referred to in the preceding paragraph will be those that the legal entity in question has as of the date of disposal, which correspond to the number of shares held by the taxpayer as of the aforementioned date. Such losses will be restated for the period from the month in which the last restatement was made until the month in which the disposal in question takes place.

The tax loss carryforwards referred to in the preceding paragraph will not be reduced by the amount of such tax loss carryforwards applied by the entity for purposes of the provisional payments corresponding to the months of the year in question.

The reimbursements paid by the legal entity in question will be those corresponding to the number of shares held by the taxpayer as of the month in which the disposal takes place.

The difference referred to in the fifth paragraph of Article 77 of this Law, will be the difference pending to be reduced that the issuing company has at the date of the disposal and that corresponds to the number of shares held by the taxpayer at the month in which the disposal takes place.

The tax loss carryforwards, refunds and the difference referred to in this paragraph, of the entity in question, will be allocated to the taxpayer in the proportion represented by the number of shares held at the date of disposal of the shares of such entity, corresponding to the year in which the loss was obtained, the refund is paid, or the difference is determined, as applicable, with respect to the total outstanding shares held by such entity in the year in question.

Tax loss carryforwards, reimbursements paid and the difference referred to in this paragraph, obtained, paid or determined, respectively, will only be considered for the period from the month of acquisition of the shares until the date of their disposal.

III. To the result obtained in accordance with the preceding section, the amount of the tax losses that the entity issuing the shares has obtained in fiscal years prior to the date on which the taxpayer acquired the shares in question and that such entity has reduced its taxable income during the period from the month in which the taxpayer acquired such shares until the month in which the shares are disposed of, shall be added.

The losses referred to in the preceding paragraph will be allocated to the taxpayer in the proportion represented by the number of shares held by such legal entity at the date of the disposal, corresponding to the fiscal year in which the aforementioned legal entity reduced such losses, with respect to the total outstanding shares held by the aforementioned legal entity in the fiscal year in question.

When the balance of the net tax profit account at the date of acquisition, plus the amount of the reimbursements paid, the difference pending reduction referred to in the fifth paragraph of Article 77 of this Law and the tax losses pending reduction, referred to in paragraph b) section II of this Article, is greater than the sum of the balance of the net tax profit account at the date of the disposal plus the losses reduced referred to in the first paragraph of this section, the difference will be reduced from the deemed acquisition cost. When such difference is greater than the proven acquisition cost, the shares in question will not have an average cost per share for the purposes of this article; the excess determined in accordance with this paragraph, considered per share, must be reduced, restated from the month of the disposal and up to the month in which it is reduced, from the average cost per share determined in the terms of this article in the disposal of the immediately following or subsequent shares made by the taxpayer, even in the case of different issuers.

IV. The restatement of the restated acquisition cost of the shares will be made for the period from the month of their acquisition until the month in which the shares are disposed of. The losses and the difference pending reduction referred to in the fifth paragraph of Article 77 of this Law, will be restated from the month in which they were last restated until the month in which the shares are disposed of. Reimbursements paid will be restated for the period from the month in which they were paid until the month in which the shares are disposed of.

In order to determine the gain on the disposal of shares whose holding period is twelve months or less, taxpayers may choose to consider as the original adjusted amount of the shares, the proven acquisition cost of the shares reduced by the reimbursements and dividends or profits paid by the legal entity issuing the shares, corresponding to the holding period of the shares in question, restated in the terms of section IV of this article. In the case of dividends or profits paid, they will be restated for the period from the month in which they were paid until the month in which the shares in question are disposed of.

In the case of shares issued by legal entities resident abroad, in order to determine the average cost per share referred to in this article, the original adjusted amount of the shares will be considered as the original adjusted amount of the shares, the proven acquisition cost of the shares less the reimbursements paid, all these concepts restated in the terms of section IV of this article.

When the number of outstanding shares of the issuing entity in question has changed, and the same amount of its capital stock has been maintained, taxpayers must apply the provisions of this article when the shares in question are disposed of, provided that the cost of the total shares received is equal to the cost of the share package being replaced.

In those cases in which the number of shares of the issuing entity has varied during the period between the dates of acquisition and disposal of the shares owned by the taxpayers, the taxpayers will determine the difference between the balances of the net tax profit account of the issuing entity, the losses, the reimbursements and the difference pending reduction referred to in the fifth paragraph of Article 77 of this Law, for each of the periods between the dates of acquisition and disposal of the shares, in which the same number of shares has been maintained. In the case of the difference between the balances of the net tax profit account, the balance at the end of the period will be subtracted from the balance at the beginning of the period, both restated to the date of disposition of the shares.

The difference of the balances of the net tax profit account referred to in the preceding paragraph, as well as the tax losses, the reimbursements paid and the difference referred to in the fifth paragraph of Article 77 of this Law pending to be reduced, for each period, will be divided by the number of shares of the legal entity existing in the same period and the quotient thus obtained will be multiplied by the number of shares owned by the taxpayer in such period. The results thus obtained will be added or subtracted, as the case may be.

The issuing companies must provide to the shareholders, upon request, a statement with the information necessary to determine the adjustments referred to in this article, such statement must contain the data recorded in the tax receipt issued for such purpose. In the case of shares registered in the National Securities Registry, the company issuing the shares, independently of the obligation to give the certificate to the shareholders, must provide this information to the National Banking and Securities Commission in the form and terms indicated by the tax authorities. The accounting and documentation corresponding to such information must be kept during the term provided by Article 30 of the Federal Tax Code, counted from the date on which such certificate is issued.

When a legal entity acquires shares of another issuer from an individual or a resident abroad, the shareholder of the acquiring legal entity will not consider within the proven acquisition cost the amount of dividends or profits that have been generated prior to the acquisition date and that, directly or indirectly, have already been considered as part of the proven acquisition cost of the shares acquired from the individual or the resident abroad. For the purposes of the information to be provided to its shareholders under the terms of this article, the acquiring entity will deduct such restated earnings or dividends from the balance of the net taxable income account it has as of the date of the disposal of the shares of such entity. The restatement of the profits or dividends will be made from the month in which they were added to the net tax profit account and up to the month in which the disposition in question takes place.

When reference is made in this article to reimbursements paid, it will be understood to include the amortizations and capital reductions referred to in article 78 of this ordinance. In these cases, taxpayers will only consider the amortizations, reimbursements or capital reductions that correspond to the shares that have not been cancelled as a result of such transactions.

The provisions of this article will also be applicable when the participation rights are disposed of, regardless of the name by which they are designated, in a joint venture, when business activities are carried out through such joint venture. In this case, the restated value of the contribution made by the transferor to such joint venture or the amount paid by the transferor for its participation will be considered as the proven acquisition cost. For these purposes, the difference of the balances of the net tax profit account referred to in paragraph a) of Section II of this Article, the tax losses pending to be reduced, the reimbursements paid and the difference referred to in the fifth paragraph of Article 77 of this Law, all these concepts contained in paragraph b) of the mentioned section, will be considered in the proportion in which the distribution of the profits had been agreed in the corresponding agreement.

The shares owned by the taxpayer for which the average cost has already been calculated will have as proven acquisition cost in subsequent disposals, the average cost per share determined in accordance with the calculation made in the immediately preceding disposal of shares of the same legal entity. In this case, the date of acquisition of the shares will be considered, for purposes of considering the items to be added and subtracted under the terms of Sections II and III of Article 22 of this Law, as well as for the updating of such items, the month in which the immediately preceding disposal of shares of the same legal entity took place. In order to determine the difference between the balances of the net tax profit account referred to in paragraph a) of section II of the aforementioned article, the balance of the net tax profit account that would have corresponded to the date of the immediately preceding disposal of the shares of the same legal entity will be considered as the balance of the aforementioned account at the date of acquisition.

For the purposes of Article 22 of this Law, the deemed acquisition cost of the shares issued by the spun-off companies is considered to be that which is derived from calculating the average cost per share that the exchanged shares of the spun-off company had for each shareholder on the date of such act, under the terms of the preceding article, and the date of acquisition is considered to be the date of the exchange.

The proven acquisition cost of the shares issued by the merging company or by the company that arises as a consequence of the merger, will be that which is derived from calculating the average cost per share that the shares exchanged by each shareholder would have had, under the terms of the preceding article, and the acquisition date will be the date of the exchange.

In the case of a merger or spin-off of companies, the shares acquired by the merging or spun-off companies, as part of the assets transferred, will have as proven acquisition cost the average cost per share that they had in the merging or spun-off companies at the time of the merger or spin-off.

Shares obtained by the taxpayer from the capitalization of profits or other items of stockholders' equity or from reinvestments of dividends or profits made within 30 calendar days following their distribution will not be considered to have a proven acquisition cost.

The provisions of the preceding paragraph shall not apply to shares acquired by the taxpayer before January 1, 1989, and whose original share was disposed of prior to the aforementioned date, in which case the par value of the share in question may be considered as the proven acquisition cost.

Article 24. The tax authorities will authorize the disposal of shares at tax cost in cases of restructuring of Mexican resident companies belonging to the same group, provided that the following requirements are met:

Amended paragraph DOF 12-11-2021

I. The average cost of the shares in respect of which the request is made is determined, as of the date of the disposal, in accordance with the provisions of Articles 22 and 23 of this Law, distinguishing between the transferor, issuer and acquirer of the shares.

II. The shares received by the applicant for the shares it disposes of remain in the direct ownership of the acquirer and within the same group, for a period of not less than two years, counted from the date of the authorization referred to in this article.

III. The shares received by the applicant for the shares it disposes of, represent in the subscribed and paid-in capital of the company issuing the shares it receives, the same percentage that the shares it disposes of would represent before the disposal, over the total consolidated stockholders' equity of the companies issuing the shares it disposes of and those it receives, taking as a basis the consolidated financial statements of the companies involved in the transaction, which for these purposes must be prepared in the terms established in the Regulations of this Law, specifying in each case the basis on which the value of the shares was determined in relation to the total value of the shares.

IV. The company issuing the shares that the applicant receives for the alienation, will prepare the minutes of the meeting on the occasion of the subscription and payment of capital for the shares received, notarized before a notary public, recording in such minutes the information related to the transaction established for such purpose in the Regulations of this Law. The issuing company must send a copy of such minutes to the tax authorities within a term not to exceed 30 days from the notarization.

V. The consideration deriving from the disposal consists of the exchange of shares issued by the company acquiring the shares being transferred.

VI. The increase in capital stock recorded by the company acquiring the shares being disposed of, whether it is for the amount that represents the tax cost of the shares being transferred.

VII. A report is submitted by a public accountant registered with the tax authorities, stating: the proven acquisition cost of the shares adjusted in accordance with Articles 22 and 23 of this Law, as of the date of acquisition; the book value of the shares subject to authorization; the organization chart of the group showing the percentage of participation in the capital stock of the partners or shareholders, as well as the direct and indirect shareholding of the companies comprising such group before and after the restructuring; the business segments and line of business of the issuing company and the acquiring company, and certifying that said companies consolidate their financial statements in accordance with the provisions that regulate them in accounting and financial matters, or that they are obliged to apply.

Reformed fraction DOF 12-11-2021

VIII. The adjusted original amount of the total shares disposed of, determined in accordance with Section VII of this Article at the time of such disposal, is distributed proportionally to the shares received in accordance with the terms of Section III of the same Article.

IX. The companies that participate in the restructuring are audited under the terms of Article 32-A of the Federal Tax Code or file the informative return on their tax situation under the terms of Article 32-H of said Code, when required to do so, in the fiscal year in which such restructuring is carried out.

X. It is demonstrated that the participation in the capital stock of the companies issuing the shares being sold is maintained at the same percentage by the company that controls the group or by the company that, if applicable, is incorporated for such purpose.

XI. State all relevant transactions related to the restructuring subject to authorization, within the five years immediately preceding the filing of the request for authorization referred to in this article.

Fraction added DOF 12-11-2021

When within five years after the restructuring is carried out a relevant transaction is executed, the company acquiring the shares must submit the information referred to in Article 31-A, first paragraph, paragraph d) of the Federal Tax Code, in the terms established in such provision.

Paragraph added DOF 12-11-2021

In the event that the tax authority, in the exercise of its verification powers, detects that the restructuring lacks a business reason, or that it does not comply with any of the requirements referred to in this article, the authorization will be without effect and the tax corresponding to the sale of shares must be paid, considering the value at which such shares would have been sold between independent parties in comparable transactions, or considering the value determined by an appraisal performed by a person authorized by the tax authorities. The tax thus determined will be paid by the transferor, restated from the date on which the transfer was made until the date on which it is paid.

Amended paragraph DOF 12-11-2021

For the purposes of this article, relevant operations shall be understood as any act, regardless of the legal form used, whereby:

1. The ownership, enjoyment or use of the shares or of the voting or veto rights in the decisions of the issuing company, of the acquiring company or of the transferring company, or of the favorable vote necessary to make decisions in such companies is transferred.

The right is granted over the assets or profits of the issuing company, of the acquiring company or of the transferring company, in the event of any type of capital reduction or liquidation, at any moment.

3. The book value of the shares of the issuing company decreases or increases by more than 30% in relation to the book value determined on the date of the request for authorization referred to in this article, which was included in the opinion established in this provision.

The issuing company, the acquiring company and the transferring company cease to consolidate their financial statements in accordance with the provisions that regulate them in accounting and financial matters, or that they are obliged to apply.

The capital stock of the issuing company, the acquiring company or the transferring company is decreased or increased, based on the capital stock stated in the report.

A partner or shareholder increases or decreases its percentage of direct or indirect participation in the capital stock of the issuing company, the acquiring company or the transferring company, which intervened in the restructuring and, as a consequence, increases or decreases the percentage of participation of another partner or shareholder of the issuing company, taking as a basis the percentages of participation in the capital stock of such partners or shareholders stated in the opinion.

7. The tax residence of the issuing company, the acquiring company or the transferring company is changed.

One or more segments of the business of the issuing company are transferred, or of the acquiring or transferring company related to one or more segments of the business of the issuer, as set forth in the opinion.

Paragraph with numerals added DOF 12-11-2021

For the purposes of this article, a group is considered to be a group of companies whose voting shares representing the capital stock are owned directly or indirectly at least 51% by the same persons. For these purposes, shares that are considered to have been placed among the general investor public in accordance with the rules issued for such purpose by the Tax Administration Service will not be computed, provided that such shares have been effectively offered and placed among the general investor public. Shares that have been repurchased by the issuer are not considered to have been placed among the general investor public.

CHAPTER II

OF DEDUCTIONS

SECTION I

DEDUCTIONS IN GENERAL

Article 25. Taxpayers may make the following deductions:

I. Refunds received or discounts or allowances made during the fiscal year.

II. Cost of goods sold.

III. Expenses net of discounts, rebates or refunds.

IV. Investments.

V. Bad debts and losses due to acts of God, force majeure or disposal of assets other than those referred to in section II of this article.

VI. Employer's contributions paid to the Mexican Social Security Institute, including those provided for in the Unemployment Insurance Law.

VII. The accrued interest payable during the year, without any adjustment. In the case of delinquent interest, as of the fourth month, only the interest actually paid will be deducted. For these purposes, payments for delinquent interest made after the third month following the month in which the delinquency occurred are considered to cover, in the first instance, the delinquent interest accrued in the three months following the month in which the delinquency occurred, until the amount paid exceeds the amount of accrued delinquent interest deducted corresponding to the last mentioned period.

VIII. The annual adjustment for inflation that is deductible under the terms of Article 44 of this Law.

IX. Advances and yields paid by production cooperative societies, as well as advances given by civil societies and associations to their members, when they distribute them under the terms of Section II of Article 94 of this Law.

X. Contributions made for the creation or increase of reserves for personnel pension or retirement funds, complementary to those established by the Social Security Law, and seniority premiums established under the terms of this Law. The amount of the deduction referred to in this section shall in no case exceed the amount resulting from applying the factor of 0.47 to the amount of the contribution made in the year in question. The factor referred to in this paragraph will be 0.53 when the benefits granted by the taxpayers in favor of their employees, which in turn are exempt income for such employees, in the fiscal year in question, do not decrease with respect to those granted in the immediately preceding fiscal year.

When for the expenses referred to in section III of this article, taxpayers have paid an advance payment, this will be deductible provided that the requirements established in article 27, section XVIII of this Law are complied with.

In the case of legal entities residing abroad, as well as any entity that is considered a legal entity for tax purposes in its country, that have one or more permanent establishments in the country, they may make the deductions that correspond to the activities of the permanent establishment, whether they are incurred in Mexico or elsewhere, provided that the requirements established in this Law and its Regulations are met.

When the persons referred to in the preceding paragraph reside in a country with which Mexico has a treaty in force to avoid double taxation, expenses incurred with the head office or its establishments may be deducted, provided that both the head office and the establishment in which the expenditure is made also reside in a country with which Mexico has a treaty in force to avoid double taxation and has a comprehensive information exchange agreement and also complies with the requirements established in the Regulations of this Law.

Remittances made by the permanent establishment located in Mexico to the head office of the company or to another establishment of the company abroad will not be deductible, even when such remittances are made as royalties, fees, or similar payments, in exchange for the right to use patents or other rights, or as commissions for specific services or for services rendered or for interest on money sent to the permanent establishment.

The permanent establishments of companies resident abroad engaged in international air or land transportation, instead of the deductions established in Article 25 of this Law, will make the deduction of the proportional part of the average expense for its operations that such company has had in the same fiscal year, considering the head office and all its establishments. When the fiscal year of such foreign resident companies does not coincide with the calendar year, they will make the aforementioned deduction considering the last completed fiscal year of the company.

For the purposes of the preceding paragraph, the average expense will be determined by dividing the income obtained in the fiscal year by the company in all its establishments before payment of income tax, by the total income received in the same fiscal year; the quotient thus obtained will be subtracted from the unit and the result will be the expense factor applicable to the income attributable to the establishment in Mexico. When in the fiscal year the total income of the company is less than the total expenses of all of its establishments, the expense factor applicable to the income will be equal to 1.00.

Article 27. The deductions authorized in this Title must meet the following requirements:

I. Be strictly indispensable for the purposes of the taxpayer's activity, except in the case of donations that are not onerous or remunerative, that meet the requirements set forth in this Law and in the general rules established by the Tax Administration Service for such purpose, and that are granted in the following cases:

a) To the Federation, federal entities or municipalities, their decentralized agencies that pay taxes in accordance with Title III of this Law, as well as to international organizations of which Mexico is a full member, provided that the purposes for which such organizations were created correspond to the activities for which authorization may be obtained to receive tax-deductible donations.

b) To the entities referred to in Article 82 of this Law.

c) To the legal entities referred to in articles 79, section XIX and 82 of this Law.

d) To the legal entities referred to in sections VI, X, XI, XX, and XXV of Article 79 of this Law and that comply with the requirements established in Article 82 of the same Law.

e) Associations and civil societies that grant scholarships and comply with the requirements of Article 83 of this Law.

f) Repealed.

Subsection repealed DOF 08-12-2020

The Tax Administration Service will publish in the Official Gazette of the Federation and will disclose in its electronic page on the Internet the information of the institutions referred to in paragraphs b), c), d) and e) of this section that meet the above mentioned requirements.

In the case of donations granted to educational institutions authorized to receive donations under Title III of this Law, such donations will be deductible as long as they are public or privately owned institutions that have authorization or recognition of official validity of studies under the terms of the General Education Law, are destined to the acquisition of investment goods, scientific research or the development of technology, as well as administrative expenses up to the amount, in the latter case, specified in the Regulations of this Law, to scientific research or the development of technology, as well as to administrative expenses up to the amount, in the latter case, indicated in the Regulations of this Law, they are donations that are not onerous or remunerative and provided that such institutions have not distributed remainders to their partners or members in the last five years.

The total amount of the donations referred to in this section will be deductible up to an amount that does not exceed 7% of the taxable income obtained by the taxpayer in the fiscal year immediately prior to the one in which the deduction is made. When donations are made in favor of the Federation, federal entities, municipalities, or their decentralized agencies, the deductible amount may not exceed 4% of the tax profit referred to in this paragraph, without in any case the limit of the total deduction, considering these donations and those made to different authorized donatarias, exceeding the 7% mentioned above.

II. That when this Law allows the deduction of investments, the procedure shall be in accordance with the terms of Section II of this Chapter.

III. To be covered with a tax receipt and that the payments whose amount exceeds $2,000.00 are made through electronic transfer of funds from accounts opened in the name of the taxpayer in institutions that make up the financial system and the entities authorized for such purpose by Banco de México; nominative check from the taxpayer's account, credit card, debit card, service card, or the so-called electronic purses authorized by the Tax Administration Service.

In the case of the acquisition of fuel for maritime, air and land vehicles, the payment must be made in the manner indicated in the preceding paragraph, even when the consideration for such acquisitions does not exceed $2,000.00 and the tax receipt must contain the information of the current permit issued under the terms of the Hydrocarbons Law to the supplier of the fuel and that, if applicable, such permit is not suspended at the time of issuance of the tax receipt.

Amended paragraph DOF 12-11-2021

The tax authorities may waive the obligation to pay expenditures through the means established in the first paragraph of this section, when such expenditures are made in towns or rural areas without financial services.

Payments made by nominative check must contain the Federal Taxpayers Registry Code of the person issuing the check, as well as on the front of the check the expression "for payment on account of the beneficiary".

IV. Be duly recorded in the accounting records and be subtracted only once.

V. Comply with the obligations established in this Law and other tax provisions regarding the withholding and payment of taxes payable by third parties or that, if applicable, a copy of the documents evidencing the payment of such taxes is obtained from such third parties. In the case of payments abroad, these can only be deducted provided that the taxpayer provides the information to which it is obligated under the terms of Article 76 of this Law.

Amended paragraph DOF 09-12-2019

Payments that are also income under the terms of Chapter I of Title IV of this Law may be deducted provided that the payments for remuneration, the corresponding withholdings and the deductions of the local tax for salaries and, in general, for the rendering of an independent personal service, are recorded in tax receipts issued under the terms of the Federal Tax Code, and the obligations referred to in Article 99, Sections I, II, III and V of this Law are complied with, are recorded in tax receipts issued in terms of the Federal Tax Code and the obligations referred to in Article 99, Sections I, II, III and V of this Law are complied with, as well as the provisions that, if applicable, regulate the subsidy for employment and the taxpayers comply with the obligation to register the workers with the Mexican Social Security Institute when they are obligated to do so, in terms of the social security laws.

In the case of the rendering of specialized services or the execution of specialized works referred to in Article 15-D, third paragraph of the Federal Fiscal Code, the contractor must verify when the payment of the consideration for the service received is made, that the contractor has the registration referred to in Article 15 of the Federal Labor Law, as well, must obtain from the contractor a copy of the tax receipts for the payment of the salaries of the workers with whom the contractor has provided the service or performed the corresponding work, the payment receipt issued by the banking institution for the declaration of the withholding of taxes made to such workers, the payment of the employer's contributions to the Mexican Social Security Institute, as well as the payment of the contributions to the National Workers' Housing Fund Institute (Instituto del Fondo Nacional de la Vivienda para los Trabajadores). The contractor shall be obligated to deliver to the contractor the receipts and information referred to in this paragraph.

Paragraph added DOF 23-04-2021

Reform DOF 09-12-2019: Repealed the then third paragraph (previously added DOF 30-11-2016).

VI. That when the payments whose deduction is intended to be made are made to taxpayers who pay value added tax, said tax is expressly and separately transferred in the corresponding tax receipt. Likewise, they must comply with the obligation of withholding and reporting the value added tax that, as the case may be, is established in the corresponding Law.

Amended paragraph DOF 09-12-2019

In those cases in which the tax provisions establish the obligation to affix labels or seals on the containers and receptacles containing the products being acquired, the deduction referred to in Section II of Article 25 of this Law may only be made when such products have the corresponding label or seal affixed.

VII. That in the case of interest on capital borrowed, these have been invested for the purposes of the business. When the taxpayer grants loans to third parties, to its employees or officers, or to its partners or stockholders, only the interest accrued on capital taken in loans up to the amount of the lowest interest rate stipulated in the loans to third parties, to its employees or to its partners or stockholders, in the portion of the loan made to them, and issues and delivers a tax receipt to those who have granted the loan, will be deductible; If no interest is stipulated in any of these transactions, the deduction will not be applicable with respect to the proportional amount of the loans made to the aforementioned persons. These last limitations do not apply to credit institutions, regulated multiple purpose financial companies or auxiliary credit organizations, in the performance of the operations inherent to their purpose.

Amended paragraph DOF 18-11-2015

In the case of capital borrowed for the acquisition of investments or for the incurrence of expenses or when the investments or expenses are made on credit, and for the purposes of this Law such investments or expenses are not deductible or are partially deductible, the interest derived from the capital borrowed or from the credit operations will only be deductible in the same proportion in which the investments or expenses are deductible.

In the case of interest derived from the loans referred to in Section III of Article 143 of this Law, such interest will be deducted until it is paid in cash, goods or services.

VIII. That in the case of payments that in turn are income of individual taxpayers, of the taxpayers referred to in Articles 72, 73, 74 and 196 of this Law, as well as those made to the taxpayers referred to in the last paragraph of Section I of Article 17 of this Law and of donations, these shall only be deducted when they have been effectively disbursed in the year in question, these are only deducted when they have been effectively disbursed in the fiscal year in question, they will be understood as effectively disbursed when they have been paid in cash, through electronic fund transfers from accounts opened in the name of the taxpayer in institutions that make up the financial system and the entities authorized for such purpose by Banco de México; or in other goods that are not debt securities. In the case of payments by check, it will be considered effectively disbursed on the date on which the check is cashed or when the taxpayers transfer the checks to a third party, except when such transfer is by proxy. It is also understood to be effectively disbursed when the creditor's interest is satisfied through any form of extinction of the obligations.

Amended paragraph DOF 18-11-2015, 30-11-2016

When the payments referred to in the preceding paragraph are made by check, the deduction will be made in the year in which the check is cashed, provided that no more than four months have elapsed between the date shown on the tax voucher issued and the date on which the check is actually cashed, except when both dates correspond to the same year.

IX. That in the case of fees or bonuses to administrators, statutory auditors, directors, general managers or members of the board of directors, supervisory, advisory or any other type of board, these are determined, in terms of total amount and monthly payment or by attendance, affecting in the same way the taxpayer's results and satisfying the following assumptions:

a) That the annual amount established for each person does not exceed the annual salary earned by the most senior officer of the company.

b) That the total amount of the established fees or bonuses does not exceed the amount of the annual wages and salaries earned by the taxpayer's personnel.

c) Not exceeding 10% of the total amount of other deductions for the year.

X. That in the cases of technical assistance, technology transfer or royalties, it is proven before the tax authorities that the person providing the knowledge has its own technical elements to do so; that it is provided directly and not through third parties, except in the cases referred to in Article 15-D, third paragraph of the Federal Tax Code, and that it does not consist of the simple possibility of obtaining it, but in services that are actually carried out.

Reformed fraction DOF 12-11-2021

XI. That in the case of social welfare expenses, the corresponding benefits are granted in a general manner for the benefit of all employees. In the case of food vouchers granted to employees, they will be deductible provided that they are delivered through the electronic purses authorized for such purpose by the Tax Administration Service.

For the purposes of the preceding paragraph, in the case of unionized workers, social welfare benefits are considered to be granted in a general manner when they are established in accordance with collective bargaining agreements or legal contracts.

When a legal entity has two or more unions, social welfare benefits are considered to be granted on a general basis as long as they are granted in accordance with the collective bargaining agreements or legal contracts and are the same for all employees of the same union, even if they are different in relation to those granted to employees of other unions of the same legal entity, in accordance with their collective bargaining agreements or legal contracts.

In the case of contributions to savings funds, these will only be deductible when, in addition to being general in the terms of the preceding paragraphs, the amount of the contributions made by the taxpayer is equal to the amount contributed by the workers, the taxpayer's contribution does not exceed thirteen percent of the worker's salary, without in any case said contribution exceeding the equivalent amount of 1.3 times the general minimum wage raised per year and provided that the permanence requirements established in the Regulations of this Law are met.

Amended paragraph DOF 18-11-2015

Payments of life insurance premiums granted for the benefit of employees will be deductible only when the benefits of such insurance cover the death of the policyholder or in cases of disability or incapacity of the policyholder to perform paid personal work in accordance with the social security laws, which are delivered as a single payment or in the installments agreed upon by the parties. Payments of medical expense insurance premiums made by the taxpayer for the benefit of the employees will be deductible.

In the case of the social welfare benefits referred to in the preceding paragraph, these are considered to be general when they are the same for all workers of the same union or for all non-unionized workers, even when such benefits are only granted to unionized workers or to non-unionized workers.

Amended paragraph DOF 18-11-2015

Reform DOF 18-11-2015: Repealed the then fourth and eighth paragraphs of the section.

XII. That the payments of premiums for insurance or bonds are made in accordance with the laws of the matter and correspond to items that this Law indicates as deductible or that other laws establish the obligation to contract them and provided that, in the case of insurance, during the term of the policy no loans are granted to any person by the insurer as a guarantee of the sums insured, of the premiums paid or of the mathematical reserves.

In those cases in which the purpose of the insurance is to grant benefits to the workers, the provisions of the preceding section must be observed. If the purpose of the insurance is to compensate the taxpayer for the decrease in productivity that could be caused by the death, accident or illness of technicians or managers, the deduction of the premiums will proceed provided that the insurance is established in a plan in which the procedure to fix the amount of the benefit is determined and the terms and requirements established in general provisions are complied with.

XIII. That the declared acquisition cost or the interest derived from credits received by the taxpayer, correspond to the market price. When they exceed the market price, the excess will not be deductible.

XIV. That in the case of acquisition of imported goods, it is proven that the legal requirements for their importation have been complied with. The amount of such acquisition shall be considered to be that which has been declared on the occasion of the importation.

XV. That in the case of losses from uncollectible credits, these shall be considered realized in the month in which the corresponding statute of limitations period expires, or earlier if the practical impossibility of collection is notorious.

For the purposes of this article, it is considered that there is a notorious practical impossibility of collection, among others, in the following cases:

a) In the case of credits whose principal amount at the date of maturity does not exceed thirty thousand investment units, when within a period of one year from the date of delinquency, collection has not been achieved. In this case, they shall be considered uncollectible in the month in which one year has elapsed since the delinquency.

When there are two or more loans with the same individual or legal entity as mentioned in the preceding paragraph, the total amount of the loans granted must be added together to determine if they do not exceed the amount referred to in the preceding paragraph.

The provisions of this subsection will be applicable in the case of loans contracted with the general public, whose principal amount at the maturity date is between five thousand pesos and thirty thousand investment units, provided that the taxpayer, in accordance with the general rules issued by the Tax Administration Service, reports such loans to the credit information companies that obtain authorization from the Ministry of Finance and Public Credit in accordance with the Law to Regulate Credit Information Companies.

Amended paragraph DOF 12-11-2021

The provisions of this paragraph will be applicable when the debtor of the loan in question is a taxpayer that carries out business activities and the creditor informs the debtor in writing that it will deduct the bad debt, in order for the debtor to accrue the income derived from the debt not covered under the terms of this Law. Taxpayers that apply the provisions of this paragraph, must inform no later than February 15 of each year of the bad debts that they deducted under the terms of this paragraph in the immediately preceding calendar year.

Amended paragraph DOF 12-11-2021

b) In the case of credits whose principal amount at maturity is greater than thirty thousand investment units, when the creditor obtains a final resolution issued by the competent authority, with which it demonstrates that collection efforts have been exhausted or, if applicable, that it was impossible to enforce the favorable resolution and, in addition, it complies with the provisions of the final paragraph of the preceding paragraph.

Subsection amended DOF 12-11-2021

c) It is proven that the debtor has been declared bankrupt or insolvent. In the first case, there must be a judgment declaring that the bankruptcy has been terminated due to bankruptcy payment or lack of assets.

In the case of Credit Institutions, it is considered that there is a notorious practical impossibility of collection in the loan portfolio when such portfolio is written off in accordance with the provisions established by the National Banking and Securities Commission.

The provisions of the preceding paragraph shall be applicable whenever, in the exercise of verification powers, they provide the tax authorities with the same information provided in the primary database controlled by the credit information companies referred to in the Law to Regulate Credit Information Companies.

Paragraph added DOF 12-11-2021

For the purposes of Article 44 of this Law, taxpayers that deduct bad debts must consider them written off in the last month of the first half of the year in which they are deducted.

In the case of accounts receivable that have a mortgage guarantee, only fifty percent of the amount will be deductible when the cases referred to in paragraph b) above occur. When the debtor pays the debt or the amount of the auction is applied to cover the debt, the deduction will be made from the balance of the account receivable or, as the case may be, the accumulation of the amount recovered.

XVI. That in the case of remuneration to employees or third parties, which are conditioned to the collection of payments in installment sales or leasing contracts in which they have been involved, these are deducted in the year in which such payments or income are collected, provided that the other requirements of this Law are met.

XVII. That in the case of payments made to commission agents and brokers residing abroad, the information and documentation requirements set forth in the Regulations of this Law are complied with.

XVIII. That when carrying out the corresponding transactions or no later than the last day of the fiscal year, the requirements established by this Law for each deduction in particular are met. In the case of the tax receipt referred to in the first paragraph of Section III of this Article, it must be obtained no later than the day on which the taxpayer must file its return. Regarding the supporting documentation for the withholdings and payments referred to in Sections V and VI of this Article, respectively, the same are made within the terms established for such purpose by the tax provisions, and the supporting documentation is obtained on such date. In the case of the informative declarations referred to in Articles 76 of this Law, and 32, Sections V and VIII of the Value Added Tax Law, these must be filed within the terms established for such purpose in Article 76, and the corresponding tax receipts must be obtained as of such date. In addition, the date of issuance of the tax receipts of a deductible expense must correspond to the fiscal year for which the deduction is made.

In the case of advances for the expenses referred to in Section III of Article 25 of this Law, these will be deductible in the year in which they are made, provided that there is tax proof of the advance in the same year in which it was paid and with the tax receipt that covers the entire transaction for which the advance was made, no later than the last day of the year following the year in which the advance was made. The deduction of the advance payment in the fiscal year in which it is paid will be for the amount thereof and, in the fiscal year in which the good or service is received, the deduction will be for the difference between the total value stated in the tax voucher and the amount of the advance payment. In any case, in order to make this deduction, the other requirements established by the tax provisions must be complied with.

When taxpayers file the informative returns referred to in Article 76 of this Law at the request of the tax authority, the requirement referred to in the first paragraph of this section will not be considered not complied with, provided that such returns are filed within a maximum period of 60 days from the date on which the tax authority is notified.

XIX. That in the case of payments made for salaries and in general for the rendering of a subordinated personal service to workers who are entitled to the employment subsidy, the amounts corresponding to such subsidy are effectively delivered to their workers and the requirements referred to in the provisions that regulate it are complied with, except when not obliged to do so under the terms of the aforementioned provisions.

XX. That the amount of merchandise, raw materials, semi-finished or finished products in stock, which due to deterioration or other causes not attributable to the taxpayer have lost their value, be deducted from the inventories during the fiscal year in which this occurs; provided that the requirements established in the Regulations of this Law are complied with.

Taxpayers may deduct the merchandise, raw materials, semi-finished or finished products referred to in the preceding paragraph, provided that they are basic goods for human subsistence in terms of food, clothing, housing or health, before proceeding to their destruction, they are offered in donation to the institutions authorized to receive deductible donations according to this Law, dedicated to the attention of basic subsistence requirements in matters of food, clothing, housing or health of persons, sectors, communities or regions, of scarce resources, complying with the requirements that for such effects the Regulation of this Law establishes.

Goods may not be offered in donation if, in terms of another legal system related to the handling, care or treatment of such goods, it expressly prohibits their sale, supply, use or establishes another destination for such goods.

XXI. That in the case of expenses that in accordance with the General Law of Cooperative Societies are generated as part of the social welfare fund referred to in Article 58 of said law and are granted to cooperative members, the same shall be deductible when the resources of the corresponding fund are available, provided that the following requirements are met:

a) That the social welfare fund from which they derive shall be constituted with the annual contribution of the percentage of net income determined by the General Assembly.

b) That the social welfare fund is destined in terms of Article 57 of the General Law of Cooperative Societies to the following reserves:

To cover occupational risks and diseases.

2. To form funds and retirement assets of members.

To form funds for seniority premiums.

To form funds for various purposes to cover: medical and funeral expenses, disability benefits, educational scholarships for members or their children, day care centers, cultural and sports activities and other social welfare benefits of a similar nature.

In order to apply the deduction referred to in this paragraph, the cooperative society must pay, except in the case of disability subsidies, directly to the service providers and in favor of the cooperative member in question, the corresponding social welfare benefits, and must have the tax receipts issued in the name of the cooperative society.

c) Prove that at the beginning of each fiscal year the General Assembly established the priorities for the application of the social welfare fund in accordance with the economic perspectives of the cooperative society.

XXII. That the value of the goods received by permanent establishments located in Mexico, from taxpayers residing abroad, from the head office or from another establishment of the taxpayer located abroad, may not exceed the customs value of the good in question.

For the purposes of this Title, the following shall not be deductible:

I. Payments for income tax payable by the taxpayer or third parties or contributions in the subsidized portion or that originally correspond to third parties, in accordance with the related provisions, except in the case of contributions paid to the Mexican Social Security Institute payable by employers, including those provided for in the Unemployment Insurance Law.

The amounts derived from the employment subsidy paid by the taxpayer, in its capacity as withholder, to the persons who render subordinate personal services, as well as the accessories of the contributions, with the exception of the surcharges actually paid, including through compensation, will not be deductible either.

II. Expenses and investments, in the proportion that the exempt income represents with respect to the total income of the taxpayer. Expenses incurred in connection with investments that are not deductible under this Chapter. In the case of automobiles and airplanes, they may be deducted in the proportion represented by the original amount of the deductible investment referred to in Article 36 of this Law, with respect to the acquisition value thereof.

III. Gifts, hospitality and other expenses of a similar nature with the exception of those that are directly related to the sale of products or the rendering of services and that are offered to customers in general.

IV. Representation expenses.

V. The per diem or travel expenses, in the country or abroad, when they are not destined to lodging, food, transportation, use or temporary enjoyment of automobiles and payment of mileage, of the person benefiting from the per diem or when they are applied within a 50 kilometer band that surrounds the taxpayer's establishment. The persons in favor of whom the disbursement is made must have an employment relationship with the taxpayer under the terms of Chapter I of Title IV of this Law or must be rendering professional services. The expenses referred to in this section must be covered with a tax receipt when they are made in Mexican territory or with the corresponding supporting documentation when they are made abroad.

In the case of travel expenses for food, these will only be deductible up to an amount not exceeding $750.00 per day for each beneficiary, when they are incurred in Mexican territory, or $1,500.00 when they are incurred abroad, and the taxpayer accompanies the tax receipt or the supporting documentation that covers the lodging or transportation. When the taxpayer attaches only the tax receipt related to the transportation to the documentation that covers the food expense, the deduction referred to in this paragraph will only proceed when the payment is made by credit card of the person making the trip.

Travel expenses for the temporary use or enjoyment of automobiles and related expenses will be deductible up to an amount not exceeding $850.00 per day, when they are incurred in Mexican territory or abroad, and the taxpayer attaches the tax receipt or supporting documentation that covers the lodging or transportation.

Travel expenses for lodging will only be deductible up to an amount not exceeding $3,850.00 per day, when they are incurred abroad, and the taxpayer attaches to the supporting documentation that covers them the documentation related to the transportation.

When the total or part of the per diem or travel expenses for seminars or conventions carried out in the country or abroad are part of the recovery fee established for such purpose and the tax receipt or supporting documentation that covers them does not itemize the amount corresponding to such expenses, only an amount that does not exceed the limit of travel expenses per day for food referred to in this section will be deductible from such fee. The difference resulting in accordance with this paragraph shall not be deductible.

VI. Penalties, indemnities for damages or conventional penalties. Indemnifications for damages and conventional penalties may be deducted when the law imposes the obligation to pay them due to created risks, objective liability, fortuitous event, force majeure or acts of third parties, unless the damages or the cause that gave rise to the conventional penalty have been originated by fault attributable to the taxpayer.

VII. The interest accrued on loans or acquisition of securities held by the Federal Government registered in the National Securities Registry, as well as in the case of debt securities or credits referred to in Article 8 of this Law, when the loan or acquisition was made from individuals or corporations with non-profit purposes.

Exempt from the provisions of the preceding paragraph are credit institutions and brokerage firms resident in Mexico that make interest payments from securities lending transactions or securities mentioned in the preceding paragraph that they have entered into with individuals, provided that such transactions comply with the requirements established by the Tax Administration Service by means of general rules.

VIII. Provisions for the creation or increase of supplementary asset or liability reserves to be charged against acquisitions or expenses for the year, with the exception of those related to employee bonuses for the year.

IX. The reserves created for employee severance payments, seniority payments or any other of a similar nature, with the exception of those created under the terms of this Law.

X. Premiums or surcharges over the nominal value that the taxpayer pays for the redemption of the shares issued.

XI. Losses due to acts of God, force majeure or disposal of assets, when the acquisition value of such assets does not correspond to the market value at the time such assets were acquired by the disposer.

XII. Commercial credit, even when acquired from third parties.

XIII. Payments for the temporary use or enjoyment of airplanes and vessels, which do not have a concession or permit from the Federal Government to be commercially exploited.

In the case of payments for the temporary use or enjoyment of dwelling houses, they will only be deductible in the cases in which they meet the requirements set forth in the Regulations of this Law. Recreational homes will not be deductible in any case.

In the case of automobiles, only payments made for the temporary use or enjoyment of automobiles up to an amount not exceeding $200.00 per day per automobile or $285.00 per day per automobile whose propulsion is through rechargeable electric batteries, as well as electric automobiles that also have an internal combustion engine or a hydrogen powered engine, will be deductible, provided that in addition to complying with the requirements for the deduction of automobiles established in Section II of Article 36 of this Law, they are strictly indispensable for the taxpayer's activity. The provisions of this paragraph will not be applicable in the case of leasing companies, as long as they use them exclusively for leasing during the entire period in which their temporary use or enjoyment is granted.

Amended paragraph DOF 30-11-2016

XIV. Losses derived from the disposal, as well as due to acts of God or force majeure, of assets whose investment is not deductible in accordance with the provisions of this Law.

In the case of airplanes, losses derived from their sale, as well as due to acts of God or force majeure, will only be deductible in the proportional part in which the original amount of the investment could have been deducted. The loss will be determined in accordance with the provisions of Article 31 of this Law.

XV. The payments for the concept of value added tax or special tax on production and services, that the taxpayer had made and the one that had been transferred to him. The provisions of this section shall not apply when the taxpayer is not entitled to credit the aforementioned taxes that have been transferred to him or that he has paid in connection with the importation of goods or services that correspond to expenses or investments that are deductible under the terms of this Law.

Neither the value added tax nor the special tax on production and services transferred to the taxpayer or paid in connection with the importation of goods or services will be deductible, when the expenditure that gave rise to the transfer or payment is not deductible under the terms of this Law.

XVI. Losses arising from mergers, capital reductions or liquidation of companies in which the taxpayer has acquired shares, partnership interests or certificates of equity contribution of national credit companies.

XVII. Losses arising from the sale of shares and other securities whose yield is not interest under the terms of Article 8 of this Law. Financial losses arising from financial operations derived from capital referred to shares or stock indexes will not be deductible either.

The losses referred to in the preceding paragraph may only be deducted against the amount of the profits, if any, obtained by the same taxpayer in the year or in the following ten years in the sale of shares and other securities whose yield is not interest under the terms of Article 8 of this Law, or in financial transactions derived from capital referred to shares or stock indexes. These losses shall not exceed the amount of such gains.

Losses will be restated for the period from the month in which they occurred until the closing month of the same fiscal year. The part of the losses that are not deducted in a fiscal year will be restated for the period from the month of the closing of the fiscal year in which it was last restated and up to the last month of the fiscal year immediately preceding the one in which it will be deducted.

In order to be able to deduct losses in accordance with this section, taxpayers must comply with the following:

a) In the case of shares placed among the general investor public, the loss shall be determined by making the adjustments referred to in Article 22 of this Law and considering the following:

Proven acquisition cost, the price at which the transaction was carried out, provided that the acquisition was made on a Stock Exchange under the terms of the Securities Market Law. If the acquisition was made outside the aforementioned Stock Exchange, the lower of the price of the transaction and the average quotation on the aforementioned Stock Exchange on the day on which the shares were acquired will be considered as such cost.

Income obtained from the transaction, provided that the shares are sold on a Stock Exchange under the terms of the Securities Market Law. If the sale was made outside the Stock Exchange, the higher of the price of the transaction and the average price on the aforementioned Stock Exchange on the day on which they were sold will be considered as income.

b) In the case of capital stock and shares other than those mentioned in the preceding paragraph, the loss will be determined by making the adjustments referred to in Article 22 of this Law and considering as income obtained the greater of the amount agreed in the transaction in question and the sale price of the shares determined in accordance with the methodology established in Articles 179 and 180 of this Law.

When the transaction is carried out with and between related parties, a study on the determination of the sale price of the shares must be submitted under the terms of Articles 179 and 180 of this Law and considering the elements contained in paragraph e) of section I of Article 179 of this Law.

c) In the case of the securities referred to in the preceding paragraphs of this section, provided that in the case of those included in paragraph a), they are acquired or disposed of outside a Stock Exchange concessioned under the terms of the Securities Market Law, the acquirer, in any case, and the transferor, when there is a loss, must present notice within ten days following the date of the transaction and, if applicable, the study on the sale price of the shares referred to in the last paragraph of the preceding paragraph.

d) In the case of securities other than those mentioned in the preceding paragraphs of this article, authorization must be requested from the corresponding tax authority in order to deduct the loss. The authorization referred to in this paragraph will not be necessary in the case of institutions that are part of the financial system.

XVIII. Expenses incurred abroad on a pro rata basis with those who are not income tax payers under the terms of Titles II or IV of this Law.

XIX. Losses obtained in derivative financial transactions and in the transactions referred to in Article 21 of this Law, when entered into with individuals or legal entities resident in Mexico or abroad, that are related parties under the terms of Article 179 of this Law, when the agreed terms do not correspond to those that would have been agreed with or between independent parties in comparable transactions.

XX. 91.5% of the consumption in restaurants. In order to deduct the difference, the payment must invariably be made by credit, debit or service card, or through the electronic purses authorized for such purpose by the Tax Administration Service. Consumption in restaurants that meet the requirements of section V of this article will be 100% deductible without exceeding the limits established in said section. In no case will consumption in bars be deductible.

Expenses in canteens that by their nature are not available to all the workers of the company and even when they are, these exceed an amount equivalent to a general daily minimum wage of the taxpayer's geographic area for each worker that makes use of them and for each day in which the service is rendered, added with the recovery fees paid by the worker for this concept.

The limit established in this section does not include expenses related to the provision of the dining room service, such as the maintenance of laboratories or specialists that study the quality and suitability of the food served in the dining rooms referred to in the preceding paragraph.

XXII. Payments for customs services, other than customs agents' fees and expenses incurred by such agents or the legal entity constituted by such customs agents under the terms of the Customs Law.

XXIII. Payments made to related parties or through a structured agreement, when the income of the counterparty is subject to preferential tax regimes.

This section will also apply when the payment is not considered income subject to a preferential tax regime, if the direct or indirect recipient of the payment uses the amount to make other deductible payments to another member of the group or under a structured agreement, which are considered income subject to preferential tax regimes. The above provisions will be applicable regardless of whether the payment made by the recipient is made prior to the payment made by the taxpayer. The foregoing is presumed, unless proven otherwise, when such recipient makes deductible payments that are considered income subject to preferential tax regimes for its counterparty, if the amount of such payments is equal to or greater than 20% of the payment made by the taxpayer. In this case, the amount equivalent to the deductible payment made by the recipient that is considered income subject to a preferential tax regime will not be deductible. The above provisions will be calculated regardless of the number of transactions involved, and will be applicable only for transactions carried out between members of the same group or under a structured agreement. The Tax Administration Service will issue general rules to regulate the interaction of the application of this paragraph, with similar rules contained in foreign legislation that deny the deduction of payments made to preferential tax regimes or by virtue of being subject to hybrid mechanisms.

This section will not be applicable when the payment that is considered income subject to a preferential tax regime derives from the exercise of the business activity of the recipient of the payment, provided that it is demonstrated that the recipient has the personnel and assets necessary to carry out such activity. This paragraph will only be applicable when the recipient of the payment has its place of effective management and is incorporated in a country or jurisdiction with which Mexico has a comprehensive information exchange agreement.

The provisions of the preceding paragraph shall not apply when the payment is considered income subject to a preferential tax regime due to a hybrid mechanism. For the purposes of this section, a hybrid mechanism is considered to exist when the domestic and foreign tax legislation characterizes a legal entity, legal figure, income or the owner of the assets or a payment in a different manner, and that results in a deduction in Mexico and that all or part of the payment is not taxed abroad. The provisions of the preceding paragraph will also not be applicable when the payment is attributed to a permanent establishment or a branch of a member of the group or by virtue of a structured agreement, provided that such payment is not taxed in the country or jurisdiction of tax residence of the recipient thereof, nor in the country or jurisdiction where such permanent establishment or branch is located.

The provisions of the preceding paragraph shall not apply to payments made by the taxpayer to one of its partners or shareholders, when the tax legislation of the country or jurisdiction where the latter reside considers such income non-existent or non-taxable by virtue of the fact that the taxpayer is considered as a fiscal transparent for purposes of such legislation. This paragraph will only be applicable when the recipient of the payment accumulates the income generated by the taxpayer in the proportional part of its participation and provided that such income is not considered as income subject to preferential tax regimes. Notwithstanding the foregoing, if the total amount of the payments made as referred to in this paragraph exceeds the total amount of the referred income of the taxpayer that has been accrued by the recipient of the payment, the difference will be nondeductible. If a non-deductible amount is generated in the year due to different moments in the accumulation of income between the taxpayer and its partners or shareholders, such amount may be deducted under the terms of the general rules issued for such purpose by the Tax Administration Service.

The provisions of this section shall not apply to the extent that the payment is indirectly taxed by reason of the application of Article 4-B or Chapter I of Title VI of this Law, or similar provisions contained in foreign tax legislation under the terms of the general rules issued by the Tax Administration Service. The provisions of this section shall also not be applicable when the payment is subject to the withholding rate established in Article 171 of this Law. The provisions of this paragraph shall not be applicable in the case established in the fifth paragraph of this section.

For purposes of this section, a structured agreement is considered to be any agreement in which the taxpayer or one of its related parties participates, and whose consideration is based on payments made to preferential tax regimes that favor the taxpayer or one of its related parties, or when based on the facts or circumstances it can be concluded that the agreement was made for this purpose.

For purposes of this section, two members are considered to be in the same group when one of them has effective control of the other, or when a third party has effective control of both. Effective control will be considered as indicated in Article 176 of this Law, regardless of the tax residence of the parties involved.

Reformed fraction DOF 09-12-2019

XXIV. Payments of initial amounts for the right to acquire or sell goods, foreign currency, shares or other securities that are not listed in recognized markets, in accordance with the provisions of Article 16-C of the Federal Fiscal Code, and that have not been exercised, provided that they are related contracting parties in the terms of Article 179 of this Law.

XXV. The restitution made by the borrower for an amount equivalent to the economic rights of the securities received on loan, when such rights are collected by the borrowers of the securities.

XXVI. The amounts that have the character of participation in the taxpayer's profit or are conditioned to the obtainment thereof, whether they correspond to employees, members of the board of directors, bondholders or others.

XXVII. Interest derived from the amount of the taxpayer's debts exceeding three times its stockholders' equity arising from debts contracted with related parties resident abroad under the terms of Article 179 of this Law.

To determine the amount of the debts that exceed the limit indicated in the preceding paragraph, the amount resulting from multiplying by three the quotient obtained by dividing by two the sum of the stockholders' equity at the beginning and end of the year, will be subtracted from the average annual balance of all the taxpayer's interest-bearing debts.

When the average annual balance of the taxpayer's debts contracted with related parties residing abroad is less than the excess amount of the debts referred to in the preceding paragraph, the interest accrued on such debts will not be deductible in full. When the average annual balance of the debts contracted with related parties residing abroad is greater than the excess amount referred to above, the interest accrued on such debts contracted with related parties residing abroad will not be deductible, only for the amount resulting from multiplying such interest by the factor obtained by dividing the excess amount by such balance.

For the purposes of the two preceding paragraphs, the average annual balance of all interest-bearing debts of the taxpayer is determined by dividing the sum of the balances of such debts as of the last day of each of the months of the year by the number of months of the year, and the average annual balance of debts contracted with related parties resident abroad is determined in the same manner, considering the balances of the latter debts as of the last day of each of the months of the year.

Taxpayers may opt to consider as stockholders' equity for the year, for purposes of determining the amount in excess of their debts, the amount resulting from adding the beginning and ending balances of the year in question of their contribution capital, net tax profit and reinvested net tax profit accounts, decreasing the sum of the beginning and ending balances of the tax losses pending to be reduced that have not been considered in the determination of the tax result, and dividing the result of this operation by two. The option referred to in this paragraph may not be exercised when the result of the aforementioned operation exceeds 20% of the stockholders' equity of the year in question, unless, during the exercise of verification powers, the taxpayer proves to the tax authorities that the situations that cause the difference between such amounts have a business reason and demonstrates that the integration of its contribution capital accounts, net tax profit, net reinvested tax profit and tax loss carryforwards have the corresponding support.

Amended paragraph DOF 12-11-2021

Those who choose the option described in the preceding paragraph must continue to apply it for a period of not less than five years from the year in which they choose it. Taxpayers that do not apply the financial reporting standards in the determination of their stockholders' equity, must consider as stockholders' equity for the purposes of this section, the capital integrated in the manner described in the preceding paragraph.

Paragraph added DOF 12-11-2021

Debts incurred by members of the financial system in the performance of the operations inherent to their purpose, and those incurred for the construction, operation or maintenance of productive infrastructure related to strategic areas for the country or for the generation of electricity, will not be included among the debts that accrue interest to the taxpayer for the calculation of the amount in excess of three times its stockholders' equity; In the latter case, it is understood that such exceptions are applicable to the holder of the document issued by the competent authority in accordance with the Law of the matter, with which it is accredited that it can carry out such operations on its own account.

Amended paragraph DOF 18-11-2015, 12-11-2021

The provisions of the preceding paragraph shall not apply in the case of unregulated multiple purpose financial companies that, in order to achieve their corporate purpose, carry out activities mainly with their domestic or foreign related parties.

Paragraph added DOF 12-11-2021

The limit of three times the stockholders' equity that determines the excess amount of debts referred to in this section could be extended in cases in which taxpayers prove that the activity they carry out requires in itself greater leverage and obtain a resolution in this respect under the terms set forth in Article 34-A of the Federal Tax Code.

Independently of the provisions of this section, the provisions of Articles 11 and 179 of this Law shall apply.

XXVIII. Advances for the acquisition of merchandise, raw materials, semi-finished and finished products or for expenses directly or indirectly related to the production or rendering of services referred to in Article 39 of this Law. Said advances shall not be part of the cost of sales referred to in Section II of Article 25 of this Law.

For the purposes of this section, the total amount of the acquisitions or expenses will be deducted in accordance with the terms of Section III of Title II of this Law, provided that there is a tax receipt that covers the totality of the transaction for which the advance payment was made.

XXIX. Payments made by the taxpayer that are also deductible for a member of the same group, or for the same taxpayer in a country or jurisdiction where the taxpayer is also considered a tax resident. If the taxpayer is a resident abroad with a permanent establishment in Mexican territory, this fraction will also be applicable when the payment is deductible for the resident abroad in his country or jurisdiction of tax residence.

The provisions of this section will not be applicable when the member of the same group or the resident abroad, referred to in the previous paragraph, accumulates the income generated by the taxpayer in the proportional part of its participation. In the event that the taxpayer is also considered a tax resident in another country or jurisdiction, the provisions of this section will not be applicable as long as the income taxed in Mexico is also accrued in the other country or jurisdiction. Notwithstanding the foregoing, if the total amount of the payments made as referred to in this section exceeds the total amount of the taxpayer's income that has been accrued by the aforementioned parties, the amount corresponding to such difference will be non-deductible in proportion to their participation. If a non-deductible amount is generated in the year due to different moments in the accumulation of income between the taxpayer and the member of the same group or resident abroad, such amount may be deducted under the terms of the general rules issued for such purpose by the Tax Administration Service.

The provisions of section XXIII of this article shall be applicable for the purpose of determining whether two members are in the same group.

Reformed fraction DOF 09-12-2019

XXX. Payments that in turn are exempt income for the worker, up to the amount resulting from applying the factor of 0.53 to the amount of such payments. The factor referred to in this paragraph will be 0.47 when the benefits granted by the taxpayers in favor of their employees that in turn are exempt income for said employees, in the fiscal year in question, do not decrease with respect to those granted in the immediately preceding fiscal year.

XXXI. (Repealed).

Repealed fraction DOF 09-12-2019

XXXII. Net interest for the year in excess of the amount resulting from multiplying the adjusted taxable income by 30%.

This fraction will only be applicable to taxpayers whose interest accrued during the fiscal year derived from their debts exceeds $20,000,000.00. This amount will apply jointly to all corporations subject to this Title and permanent establishments of foreign residents that belong to the same group or that are related parties. The last paragraph of Article 24 of this Law will be considered as a group. This amount will be distributed among the members of the group or related parties, in the proportion of the taxable income generated during the previous year by the taxpayers to which this section applies.

The net interest for the year will correspond to the amount resulting from subtracting from the total interest accrued during the year derived from debts of the taxpayer, the total interest income accrued during the same period and the amount indicated in the preceding paragraph. This fraction will not be applicable when the amount of accrued interest is equal to or greater than the amount of accrued interest.

The adjusted taxable income will be the amount resulting from adding to the taxable income referred to in Section I of Article 9 of this Law, the total interest accrued during the year derived from debts of the taxpayer, as well as the total amount deducted during the year for fixed assets, deferred expenses, deferred charges and expenditures made in pre-operating periods in accordance with this Law and other tax provisions.

The adjusted taxable income will be determined even if no taxable income is obtained in accordance with Section I of Article 9 of this Law or a tax loss is generated during the year in accordance with the first paragraph of Article 57 of the same law. In the event that a tax loss is generated, the amount thereof shall be subtracted from the items indicated in the preceding paragraph. When the amount of the adjusted tax profit results in zero or in a negative number, the deduction of the totality of the interest payable by the taxpayer will be denied, except for the amount that is not subject to this section.

For purposes of the preceding paragraphs, the total interest accrued during the year derived from debts of the taxpayer, only includes the amounts deductible in accordance with this Law. Likewise, the total interest income only includes the amounts that are taxable during the same fiscal year in terms of this Law.

For purposes of the calculation indicated in this section, the amount of the adjusted taxable income and interest income from foreign sources will only be included in these concepts in the same proportion that the tax established by this Law must be paid, after deducting the foreign income taxes credited in terms of Article 5 of this Law. The accumulated income and deductible expenses for purposes of determining the tax established in Articles 176 and 177 of this Law are not included in the calculations established in this section.

For purposes of this section, foreign exchange gains or losses accrued from the fluctuation of foreign currency will not be treated as interest, unless they are derived from an instrument whose yield is considered interest. Neither will be considered interest for purposes of this section, the consideration for acceptance of a guarantee, unless they are related to an instrument whose yield is considered interest.

The amount of non-deductible interest will be determined by subtracting the limit determined in accordance with this section from the net interest for the year. If the result of this calculation is zero or negative, the total accrued interest payable by the taxpayer in accordance with this section will be allowed as a deduction.

The amount of net interest for the year that is not deductible in accordance with this section may be deducted during the following ten years until it is exhausted. The amount not deducted in the following ten years will not be deductible. Such net interest pending to be deducted will have to be added to the net interest of the following year and the resulting amount must comply with the provisions of this same section. It is considered that the first interest to be deducted are those corresponding to previous years. For the purposes of this paragraph, the same rules set forth in Article 57 of this Law shall apply, unless otherwise expressly stated in this section. The provisions of this paragraph will only be applicable if the taxpayer keeps a record of the net interest pending deduction, which is available to the tax authority.

The provisions of this section shall not apply to interest derived from debts contracted to finance public infrastructure works, as well as to finance construction, including the acquisition of land where such works are to be carried out, located in Mexican territory; to finance projects for the exploration, extraction, transportation, storage or distribution of oil and solid, liquid or gaseous hydrocarbons, as well as other extractive industry projects and for the generation, transmission or storage of electricity or water. This fraction will not be applicable to the yields of public debt either. The income derived from the activities indicated in this paragraph will have to be deducted from the adjusted taxable income calculated in accordance with this section.

The provisions of this section shall not apply to state-owned productive enterprises, nor to members of the financial system in the performance of the operations inherent to their purpose.

The provisions of this section shall only be applicable when the amount of nondeductible interest determined in accordance with the preceding paragraphs is greater than that determined in accordance with section XXVII of this article, in which case, said section shall not be applicable.

The provisions of this section may be determined in the case of companies belonging to the same group on a consolidated basis under the terms of the general rules issued for such purpose by the Tax Administration Service.

The calculation indicated in this section will be made at the end of the fiscal year in question and will be reflected in the corresponding annual tax return.

Fraction added DOF 09-12-2019

XXXIII. Payments made in the cases indicated in Article 15-D, first and second paragraphs of the Federal Fiscal Code.

Section added DOF 23-04-2021

The non-deductible items referred to in this Law must be considered in the year in which the expenditure is made and not in the year in which they form part of the cost of goods sold.

Article 29. The reserves for personnel pension or retirement funds, complementary to those established by the Social Security Law and seniority premiums, shall be adjusted to the following rules:

I. They must be created and calculated under the terms and in accordance with the requirements established in the Regulations of this Law and be distributed uniformly over ten fiscal years. Said calculation must be made each fiscal year in the month in which the reserve was constituted.

II. The reserve must be invested at least 30% in securities in charge of the Federal Government registered in the National Securities Registry or in shares of investment funds in debt instruments. The difference must be invested in securities approved by the National Banking and Securities Commission, as an investment object of the technical reserves of insurance institutions, or in the acquisition or construction and sale of houses for workers of the taxpayer that have the characteristics of social interest housing, or in loans for the same purposes, in accordance with the regulatory provisions, or in certificates of participation issued by fiduciary institutions with respect to the trusts referred to in Article 188 of this Law, provided that in this case the total investment does not exceed 10% of the reserve referred to in this article.

Amended paragraph DOF 18-11-2015

Investments, if any, in securities issued by the company itself or by companies considered related parties, may not exceed 10 percent of the total amount of the reserve, provided they are securities approved by the National Banking and Securities Commission under the terms of the preceding paragraph.

For the purposes of the preceding paragraph, two or more persons are not considered to be related parties when the direct or indirect participation of one in the capital of the other does not exceed 10% of the total subscribed capital and provided that it does not participate directly or indirectly in the management or control of the other.

III. The assets forming the fund must be placed in an irrevocable trust, in a credit institution authorized to operate in the Republic, or be managed by mutual insurance institutions or companies, brokerage firms, investment fund operators or retirement fund managers, with concession or authorization to operate in the country, in accordance with the general rules issued by the Tax Administration Service. The yields obtained from the investment are part of the fund and must remain in the irrevocable trust; only the assets and the yields of the investment may be used for the purposes for which the fund was created.

Reformed fraction DOF 18-11-2015

IV. The investments that constitute the fund must be valued each year at market price, in the month in which the reserve was constituted, except for investments in loans for the acquisition or construction of low-income housing, in which case the unpaid balance of the loan granted will be considered.

V. Contributions may not be deducted when the value of the fund is sufficient to meet the obligations established under the pension or retirement plan.

VI. The taxpayer may only dispose of the assets and securities referred to in Section II of this Article, for the payment of pensions or retirements and seniority bonuses to personnel. If he disposes of them or their yields for different purposes, he shall pay tax on the respective amount at the rate established in Article 9 of this Law.

The provisions of sections II and III of this article shall not apply if the fund is managed by a retirement fund manager and its resources are invested in a specialized retirement fund investment company.

Article 30. Taxpayers who carry out works consisting of real estate developments or subdivision of lots, those who enter into contracts for real estate works or for the manufacture of fixed asset goods of long manufacturing process and the providers of the tourist service of the time-sharing system, may deduct the estimated expenses related to the direct and indirect costs of such works or the rendering of the service, in the years in which they obtain the income derived therefrom, instead of the deductions established in Articles 19 and 25 of this Law, which correspond to each of the works or the rendering of the service mentioned. The estimated expenditures will be determined for each work or for each property from which the income from the rendering of services referred to in this Article is derived, by multiplying the accruable income in each fiscal year derived from the work or from the rendering of the service, by the total deduction factor resulting from dividing the sum of the estimated direct and indirect costs at the beginning of the fiscal year, or of the work or rendering of the service in question, by the total income corresponding to such estimate on the same date, in accordance with the provisions of this paragraph.

The deduction of investments and remunerations for the rendering of subordinate personal services, directly related to the production or rendering of services, which will be deducted in accordance with the provisions of Section III of this Chapter, as well as operating and financial expenses, which will be deducted in accordance with the terms established in this Law, will not be considered within the estimate of direct and indirect costs referred to in the preceding paragraph. Taxpayers engaged in the rendering of timeshare tourism services may consider within the estimation of direct and indirect costs, the deduction of the investments corresponding to the real estate used for the rendering of such services, under the terms of Article 31 of this Law.

At the end of each fiscal year, taxpayers must calculate the total deduction factor referred to in the first paragraph of this article for each work or for each property from which the income from the rendering of timeshare services is derived, as the case may be, with the data they have at that date. This factor shall be compared at the end of each fiscal year with the factor used in the fiscal year itself and in previous fiscal years, which corresponds to the work or to the rendering of the service in question. If the comparison shows that the deduction factor corresponding to the end of the fiscal year in question is lower than any of the previous ones, the taxpayer must file supplementary returns, using this lower deduction factor, modifying the amount of the estimated expenditures deducted in each of the fiscal years in question.

If the comparison referred to in the preceding paragraph results in a total deduction factor at the end of the year that is more than 5% lower than that which would have been determined in the same year or in previous years, the corresponding surcharges, if any, will be paid.

In the fiscal year in which the accrual of income related to the work or rendering of the service in question is completed, taxpayers will compare the expenditures made corresponding to the direct and indirect costs referred to in the first paragraph of this article, without considering, if applicable, those referred to in the second paragraph of this article, during the period elapsed from the beginning of the work or rendering of the service up to the fiscal year in which such income is finished accruing, against the total of the estimated expenses deducted in the same period under the terms of this article, corresponding in both cases to the same work or to the property from which the income from the rendering of the service is derived. In order to make this comparison, taxpayers will update the estimated expenditures and those made in each fiscal year, from the last month of the fiscal year in which they were deducted or in which they were made, as the case may be, and up to the last month of the first half of the fiscal year in which the income related to the work or to the rendering of the tourist service of the timeshare system is finished accumulating. The providers of the tourist service of the timeshare system will consider as disbursements made for the investments corresponding to the properties from which the income from the rendering of such services derives, the original amounts of the investments that are proven with the documentation that meets the requirements indicated in the tax provisions.

If from the comparison referred to in the preceding paragraph, it results that the total estimated actualized expenses deducted exceed the actualized expenses incurred, the difference will be accrued to the taxpayer's income in the year in which the income related to the work or service rendered in question is finished accruing.

For the purposes of the provisions of the two preceding paragraphs, in the case of the rendering of the tourist service of the time-sharing system, it will be considered that the accrual of income related to the rendering of the service is completed in the fiscal year in which any of the following events occur: 90% of the payment or consideration agreed upon has been received, or five fiscal years have elapsed since the work or rendering of the service referred to in this article began.

If from the comparison referred to in the fifth paragraph of this article, it results that the total of the estimated expenses deducted exceed by more than 5% the expenses incurred, both restated, the corresponding surcharges will be calculated on the excess as of the day on which the tax return for the year in which the estimated expenses were deducted was filed or should have been filed. These surcharges will be paid together with the tax return in question.

Taxpayers exercising the option set forth in this article must file a notice before the tax authorities, stating that they opt for the provisions of this article, for each of the works or for the property from which the income from the rendering of the service is derived, within fifteen days following the beginning of the work or the execution of the contract, as applicable. Once this option has been exercised, it cannot be changed. Taxpayers must also submit the information established by the Tax Administration Service through general rules.

SECTION II

OF INVESTMENTS

Investments may only be deducted through the application, in each fiscal year, of the maximum percentages authorized by this Law, on the original amount of the investment, with the limitations on deductions that, as the case may be, are established by this Law. In the case of irregular fiscal years, the corresponding deduction will be made in the percentage that represents the number of complete months of the fiscal year in which the asset has been used by the taxpayer, with respect to twelve months. When the asset begins to be used after the beginning of the fiscal year in which the deduction is completed, the deduction will be made according to the same rules that apply to irregular fiscal years.

The original amount of the investment includes, in addition to the price of the good, the taxes actually paid on the acquisition or importation of the good, except for value added tax, as well as expenses for duties, compensatory quotas, preparation of the physical site, installation, assembly, handling, delivery, freight, transportation, hauling, insurance against transportation risks, handling, commissions on purchases and fees to customs agents or agencies, as well as those related to the services contracted for the investment to operate. In the case of investments in automobiles, the original amount of the investment also includes the amount of investments in armored equipment.

Amended paragraph DOF 12-11-2021

When the assets are acquired as a result of a merger or spin-off of companies, the date of acquisition will be considered to be the date that corresponded to the merged company or the spin-off company.

The taxpayer may apply percentages lower than those authorized by this Law. In this case, the percentage chosen will be mandatory and may be changed, without exceeding the maximum authorized. In the case of the second and subsequent changes, at least five years must elapse from the last change; when the change is to be made before this period elapses, the requirements established in the Regulations of this Law must be complied with.

The investments will begin to be deducted, at the taxpayer's option, as of the year in which the use of the assets begins or as of the following year. The taxpayer may not begin the deduction of the investments for tax purposes as of the beginning of the periods referred to in this paragraph. In the latter case, he may do so later, losing the right to deduct the amounts corresponding to the years elapsed since he was able to make the deduction in accordance with this article and until he initiates the deduction, calculated by applying the maximum percentages authorized by this Law.

When the taxpayer disposes of the assets or when they cease to be useful to obtain the income, it will deduct, in the fiscal year in which this occurs, the part not yet deducted. The above is not applicable to the cases indicated in the penultimate and last paragraphs of this article. In the event that the goods cease to be useful to obtain the income, the taxpayer must maintain without deduction one peso in its records and file a notice before the tax authorities.

Amended paragraph DOF 12-11-2021

Taxpayers will adjust the deduction determined under the terms of the first and sixth paragraphs of this article, multiplying it by the restatement factor corresponding to the period from the month in which the asset was acquired until the last month of the first half of the period in which the asset has been used during the fiscal year for which the deduction is made.

When the number of months included in the period in which the asset has been used in the fiscal year is odd, the last month of the first half of such period shall be considered to be the month immediately preceding the month to which the half of the period corresponds.

To determine the gain on the disposal of assets whose investment is partially deductible under the terms of sections II and III of Article 36 of this Law, the difference between the original amount of the deductible investment decreased by the deductions made on such amount and the price at which the assets are disposed of will be considered.

In the case of assets whose investment is not deductible under the terms of sections II, III and IV of Article 36 of this Law, the price obtained from their sale will be considered as profit.

For the purposes of this Law, fixed assets, expenses and deferred charges and expenditures made in pre-operating periods are considered investments, in accordance with the following concepts:

Fixed assets are the set of tangible goods used by taxpayers for the performance of their activities and which are depreciated by use in the taxpayer's service and by the passage of time. The purpose of the acquisition or manufacture of these assets will always be to use them for the development of the taxpayer's activities, and not to be disposed of in the normal course of its operations.

For purposes of this Law, the acquisition of the right of usufruct over real estate will be considered a fixed asset.

Paragraph added DOF 12-11-2021

Deferred expenses are intangible assets represented by goods or rights that allow to reduce operating costs, improve the quality or acceptance of a product, use, enjoy or exploit a good, for a limited period of time, less than the duration of the activity of the legal entity. Intangible assets that allow the exploitation of public property or the rendering of a concessioned public service are also considered deferred expenses.

Deferred charges are those that meet the requirements indicated in the preceding paragraph, except those related to the exploitation of public property or the rendering of a public service under concession, but whose benefit is for an unlimited period that will depend on the duration of the activity of the legal entity.

Expenditures made in pre-operating periods are those related to research and development, related to the design, elaboration, improvement, packaging or distribution of a product, as well as to the rendering of a service, provided that the expenditures are made before the taxpayer sells its products or renders its services, on an ongoing basis. In the case of extractive industries, these expenditures are those related to the exploration for the location and quantification of new deposits susceptible of being exploited. Expenditures in the pre-operating period will not be considered to be those corresponding to intangible assets that allow the exploration or exploitation of public property, which will be treated as deferred expenses.

Amended paragraph DOF 12-11-2021

Article 33. The maximum authorized percentages for expenses and deferred charges, as well as for expenditures made in pre-operating periods, are as follows:

I. 5% for deferred charges.

II. 10% for expenditures made in pre-operating periods.

III. 15% for royalties, for technical assistance, as well as for other deferred expenses, with the exception of those indicated in section IV of this article.

IV. In the case of intangible assets that allow the exploitation of public property or the rendering of a concessioned public service, the maximum percentage will be calculated by dividing the unit by the number of years for which the concession was granted, the quotient thus obtained will be multiplied by one hundred and the product will be expressed as a percentage.

In the event that the benefit of the investments referred to in sections II and III of this article is realized in the same year in which the expenditure was made, the deduction may be made in its entirety in such year.

The maximum authorized percentages, in the case of fixed assets by type of asset, are as follows:

I. In the case of constructions:

a) 10% for properties declared as archeological, artistic, historical or patrimonial monuments, in accordance with the Federal Law on Archeological, Artistic and Historical Monuments and Zones, which have a restoration certificate issued by the National Institute of Anthropology and History or the National Institute of Fine Arts.

b) 5% in all other cases, including installations, additions, repairs, improvements, adaptations, as well as any other construction carried out on a mining lot in accordance with Article 12 of the Mining Law.

Subsection amended DOF 12-11-2021

II. in the case of railroads:

a) 3% for train fuel supply pumps.

b) 5% for railroad tracks.

c) 6% for railroad cars, locomotives, railcars and railcars.

d) 7% for track leveling machinery, rail levelers, rail grinding machines, motorized track jacks, track removers, sleeper inserters and drills.

e) 10% for communication, signaling and remote control equipment.

III. 10% for office furniture and equipment.

IV. 6% for vessels.

V. In the case of airplanes:

a) 25% for those dedicated to agricultural aerial fumigation.

b) 10% for others.

VI. 25% for automobiles, buses, cargo trucks, tractor-trailers, forklifts and trailers.

VII. 30% for desktop and laptop personal computers; servers; printers, optical readers, scanners, bar code scanners, digitizers, external storage units and computer network hubs.

VIII. 35% for dies, dies, molds, dies and tooling.

IX. 100% for livestock and vegetables.

X. In the case of telephone communications:

a) 5% for transmission towers and cables, except fiber optic cables.

b) 8% for radio systems, including transmission and handling equipment that uses the radio spectrum, such as digital or analog microwave radio transmission, microwave towers and waveguides.

c) 10% for equipment used in transmission, such as internal plant circuits that are not part of the switching and whose functions are focused on the trunks that reach the telephone exchange, including multiplexers, concentrators and routers.

d) 25% for telephone switchboard equipment used for switching calls using technology other than electromechanical.

e) 10% for others.

XI. In the case of satellite communications:

a) 8% for the satellite segment in space, including the main body of the satellite, transponders, antennas for the transmission and reception of digital and analog communications, and monitoring equipment on the satellite.

b) 10% for satellite equipment on the ground, including antennas for the transmission and reception of digital and analog communications and satellite monitoring equipment.

XII. 100% for adaptations made to facilities that imply additions or improvements to fixed assets, provided that such adaptations are intended to facilitate access to and use of the taxpayer's facilities by persons with disabilities, as referred to in Article 186 of this Law.

XIII. 100% for machinery and equipment for the generation of energy from renewable sources or efficient electricity cogeneration systems.

For the purposes of the preceding paragraph, renewable sources are those that by their nature or through adequate use are considered inexhaustible, such as solar energy in all its forms; wind energy; hydraulic energy, both kinetic and potential, from any natural or artificial body of water; ocean energy in its different forms; geothermal energy; and energy from biomass or waste. Likewise, the successive conversion of energy from renewable sources into other forms of energy is considered generation.

The provisions of this section shall be applicable provided that the machinery and equipment are in operation or functioning for a minimum period of 5 years immediately following the fiscal year in which the deduction is made, except in the cases referred to in Article 37 of this Law. Taxpayers that fail to comply with the minimum period established in this paragraph, must cover, if applicable, the corresponding tax for the difference resulting between the amount deducted in accordance with this section and the amount that should have been deducted in each year in the terms of this article or article 35 of this Law, if the 100% deduction had not been applied. For these purposes, the taxpayer must file supplementary tax returns for each of the corresponding years, no later than within the month following the month in which the deadline established in this section is not met, and must pay the corresponding surcharges and restatement, from the date on which the deduction was made until the last day on which the machinery and equipment operated or functioned.

XIV. 25% for conventional bicycles, bicycles and motorcycles powered by rechargeable electric batteries.

Fraction added DOF 30-11-2016

XV. 5% for the right of usufruct constituted on real estate.

Fraction added DOF 12-11-2021

Article 35. For machinery and equipment other than those indicated in the preceding article, the following percentages shall be applied, according to the activity in which they are used:

I. 5% in the generation, conduction, transformation and distribution of electricity; in grain milling; in the production of sugar and its derivatives; in the manufacture of edible oils; in maritime, river and lake transportation.

II. 6% in the production of metal obtained in the first process; in the manufacture of tobacco products and natural coal derivatives.

III. 7% in the manufacture of pulp, paper and similar products.

Reformed fraction DOF 30-11-2016

IV. 8% in the manufacture of motor vehicles and parts thereof; in the construction of railroads and ships; in the manufacture of metal products, machinery and professional and scientific instruments; in the manufacture of food and beverage products, except grains, sugar, edible oils and derivatives.

V. 9% in leather tanning and the manufacture of leather goods; in the manufacture of chemical, petrochemical and pharmacobiological products; in the manufacture of rubber and plastic products; in printing and graphic publishing.

VI. 10% in electric transportation; in fixed infrastructure for the transportation, storage and processing of hydrocarbons, in well drilling platforms and vessels, and hydrocarbon processing and storage vessels.

Reformed fraction DOF 30-11-2016

VII. 11% in the manufacture, finishing, dyeing and printing of textile products and clothing.

VIII. 12% in the mining industry; in aircraft construction and in land transportation of cargo and passengers. The provisions of this section shall not be applicable to the machinery and equipment indicated in section II of this article.

IX. 16% in air transportation; in the transmission of communication services provided by telegraphs and radio and television stations.

X. 20% in restaurants.

XI. 25% in the construction industry; in agriculture, livestock, forestry and fishing activities.

XII. 35% for those destined directly to the research of new products or development of technology in the country.

XIII. 50% in the manufacture, assembly and transformation of magnetic components for hard disks and electronic cards for the computer industry.

XIV. 10% in other activities not specified in this article.

In the event that the taxpayer engages in two or more of the activities indicated in this article, the corresponding percentage will be applied to the activity in which the taxpayer has obtained more income in the immediately preceding fiscal year.

The deduction of investments shall be subject to the following rules:

I. Repairs, as well as adaptations to facilities, will be considered investments whenever they imply additions or improvements to fixed assets.

In no case shall expenses for conservation, maintenance and repair, which are incurred for the purpose of maintaining the asset in question in operating conditions, be considered as investments.

II. Investments in automobiles will only be deductible up to an amount of $175,000.00. In the case of investments made in automobiles whose propulsion is through rechargeable electric batteries, as well as electric automobiles that also have an internal combustion engine or a hydrogen powered engine, they will only be deductible up to an amount of $250,000.00.

Amended paragraph DOF 18-11-2015, 30-11-2016

The provisions of this section shall not apply in the case of taxpayers whose activity consists of the granting of the temporary use or enjoyment of automobiles, provided that they use them exclusively for such activity.

III. Investments in housing and dining rooms, which by their nature are not available to all the employees of the company, as well as in airplanes and boats that do not have a concession or permit from the Federal Government to be commercially exploited, will only be deductible in the cases that meet the requirements set forth in the Regulations of this Law. In the case of airplanes, the deduction will be calculated considering as the original maximum amount of the investment, an amount equivalent to $8'600,000.00.

In the case of taxpayers whose preponderant activity consists of granting the temporary use or enjoyment of airplanes or automobiles, they may deduct the full amount of the original investment in the airplane or automobile in question, except when such taxpayers grant the temporary use or enjoyment of airplanes or automobiles to another taxpayer, when one of them, or their partners or shareholders, are partners or shareholders of the other, or when there is a relationship that in fact allows one of them to exercise a preponderant influence in the operations of the other, in which case the deduction will be made, or their partners or shareholders, are in turn partners or shareholders of the other, or there is a relationship that in fact allows one of them to exercise a preponderant influence in the operations of the other, in which case the deduction will be determined in the terms of the first paragraph of this section, in the case of airplanes, and in the terms of section II of this article in the case of automobiles.

Investments in recreational homes will in no case be deductible.

In the case of corporations that have opted to be taxed under the terms of Chapter VI of Title II of this Law, they may not apply the deduction referred to in this section in the case of investments in aircraft that do not have a concession or permit from the Federal Government to be operated commercially.

IV.In the case of assets acquired by merger or spin-off of companies, the values subject to deduction shall not exceed the values pending deduction in the merged or spun-off company, as the case may be.

V. Commissions and expenses related to the issuance of debentures or any other debt security, placed among the general investing public, or any other debt security of those mentioned in Article 8 of this Law, will be deducted annually in proportion to the payments made to redeem such debentures or securities, in each fiscal year. When the obligations and securities referred to in this section are redeemed by means of a single payment, the commissions and expenses will be deducted in equal parts during the fiscal years that elapse until the payment is made.

VI. Constructions, installations or permanent improvements in tangible fixed assets owned by third parties, which in accordance with the respective lease or concession contracts are for the benefit of the owner and have been made as of the date of execution of the aforementioned contracts, will be deducted under the terms of this Section. When the termination of the contract occurs without the deductible investments having been redeemed for tax purposes, the value to be redeemed may be deducted in the tax return for the respective year.

VII. In the case of royalties, the deduction may be made in accordance with the terms of section III of Article 33 of this Law, only when they have been effectively paid.

Losses of the taxpayer's property due to acts of God or force majeure, which are not reflected in the inventory, will be deductible in the fiscal year in which they occur. The loss will be equal to the amount pending deduction as of the date on which it is suffered. The amount recovered will be accrued under the terms of Article 18 of this Law.

When fixed assets that are not individually identifiable are lost due to acts of God or force majeure or cease to be useful, the amount pending deduction of such assets will be applied considering that the first assets acquired are the first to be lost.

When the taxpayer reinvests the amount recovered in the acquisition of goods of a similar nature to those lost, or to redeem liabilities for the acquisition of such goods, only the portion of the recovered amount not reinvested or not used to redeem liabilities will be accumulated. The reinvested amount resulting from the recovery may only be deducted by applying the percentage authorized by this Law to the original amount of the investment of the asset that was lost and up to the amount of this amount that was pending deduction at the date of the loss.

If the taxpayer invests additional amounts to those recovered, it will consider these as a different investment.

The reinvestment referred to in this provision must be made within twelve months after the recovery is obtained. In the event that the amounts recovered are not reinvested or are not used to redeem liabilities within such term, they will be accumulated to the other income obtained in the fiscal year in which the term concludes.

Taxpayers may request authorization from the tax authorities, so that the period indicated in the preceding paragraph may be extended for another equal period.

The amount recovered not reinvested within the period indicated in the fifth paragraph of this article, will be adjusted by multiplying it by the restatement factor corresponding to the period from the month in which the recovery was obtained until the month in which it is accrued.

In the case of financial leasing contracts, the lessee shall consider as the original amount of the investment, the amount agreed upon as the value of the asset in the respective contract.

When financial leasing contracts make use of any of their options, the following shall be observed for the deduction of the investments related to such contracts:

I. If it is opted to transfer the ownership of the property object of the contract through the payment of a determined amount, or to extend the contract for a certain term, the amount of the option will be considered as a complement to the original amount of the investment, for which reason it will be deducted by the percentage resulting from dividing the amount of the option by the number of years remaining to finish deducting the original amount of the investment.

II. If participation is obtained from the sale of the assets to third parties, the difference between the payments made and the amounts already deducted, less the income obtained from the participation in the sale to third parties, must be considered deductible.

SECTION III

OF COST OF GOODS SOLD

The cost of the goods that are disposed of, as well as the cost of those that make up the final inventory of the fiscal year, shall be determined in accordance with the absorbing costing system on the basis of historical or predetermined costs. In any case, the cost shall be deducted in the fiscal year in which the income derived from the disposal of the goods in question is accrued.

Taxpayers that carry out commercial activities consisting of the acquisition and sale of merchandise will only consider the following as part of the cost:

a) The amount of merchandise acquisitions, reduced by the amount of returns, discounts and rebates made during the year.

b) Expenses incurred in acquiring and leaving the goods in a condition to be disposed of.

Taxpayers that carry out activities other than those indicated in the second paragraph of this article shall only consider the following as part of the cost:

a) Acquisitions of raw materials, semi-finished products or finished products, reduced by returns, discounts and rebates on the same, made during the year.

b) Remuneration for the rendering of subordinate personal services directly related to the production or rendering of services.

c) Expenses net of discounts, rebates or refunds, directly related to the production or rendering of services.

d) The deduction of investments directly related to the production of merchandise or the rendering of services, calculated in accordance with Section II, Chapter II, of Title II of this Law.

When the items referred to in the preceding paragraph are indirectly related to production, they shall form part of the cost in proportion to their importance in such production.

To determine the cost of the year, the cost of merchandise not disposed of during the year, as well as the cost of production in process at the end of the year in question, will be excluded.

Residents abroad with a permanent establishment in the country will determine the cost of the merchandise in accordance with the provisions of this Law. In the case of the cost of goods received from the head office or other establishment of the taxpayer located abroad, they will be subject to the provisions of Article 27, Section XIV of this Law.

In order to determine the cost of goods sold, the same procedure must be applied in each fiscal year for a minimum period of five fiscal years and may only be varied by complying with the requirements established in the Regulations of this Law.

In no case will tax effects be given to the revaluation of inventories or cost of goods sold.

Taxpayers who enter into financial leasing contracts and choose to accrue as income for the year, the portion of the price payable during the year, must deduct the cost of the goods sold in the proportion that represents the income received in such year, with respect to the total payments agreed upon in the initial mandatory term, instead of deducting the total amount of the cost of the goods sold at the time the goods are disposed of.

Taxpayers may choose any of the following inventory valuation methods:

I. First in first out (FIFO).

II. Identified cost.

III. Average cost.

IV. Retailer.

When the method referred to in section I of this article is chosen, it must be carried by each type of merchandise individually, without being able to be carried in monetary form. Under the terms established by the Regulations of this Law, facilities may be established for not identifying the percentages of deduction of the cost with respect to the purchases for each type of merchandise individually.

Taxpayers who sell merchandise that can be identified by serial number and whose cost exceeds $50,000.00 must only use the identified cost method.

In the case of taxpayers that opt to use the retail method, they must value their inventories at the sales price reduced by the gross profit margin they have in the fiscal year in accordance with the procedure established in the Regulations of this Law. The option referred to in this paragraph does not release taxpayers from the obligation to maintain the inventory control system referred to in Section XIV of Article 76 of this Law.

Once the method is chosen under the terms of this article, it must be used for a minimum period of five fiscal years. When taxpayers for accounting purposes use a method other than those indicated in this article, they may continue to use it to value their inventories for accounting purposes, provided that they keep a record of the difference in the cost of the merchandise that exists between the valuation method used by the taxpayer for accounting purposes and the valuation method used under the terms of this article. The amount determined under the terms of this paragraph will not be cumulative or deductible.

When a change in the inventory valuation method generates a deduction, this deduction must be reduced proportionally in the following five years.

When the cost of the goods is higher than the market or replacement price, the corresponding price may be considered in accordance with the following:

I. The replacement cost, whether by acquisition or production, but not exceeding the realizable value or less than the net realizable value.

The realizable value, which is the normal disposal price less direct disposal costs, provided that it is lower than the replacement cost.

III. Net realizable value, which is equivalent to the normal price of disposal less direct disposal expenses and less the percentage of profit normally obtained in its realization, if higher than the replacement value.

When taxpayers sell the goods to a related party under the terms of article 179 of this Law, any of the methods referred to in sections I, II and III of article 180 of this Law shall be used.

Taxpayers who are required to file a financial statement report for tax purposes or have chosen to do so in terms of Article 32-A of the Federal Tax Code, or have been required to file information on their tax situation in terms of Article 32-H of said Code, must report in the report or in the respective return, as the case may be, the cost of the goods considered in accordance with this article; in the case of other taxpayers, they must report it in the tax return for the fiscal year.

Amended paragraph DOF 12-11-2021

When taxpayers, in connection with the rendering of services, provide goods in the terms established in Article 17, second paragraph, of the Federal Fiscal Code, they can only be deducted in the fiscal year in which the income for the rendering of the service is accrued, valued in accordance with any of the methods established in Article 41 of this Law.

CHAPTER III

OF THE INFLATION ADJUSTMENT

Article 44. Entities shall determine, at the close of each fiscal year, the annual adjustment for inflation, as follows:

I. Determine the average annual balance of its debts and the average annual balance of its credits.

The average annual balance of credits or debts shall be the sum of the balances as of the last day of each month of the fiscal year, divided by the number of months of the fiscal year. Interest accrued during the month shall not be included in the balance as of the last day of each month.

II. When the average annual balance of the debts is greater than the average annual balance of the credits, the difference will be multiplied by the annual adjustment factor and the result will be the annual cumulative inflation adjustment.

When the average annual balance of credits is greater than the average annual balance of debts, the difference will be multiplied by the annual adjustment factor and the result will be the deductible annual inflation adjustment.

III. The annual adjustment factor will be the one obtained by subtracting the unit to the quotient obtained by dividing the National Consumer Price Index of the last month of the fiscal year in question by the mentioned index of the last month of the immediately preceding fiscal year.

When the fiscal year is less than 12 months, the annual adjustment factor will be the one obtained by subtracting the unit to the quotient obtained by dividing the National Consumer Price Index of the last month of the fiscal year in question by the mentioned index of the month immediately prior to the first month of the fiscal year in question.

Receivables and payables in foreign currency are valued at the parity existing on the first day of the month.

For the purposes of the preceding article, credit shall be considered as the right of a creditor to receive from another debtor an amount in cash, among others: credit rights acquired by financial factoring companies, investments in shares of investment funds in debt instruments and the derivative financial transactions referred to in section IX of article 20 of this Law.

Amended paragraph DOF 18-11-2015

They are not considered credits for the purposes of the preceding article:

I. Those that are payable by individuals and do not arise from their business activities, when they are on demand, for a term of less than one month or for a longer term if they are collected before one month. It will be considered that they are for a term of more than one month if the collection is made after 30 calendar days from the date on which the loan was arranged.

II. Those payable by partners or shareholders, associates or partners in the joint venture, who are individuals or companies resident abroad, unless in the latter case, they are denominated in foreign currency and derive from the export of goods or services.

Also, credits that the trustee has in its favor with its settlors or trustees in the trust through which business activities are carried out, who are individuals or companies residing abroad, are not considered credits, unless in the latter case, they are denominated in foreign currency and come from the export of goods or services.

The provisions of this section shall not be applicable in the case of loans granted by credit unions in charge of their partners or stockholders, which operate only with their partners or stockholders.

III. Those paid by officers and employees, as well as loans made to third parties referred to in Section VII of Article 27 of this Law.

IV. Provisional tax payments, as well as tax incentives.

V. Any income whose accrual is conditioned to its effective receipt. The provisions of this section are not applicable to income derived from financial leasing contracts for which the option provided in Article 17, Section III of this Law is exercised.

VI. Shares, non-redeemable certificates of participation and certificates of deposit of goods and in general, debt securities representing the ownership of goods, contributions to a joint venture, as well as other securities whose yields are not considered interest under the terms of Article 8 of this Law.

VII. Cash on hand.

Credits derived from accrued income, decreased by the amount of discounts and rebates thereon, will be considered as credits for the purposes of this article, as from the date on which the corresponding income is accrued and until the date on which they are collected in cash, goods, services or, until the date of their cancellation for uncollectibility. In the case of cancellation of the transaction that gave rise to the credit, the portion of the annual adjustment for inflation that corresponds to such credit will be cancelled, under the terms established in the Regulations of this Law, provided that the credits had been considered for such adjustment.

For the purposes of this article, tax credit balances shall only be considered credits as of the day following the day on which the corresponding tax return is filed and up to the date on which they are offset, credited or refunded, as the case may be.

For the purposes of Article 44 of this Law, the following shall be considered debt: any obligation in cash pending compliance, among others: those derived from financial leasing contracts, derivative financial transactions referred to in Section IX of Article 20 of this Law, contributions for future capital increases and contributions caused from the last day of the period to which they correspond and up to the day on which they must be paid.

Liabilities and asset, liability or equity reserves, which are or have been deductible, are also debts. For these purposes, reserves are considered to be created or increased monthly and in the proportion that the income for the month represents of the total income for the year.

In no case shall be considered as debts those originated by non-deductible items, in the terms of sections I, VIII and IX of Article 28 of this Law, as well as the amount of debts that exceed the limit referred to in the first paragraph of section XXVII and the amount of debts from which non-deductible interest is derived in accordance with section XXXII of the same article, as applicable during the fiscal year. However, in the case of section XXXII of Article 28 of this Law, when the amount of nondeductible interest is deducted in a subsequent year in accordance with said section, the amount of the debt from which such interest is derived will be considered for the calculation indicated in Article 44 of this Law in said year.

Amended paragraph DOF 09-12-2019

For the purposes of Article 44 of this Law, it will be considered that debts are incurred for the acquisition of goods and services, for obtaining the use or temporary enjoyment of goods or for capital borrowed, when any of the following events occur:

I. In the case of the acquisition of goods or services, as well as the acquisition of the temporary use or enjoyment of goods, when any of the events set forth in Article 17 of this Law occurs and the price or consideration is paid after the date on which the event in question occurs.

II. in the case of borrowed capital, when the capital is partially or totally received.

In the event of the cancellation of a transaction from which a debt derives, the portion of the annual inflation adjustment corresponding to such debt will be cancelled, under the terms established in the Regulations of this Law, provided that the debts in question have been considered for such adjustment.

CHAPTER IV

OF CREDIT, INSURANCE AND BONDING INSTITUTIONS, GENERAL DEPOSIT WAREHOUSES, FINANCIAL LEASING COMPANIES AND CREDIT UNIONS

Article 47. The bonded warehouses shall make the deductions referred to in this Title, among which they shall consider the creation or increase of the contingency reserve, subject to prior review by the National Banking and Securities Commission.

When at the end of a fiscal year the reserve referred to in this article is reduced in relation to those established in the immediately preceding fiscal year, the difference shall be accrued as income in the year in which the reduction is made.

Foreign establishments of domestic credit institutions must pay tax at the rate of 4.9% on the interest income they receive from the capital they place or invest in the country, or that is paid by residents in Mexican territory or residents abroad with a permanent establishment in the country, without any deduction whatsoever.

The tax referred to in the preceding paragraph will be paid through withholding by the persons making the interest payments referred to in this article. Credit institutions may credit the withholding made against the income tax payable by them, in the tax return for the year, provided they have the withholding certificate. In no case will it be appropriate to request a refund of the amounts not credited in the fiscal year.

When the interest has not been paid on the due date, the withholder shall be obligated to pay an amount equivalent to the amount that should have been withheld on the due date.

Credit institutions must accrue the interest referred to in this article to their other income. Such institutions, for the purposes of the third paragraph of Article 77 of this Law, shall not subtract the tax paid pursuant to this Article from their taxable income.

When the person paying the interest pays on behalf of the establishment the tax that corresponds to it, the amount of such tax shall be considered as interest.

The tax referred to in this article will not be levied on the interest received by such establishments which, if paid directly to a resident abroad, would be exempt from income tax under the terms of article 166 of this Law.

Credit institutions may accrue the income derived from the agreements with the Ministry of Finance and Public Credit, in the terms of section III of article 32-B of the Federal Fiscal Code, at the time they receive them in cash or in goods and in the amount actually received once the decreases provided for in such agreements have been made.

In order to determine the annual inflation adjustment that may be accrued or deductible under the terms of article 44 of this Law, credit institutions will consider as credits, in addition to those indicated in article 45 of this Law, the credits mentioned in section I of said article.

Insurance companies shall make the deductions referred to in this Title, among which they shall consider the creation or increase, only of the reserves for risks in progress, for obligations pending fulfillment due to claims and maturities, as well as the reserves for catastrophic risks, when these are constituted in accordance with the general provisions issued by the National Insurance and Bonding Commission.

Amended paragraph DOF 12-11-2021

The insurance institutions authorized to sell pension insurance, derived from the social security laws, in addition to making the deductions provided for in the preceding paragraph, may deduct the creation or increase of the special mathematical reserve related to the aforementioned insurance, as well as the other reserves provided for in the Law of Insurance and Bonding Institutions when they comply with the condition that any release be destined to the special fund for pension insurance, in accordance with the latter Law, in which the Federal Government participates as trustee.

Amended paragraph DOF 18-11-2015

When at the end of a fiscal year the reserves referred to in this article are reduced in relation to those created in the immediately preceding fiscal year, the difference will be accrued as income in the fiscal year in which the reduction is made. In order to determine the decrease in the reserves, the release of such reserves destined to the special pension insurance fund referred to in the preceding paragraph shall not be considered.

The so-called dividends or interest paid or compensated by the institutions to their policyholders as a premium adjustment procedure, in accordance with the respective policies, will also be deductible.

The insurance companies, for the purposes of Article 44 of this Law, shall additionally consider as credits for the purposes of the aforementioned Article, the land and shares representing investments authorized to guarantee the deductible reserves in accordance with the preceding Article, created by said companies. For these purposes, the balances of the land and stock accounts as of the last day of each month will be considered, without any restatement. When such assets are disposed of, the original amount of the investment or the proven acquisition cost of such assets, as applicable, will not be restated.

The surety companies shall make the deductions referred to in this Title, among which they shall consider the creation or increase, after prior review by the National Insurance and Bonding Commission, of the following reserves:

a) That of bonds in force.

b) Contingency.

Taxpayers who have acquired goods or rights by dation in payment or by adjudication, which they cannot keep as property by legal provision, may not deduct them in accordance with Article 25 of this Law. In order to determine the gain obtained or the loss incurred in the disposal of the aforementioned property or rights, they will subtract from the income obtained from such disposal in the year in which the property or right is disposed of, the proven acquisition cost, This may be adjusted by multiplying it by the restatement factor corresponding to the period from the month in which the property or right was acquired in lieu of payment or by award and up to the month immediately prior to the date on which such property or right is disposed of to a third party by the person who received it in lieu of payment or by award. In the case of shares, the amount to be subtracted under the terms of this paragraph will be the average cost per share determined in accordance with the provisions of Article 22 of this Law.

The institutions that make up the financial system that make interest payments must withhold and pay the tax by applying the rate established by the Congress of the Union for the fiscal year in question in the Federal Income Law on the amount of the principal that gives rise to the payment of interest, as a provisional payment. The withholding will be paid before the authorized offices, no later than the 17th day of the month immediately following the month to which it corresponds, and a tax receipt must be issued stating the amount of the interest payment, as well as the tax withheld.

The withholding referred to in the preceding paragraph shall not be made in the case of:

I. Interest to be paid to:

a) The Federation, the federal entities or the municipalities.

b) Decentralized entities whose activities are not predominantly entrepreneurial, as well as those subject to budgetary control under the terms of the Federal Budget and Fiscal Responsibility Law, as determined by the Tax Administration Service.

c) Legally recognized political parties or associations.

d) Entities authorized to receive deductible donations under the terms of this Law.

e) Investment companies specialized in retirement funds, pension or retirement funds for personnel complementary to those established by the Social Security Law and pension insurance companies authorized exclusively to operate pension insurance derived from social security laws in the form of life annuities or survivorship insurance in accordance with such laws, as well as investment accounts or channels implemented in connection with the personal retirement plans referred to in Article 151, Section V of this Law.

f) Foreign states in cases of reciprocity.

II. Interest paid between Banco de México, the institutions comprising the financial system and investment companies specializing in retirement funds. The provisions of this section will not be applicable in the case of interest derived from liabilities that are not the responsibility of said institutions or companies, as well as when they act on behalf of third parties.

III. Those paid to economic development funds or trusts of the Federal Government.

IV. The interest paid by financial intermediaries to personnel pension or retirement funds and seniority premiums, constituted under the terms of Article 29 of this Law, nor the interest paid to investment funds in debt instruments that exclusively manage investments of such funds or group as investors exclusively the Federation, federal entities, municipalities, decentralized agencies whose activities are not predominantly business, political parties and legally recognized political associations.

Reformed fraction DOF 18-11-2015

V. Interest paid to workers' savings funds and savings banks or to legal entities incorporated solely for the purpose of administering such funds or savings banks.

The provisions of the preceding paragraph shall be applicable only when the following is complied with:

a) That the funds and savings banks referred to in this section comply with the requirements established in the Regulations of this Law and that whoever establishes the fund or savings bank or the legal entity that is established solely to manage the fund or savings bank in question, has at the disposal of the tax authorities the documentation established in said Regulations.

b) The legal entities referred to in this section must submit to the Tax Administration Service, no later than February 15 of each year, information on the amount of contributions made to the funds and savings banks they manage, as well as the nominal and real interest paid during the year in question.

The provisions of this section shall not apply to the interest paid to the legal entities referred to in this section for investments other than those made with the resources of the workers' funds and savings banks they manage.

VI. Interest paid to the investment funds referred to in Article 87 and variable income funds referred to in Article 88 of this Law.

Reformed fraction DOF 18-11-2015

VII. Profits obtained in financial operations derived from capital referenced to the exchange rate of a currency carried out in the recognized markets referred to in Section I of Article 16-C of the Federal Fiscal Code.

The institutions comprising the financial system that pay the interest referred to in the preceding article shall have, in addition to the obligations set forth in other articles of this Law, the following obligations:

I. Submit to the Tax Administration Service, no later than February 15 of each year, information on the name, Federal Taxpayer Registry, domicile of the taxpayer in question and the nominal and real interest referred to in Article 134 of this Law, the average nominal interest rate and number of days of the investment, paid in the immediately preceding calendar year, with respect to all persons to whom interest has been paid, regardless of the provisions of Articles 192 and 295 of the Securities Market Law, 117 of the Law of Credit Institutions and 55 of the Law of Investment Funds.

Amended paragraph DOF 18-11-2015

The tax authorities will provide the necessary measures to guarantee the confidentiality of the information to be submitted under the terms of this section. Such information shall only be submitted encrypted and with the security measures previously agreed upon by the institutions of the financial system and the Tax Administration Service.

II. Provide to the persons to whom the payments are made, no later than February 15 of each year, a statement indicating the nominal and actual amount of interest paid or, as the case may be, the loss determined in accordance with Article 134 of this Law, and the withholdings made, corresponding to the immediately preceding fiscal year.

III. Keep, in accordance with the provisions of the Federal Fiscal Code, the information related to tax receipts and withholdings of this tax.

IV. Provide monthly, no later than the 17th day of the immediately following month, information on cash deposits made in accounts opened in the name of taxpayers in financial system institutions, when the accumulated monthly amount of cash deposits made in all accounts held by the taxpayer in the same financial system institution exceeds $15,000.00, as well as with respect to all cash purchases of cashier's checks, under the terms established by the Tax Administration Service by means of general rules.

Reformed fraction DOF 12-11-2021

For the purposes of this article, cash deposits are understood to be deposits in local or foreign currency made in any type of account that individuals or legal entities have in their name in institutions of the financial system, as well as cash purchases of cashier's checks. Deposits made in favor of individuals or legal entities by means of electronic transfers, account transfers, credit instruments or any other document or system agreed with institutions of the financial system under the terms of the applicable laws, even when they are in charge of the same institution that receives them, will not be considered cash deposits.

Article 56. The financial intermediaries that intervene in the alienation of shares carried out through the corporations that obtain a concession from the Ministry of Finance and Public Credit to act as a stock exchange under the terms of the Securities Market Law, must inform the Tax Administration Service, no later than February 15 of each year, in the form established for such purpose by means of general rules, the name, Federal Taxpayer Registry, domicile, as well as the details of the alienation of shares carried out through the corporations that obtain a concession from the Ministry of Finance and Public Credit to act as a stock exchange under the terms of the Securities Market Law, Federal Taxpayers Registry, domicile, as well as the data of the disposals of shares made through the corporations that obtain a concession from the Ministry of Finance and Public Credit to act as a stock exchange under the terms of the Securities Market Law, carried out in the immediately preceding calendar year, which is requested in said form, with respect to all persons that have carried out the disposal of shares.

Article amended DOF 12-11-2021

CHAPTER V

OF LOSSES

The tax loss will be obtained from the difference between the accumulated income of the fiscal year and the deductions authorized by this Law, when the amount of the latter is greater than the income. The result obtained will be increased, as the case may be, with the participation of the workers in the profits of the companies paid in the fiscal year under the terms of Article 123 of the Political Constitution of the United Mexican States.

The tax loss incurred in a fiscal year may be deducted from the taxable income of the following ten fiscal years until it is exhausted.

When the taxpayer does not reduce in a fiscal year the tax loss of previous fiscal years, when he could have done so in accordance with this article, he will lose the right to do so in subsequent fiscal years and up to the amount by which he could have done so.

For the purposes of this article, the amount of the tax loss incurred in a fiscal year will be restated by multiplying it by the restatement factor corresponding to the period from the first month of the second half of the fiscal year in which it occurred until the last month of the same fiscal year. The portion of the tax loss from prior years that has already been restated and is pending to be applied against taxable income will be restated by multiplying it by the restatement factor corresponding to the period from the month in which it was last restated through the last month of the first half of the year in which it will be applied.

For the purposes of the preceding paragraph, when the number of months of the fiscal year in which the loss occurred is odd, the first month of the second half shall be considered to be the month immediately following the month to which the half of the fiscal year corresponds.

The right to reduce tax losses is personal to the taxpayer who suffers them and may not be transferred to another person or as a result of a merger.

In the case of a spin-off of companies, the tax losses pending to be reduced from tax profits must be divided between the spin-off companies and the spun-off companies engaged in the same line of business, and the same must be accredited in the exercise of the powers of verification.

Amended paragraph DOF 12-11-2021

For the purposes of the preceding paragraph, the division of the tax losses made by the spin-off and spun-off companies will be made in the proportion in which the sum of the total value of the inventories and accounts receivable related to the business activities of the spun-off company is divided when the spun-off company was mainly engaged in such activities, or of the fixed assets when the spun-off company was mainly engaged in other business activities. In order to determine the proportion referred to in this paragraph, investments in real estate not related to the preponderant activity must be excluded.

Paragraph added DOF 12-11-2021

In cases of merger, the merging company may only reduce its tax loss pending to be reduced at the time of the merger, against the tax profit corresponding to the operation of the same business in which the loss occurred.

When the partners or controlling shareholders of a company that has tax losses from prior years pending to be reduced and the sum of its income in the last three years has been less than the restated amount of such losses at the end of the last year before the change of partners or shareholders, such company may only reduce the losses against the tax profits corresponding to the operation of the same lines of business in which the losses were incurred. For these purposes, the income shown in the financial statements corresponding to the indicated period, approved by the shareholders' meeting, will be considered.

For the purposes of the preceding paragraph, it is considered that there is a change of partners or shareholders who have control of a company, when in one or more acts carried out within a period of three years, counted from the date of the merger:

I . Change the holders, directly or indirectly, of more than fifty percent of the voting shares or partnership interests of the company

II. Change the direct or indirect holders of any of the following rights:

a) Those that allow the imposition of decisions in the general meetings of shareholders, partners or equivalent bodies, or the appointment or dismissal of the majority of the directors, administrators or their equivalents, of the company in question.

b) Those that make it possible to direct the management, strategy or main policies of the company in question, whether through the ownership of securities, by contract or in any other way.

III. After the merger, the company in question and its partner or shareholder, which is a legal entity, cease to consolidate their financial statements in accordance with the provisions that regulate the taxpayer in accounting and financial matters, or that it is obliged to apply.

Paragraph with reformed fractions DOF 12-11-2021

For purposes of the preceding sections, in the event that agreements or legal acts are entered into that subject the change of partners or shareholders to a suspensive condition or term, such change shall be deemed to be effected from the time of the execution of the act.

Paragraph added DOF 12-11-2021

The provisions of the third and fourth paragraphs of this article do not apply in cases in which the change of partners or shareholders occurs as a consequence of inheritance, donation or as a result of a corporate restructuring, merger or spin-off of companies that are not considered a sale in the terms of the Federal Tax Code, provided that in the case of the restructuring, merger or spin-off, the direct or indirect partners or shareholders that maintained control prior to such acts, maintain control after such acts. In the case of a merger, the provisions of the first paragraph of this article shall apply. For these purposes, shares placed among the general investor public will not be included, in accordance with the general rules issued for such purpose by the Tax Administration Service.

Paragraph added DOF 12-11-2021

The companies referred to in the preceding paragraphs, in order to reduce the tax losses pending reduction, must keep their accounting records in such a way that the control of their tax losses in each line of business can be exercised individually for each fiscal year, as well as for each new line of business that is incorporated to the business. With respect to unidentifiable expenses, these must be applied in the proportional part that they represent in relation to the income obtained from the activity. This application must be made with the same criteria for each fiscal year.

The tax loss or part thereof, arising from the merger or liquidation of companies in which the taxpayer is a partner or shareholder, will not be reduced.

CHAPTER VI

OF THE OPTIONAL REGIME FOR CORPORATE GROUPS

The group of companies that meet the requirements established in this Chapter to be considered as integrating and integrated, may request authorization to apply the optional regime consisting of calculating and paying their income tax in accordance with the provisions of Article 64 of this Law.

The integrating company and the integrated companies that exercise the option provided in this Chapter must apply it until the integrating company does not give notice to stop doing so, or when it ceases to comply with any of the requirements established in this Chapter.

The notice referred to in the preceding paragraph must be filed with the Tax Administration Service no later than the last month of the fiscal year prior to that in which it is intended to cease applying the option provided for in this Chapter.

Companies that choose to apply the provisions of this Chapter shall be subject to the provisions of the other provisions of this Law, unless a different treatment is expressly indicated in this Chapter.

For the purposes of this Chapter, integrating companies are considered to be those that meet the following requirements:

I. That it is a company resident in Mexico.

II. That it owns more than 80% of the voting shares of one or more other integrated companies, including when such ownership is held through other companies that in turn are integrated by the same integrating company.

III. That in no case more than 80% of its voting shares are owned by another company or companies, unless such companies are resident in a country with which there is a comprehensive information exchange agreement. For these purposes, shares placed among the general investor public will not be computed, in accordance with the rules issued for this purpose by the Tax Administration Service.

For the purposes of this Chapter, shares with limited voting rights and those which, under the terms of commercial legislation, are called voting shares, are not considered voting shares. In the case of companies that are not stock companies, the value of the corporate shares will be considered.

For the purposes of this Law, integrated companies are considered to be those in which more than 80% of their voting shares are owned, either directly, indirectly or both, by an integrating company. For these purposes, the indirect ownership referred to in this article will be that held by the integrating company through one or more other companies which in turn are integrated by the same integrating company.

Article 62. The following companies shall not have the character of integrating or integrated companies:

I. Those included in Title III of this Law.

II. Those that in the terms of the third paragraph of article 7 of the present Law compose the financial system and the capital investment funds created in accordance with the laws of the matter.

Reformed fraction DOF 18-11-2015

III. Residents abroad, including when they have permanent establishments in the country.

IV. Those in liquidation.

V. Civil societies and associations, as well as cooperative societies.

VI. The legal entities that pay taxes in accordance with Articles 72 and 73 of this Law.

VII. The joint ventures referred to in Article 17-B of the Federal Fiscal Code.

VIII. Those that carry out maquila operations referred to in Article 182 of this Law.

IX. Those that have tax losses from previous years pending to be reduced in terms of the provisions of Article 57 of this Law, which were generated prior to the date on which they meet the requirements referred to in Article 60 or 61 of this Law, as the case may be.

X. The companies that provide air public transportation services.

In order to obtain the authorization referred to in Article 59 of this Law, the integrating corporation must comply with the following requirements:

I. To have the written consent of the legal representative of each of the integrated companies to determine and pay the income tax under the terms established in this Chapter.

II. Submit the request for authorization before the tax authorities no later than August 15 of the year immediately preceding the year for which the tax is to be determined under the terms of this Chapter, accompanied by the information established by the Tax Administration Service through general rules, and the requirements set forth in said Chapter must be met as of that date.

III. In the request referred to in the preceding section, indicate all the companies that are integrated in accordance with the provisions of this Chapter.

The authorization referred to in this article shall be personal to the taxpayer and may not be transferred to another person or by reason of a merger.

The integrating company and its members, in order to determine the income tax for the year to be paid, as well as that which may be deferred, shall be subject to the following:

I. The company in question shall determine its taxable income or loss for the year in accordance with the provisions of Article 9 of this Law.

II. The integrating company will obtain the integrated tax result, as follows:

a) Add the taxable income of the year in question, corresponding to the integrated companies.

b) Subtract the tax losses of the year incurred by the integrated companies, without the restatement referred to in Article 57 of this Law.

c) As the case may be, it will add its tax result or subtract its tax loss for the fiscal year in question. The tax loss will be without the restatement referred to in Article 57 of this Law.

The items mentioned in the preceding paragraphs will be added to or subtracted from the taxable income.

III. The integrating company will calculate an integrated tax result factor corresponding to the year in question, which will be obtained by dividing the integrated tax result of the year by the sum of the tax results obtained in such year by the integrating company and by its integrated companies in the integrating interest. The integrated tax result factor will be calculated to the ten thousandth.

If the integrated tax result is negative, the integrated tax result factor will be zero.

IV. The company in question will determine the tax for the year to be paid, for which purpose it will add the amount of the tax corresponding to the taxable participation with the amount corresponding to the non-integrable participation, in accordance with the following:

a) The amount related to the taxable participation shall be determined by multiplying the tax that would have corresponded had the provisions of this Chapter not been applied by the taxable participation of the year, the amount obtained shall be multiplied by the integrated tax result factor referred to in Section III of this Article.

b) The amount corresponding to the non-integrable interest shall be determined by multiplying the tax that would have corresponded had the provisions of this Chapter not been applied by the non-integrable interest for the year.

c) The sum of the amounts obtained in the preceding paragraphs will be the tax to be paid together with the tax return corresponding to the fiscal year in question.

V. The difference between the tax corresponding to the taxable participation and that obtained in accordance with paragraph a) of section IV of this Article, shall be the tax for the year, which may be deferred for a period of three years, at the end of which it must be paid in accordance with the provisions of the first paragraph of Article 67 of this Law.

For the purposes of this Chapter, the integrating company's equity interest will be the equity interest that an integrating company has in the capital stock of an integrated company during the fiscal year of the latter, either directly or indirectly. For these purposes, the daily average corresponding to such fiscal year will be considered.

The integrable participation of the integrating companies will be 100%.

The non-integrable interest shall be the equity interest in which the integrating company does not participate directly or indirectly in the capital stock of an integrated company.

When the integrating company or the integrated companies have investments referred to in Article 176 of this Law, the integrating company or its integrated companies shall not consider the taxable income, taxable profit or tax result derived from such investments to determine its tax result or tax loss and shall be subject to the provisions of Article 177 of said Law.

The integrating and integrated companies during the period for which they must pay income tax under the terms of this Chapter shall keep the net tax profit account applying the rules and procedure established in Article 77 of this Law, having to comply with the provisions of this Article with respect to the net tax profit of the fiscal year, in accordance with the following:

I. In each fiscal year, identify the amount of net taxable income corresponding to:

a) The integral participation, for which the net tax profit will be multiplied by the integral participation that corresponds to the company in question.

b) The taxable participation for which the tax for the year was paid, which will be obtained by multiplying the amount resulting in accordance with the preceding paragraph by the factor referred to in Section III of Article 64 of this Law.

c) The taxable profit for which the tax for the year was deferred, which will be obtained by reducing the amount obtained in accordance with paragraph a) above by the amount obtained in accordance with paragraph b) above.

d) The non-integrable interest, which is calculated by multiplying the net taxable income by the non-integrable interest.

II. For purposes of the provisions of the first paragraph of Article 77 of this Law, only the portion of the net tax profit for the year determined in accordance with paragraphs b) and d) of Section I of this Article shall be added to the net tax profit account.

III. When the deferred tax referred to in Article 64 of this Law is paid, the company in question may increase the balance of its net tax profit account for the year in which such payment occurs, with the net tax profit referred to in paragraph c) of Section I of this Article that corresponds to it. Likewise, when the deferred tax is paid in advance, the balance of the net tax profit account of the year in which such payment occurred may be increased with the net tax profit corresponding to such payment.

The authorization to exercise the option referred to in Article 59 of this Law shall be effective for the group of companies as from the fiscal year following the one in which it is granted.

The companies that comply with the provisions of this Chapter in order to be considered as integrated before the authorization becomes effective, will be incorporated into the group as from the fiscal year following the one in which the authorization was obtained.

Companies that qualify as integrated after the date on which the authorization became effective must be incorporated in the fiscal year following that in which such event occurs.

In the case of integrated companies that join the group of companies during the period between the date of filing the request to exercise the option referred to in this Chapter and the date on which the respective authorization is notified, the integrating company must file the notice of incorporation within fifteen days following the date on which the tax authorities notify the authorization.

For the purposes of this article, the integrating company must file, within fifteen days following the date on which it acquires directly or through another or other integrated companies, more than 80% of the voting shares of a company, a notice with the tax authorities stating the percentage of the integrating interest, as well as the type of interest, whether direct, indirect or both, accompanied by the information established by general rules of the Tax Administration Service (Servicio de Administración Tributaria).

In the case of a company that arises as a result of a spin-off, the integrating company must file the notice within forty-five days following the date on which the spun-off company is incorporated.

When the integrating company does not incorporate a company that must be considered as an integrated company, the group must cease to apply the option referred to in this Chapter, and both the integrating company and the integrated companies will be obligated to pay the tax that they have deferred, with the updating and surcharges corresponding to the period elapsed from the date on which the tax of each company should have been paid if they had not complied with the provisions of this Chapter and until the same is paid. The foregoing shall also apply in the case of incorporation of a company that does not qualify as an integrated company under the terms of Article 62 of this Law.

The companies that have opted to apply the provisions of this Chapter must pay the deferred income tax on the same date on which they must file the tax return corresponding to the fiscal year following the one in which the three-year period referred to in Section V of Article 64 of this Law concludes.

The deferred income tax must be paid restated for the period from the month in which the tax should have been paid had the option not been exercised until the filing date of the aforementioned tax return.

Article 68. The company that should no longer be considered as integrated or that ceases to meet the requirements to be so, must disincorporate as of the date on which this assumption occurs and pay within the following month the tax that had been deferred during the period that was in compliance with the provisions of this Chapter.

The deferred tax to be paid will be restated for the period from the month in which the payment of the tax for each year should have been made if the option provided for in this Chapter were not applied until the payment is made.

In the case of a merger of companies, the merging company must pay the tax deferred by the integrated company that disappears as a result of the merger, applying the provisions of the first and second paragraphs of this article.

In the case of a spin-off of companies, the company that participates as a spin-off or the company that has the character of a designated spin-off in terms of the provisions of Article 14-B, Section II, paragraph b) of the Federal Tax Code, must pay within the month following the month in which the spin-off takes effect, the total tax that the spin-off company had deferred prior to that event, applying the provisions of the first and second paragraphs of this Article. The surviving spin-off company may continue to apply the provisions of this Chapter as from the fiscal year following that in which the spin-off occurs.

When an integrated company falls under the provisions of this article, the integrating company must file a notice with the Tax Administration Service within fifteen days following the date on which such event occurs, accompanied by the information specified by the Tax Administration Service by means of general rules.

When the integrating company ceases to apply the option referred to in this Chapter, can no longer be considered as integrating company or no longer meets the requirements to be so, each company must disincorporate as of the date on which this event occurs and pay within the following month the tax that had been deferred during the period that was in compliance with the provisions of this Chapter.

When the integrating company is located in any of the situations referred to in the first paragraph of this Article, the companies comprising the group will be prevented from reapplying the option referred to in this Chapter during the three fiscal years following that in which the situation in question arises.

In the case of a merger of companies, when the company that disappears as a result of the merger is the integrating company, both the merging company and the integrated companies will be obliged to pay the deferred tax, applying the provisions of the first and second paragraphs of this article.

In the case of a partial spin-off of the integrating company, the company that participates as a spin-off must pay within the month following the month in which the spin-off takes effect, the total tax that the spin-off company had deferred prior to that event, applying the provisions of the first and second paragraphs of this article.

In the event of a total spin-off of the integrating company, the company that has the character of designated spin-off referred to in Article 14-B, section II, paragraph b) of the Federal Fiscal Code and the integrated companies must comply with the provisions of the first and second paragraphs of this article.

When the group falls under the provisions of this article, the integrating, merging, spin-off or spun-off company referred to in the preceding paragraph, as applicable, must file the notice referred to in the last paragraph of article 68 of this Law for each of the companies of the group, including itself, with the Tax Administration Service within fifteen days following the date on which such event occurs, presenting the information indicated by the Tax Administration Service by means of general rules.

In the event that any company ceases to be integrated or integrating in terms of the provisions of this Chapter, or when such companies cease to comply with the requirements established therein and the company in question continues to apply this option, the group will be obligated to pay the deferred tax, applying the provisions of the first and second paragraphs of this Article, as well as the surcharges resulting from the month in which the payment of the tax for each year should have been made if the option had not been applied and until the month in which the tax is paid.

Article 70. The companies that apply the option referred to in this Chapter, in addition to the obligations established in other articles of these bylaws, shall have the following obligations:

I. The integrating company and the integrated companies shall keep and maintain the records indicated below:

a) Those that allow determining the net taxable income account referred to in Article 65 of this Law.

b) Dividends or profits received or distributed, including those that did not come from its net tax profit account, in accordance with the provisions of the general rules issued for such purposes by the Tax Administration Service.

II. The integrating company and the integrated companies must attach to the informative declaration of their tax situation that they are obliged to file in accordance with the provisions of Article 32-H of the Federal Tax Code, a copy of the opinions received from third parties on tax matters and that have had the effect of decreasing the tax result or increasing the tax loss of the fiscal year.

III. The integrator shall keep and maintain the following records:

a) That which shows the determination of the integrated tax result and the integrated tax result factor for the year.

b) The percentage of the integrating company's integrating interest in each of the integrated companies during the year.

The records referred to in this article must be kept as long as their tax effects are prolonged in time, in terms of the provisions of the applicable tax provisions.

IV. The integrating company shall be obliged to file a tax return for the fiscal year within the three months following the closing of the fiscal year, in which it shall state the integrated tax result factor.

It must also make public in May of the fiscal year in question, the information related to the tax that has been deferred in accordance with this Chapter, using its web page or the means established by the Tax Administration Service through general rules.

V. The integrated companies shall:

a) Inform the integrating company within three months following the date on which the fiscal year ends of the tax result or loss that would have corresponded to them.

b) File a tax return for the year within three months following the end of the fiscal year.

c) Make public in the month of May of the fiscal year in question, the information related to the tax that has been deferred in accordance with this Chapter, using its web page or the means established by the Tax Administration Service through general rules.

In the event that one or more of the integrated companies must modify their tax result or loss for the year, they will file a supplementary tax return in addition to the one referred to in paragraph b) of this section. In such case, the integrating company will be obliged to file a supplementary tax return for the year in which it will state the integrated tax result factor.

When in the exercise of their powers, the tax authorities modify the tax result or the tax loss of one or more integrated companies or of the integrating company and with this the integrated tax result is modified, the integrating and integrated companies will file a supplementary tax return in accordance with the provisions of the preceding paragraph.

If, as a consequence of the provisions of either of the two preceding paragraphs, a difference in tax is payable by the integrating company or any of its subsidiaries, such companies will be obligated to pay the updated tax and the corresponding surcharges for the period from the date on which the payment should have been made until such payment is made, by means of a supplementary tax return.

When the event referred to in the preceding paragraph derives from a modification to the integrated tax result factor, the integrating company may file the supplementary return correcting the aforementioned factor no later than the last month of the first or second half of the year corresponding to that in which the return was filed that gave rise to the aforementioned difference or in which the authority has modified the tax result or loss of one or some of the companies of the group.

In the event that the integrating company or any of the integrated companies modifies its tax result or loss for the year, or when in the exercise of its powers, the tax authorities modify the tax result or the tax loss of the integrating company or of one or more integrated companies, and these events occur once the deferred tax has been paid in accordance with the provisions of Section V of Article 64 of this Law, the integrated company or the integrating company, as the case may be, must pay both the tax payable by it and the restatement and surcharges, if any, that may have been generated as a result of such modification, without the tax authorities having to pay the deferred tax, the integrated company or the integrating company, as the case may be, must pay both the tax payable and the restatement and surcharges, if any, generated as a result of the referred modification, without having to recalculate the integrated tax result or the integrated tax result factor. Likewise, when the irregularity consists of showing a tax loss greater than that actually incurred, the integrating company must modify the integrated tax result and the integrated tax result factor, and the companies that would have been liable for the tax must pay the corresponding restatement and surcharges for the difference between the tax that was paid and the tax that should have been paid, for the period from the month in which the tax should have been paid if such option had not been exercised until the date on which the payment is made.

VI. When an integrated or integrating company enters into transactions through which it disposes of land, investments, shares, partnership interests, among others, with any other company of the group, it must carry them out in accordance with the provisions of Article 179 of this Law.

The integrated company that does not comply with any of the obligations referred to in this Article must apply the provisions of Article 68 of this Law, being obligated to pay the total deferred income tax for the period in which it applied this option, with the resulting surcharges from the month in which the payment of the tax for each year should have been made if the option had not been applied and until the payment is made.

In the event that the integrating company fails to comply with any of the obligations referred to in this Article, the group must cease to apply the option referred to in this Chapter, and each company will be obligated to pay the total deferred income tax for the period in which it applied this option, with the resulting restatement and surcharges from the month in which the payment of the tax for each year should have been made had the option not been applied and until the payment is made, in accordance with the provisions of Article 69, last paragraph, of this Law.

The integrating and integrated companies shall determine the provisional payments to be made in each of the months of the fiscal year in accordance with the following:

I. Calculate the provisional payment for the period in question in accordance with the procedure and rules established in Article 14 of this Law.

II. To the result determined in accordance with the provisions of the preceding section, the integrable participation corresponding to the immediately preceding fiscal year shall be applied, and the amount obtained shall be multiplied by the factor of the integrated tax result corresponding to the immediately preceding fiscal year.

III. The result of section I of this article shall be multiplied by the non-integrable participation.

IV. The provisional payment for the period to be paid shall be the amount obtained by adding the results obtained in accordance with sections II and III above.

V. Provisional payments corresponding to the same, made in accordance with this Article, may be credited against the tax for the year to be paid in terms of the provisions of Article 64 of this Law.

For the first year in which the group applies the option referred to in this Chapter, the integrating company will calculate the integrated tax result factor in terms of the provisions of Section III of Article 64 of this Law that would have corresponded to the group in the immediately preceding year had it exercised such option. In this case, the first provisional payment of the year will include the first, second and third month of said year.

CHAPTER VII

OF THE COORDINATES

The legal entities that manage and operate fixed assets or fixed assets and land, directly related to the activity of land transportation of cargo or passengers and whose members exclusively carry out activities of land transportation of cargo or passengers or complementary to such activities and have fixed assets or fixed assets and land, directly related to such activities, are considered coordinated.

Amended paragraph DOF 18-11-2015

The provisions of this Chapter may be applied to legal entities engaged exclusively in the land transportation of cargo or passengers, provided that they do not render services to another legal entity resident in the country or abroad, which is considered a related party.

Paragraph added DOF 18-11-2015

For the purposes of this Chapter, taxpayers exclusively engaged in the activity of land transportation of cargo or passengers are considered to be those whose income from such activities represents at least 90% of their total income, not including income from the sale of fixed assets or fixed assets and land owned by them that have been used for their activity.

Paragraph added DOF 18-11-2015

The coordinated parties shall comply with the obligations set forth in this Law, applying to such effect the provisions of Section I of Chapter II of Title IV of the same, in accordance with the following:

I. Calculate and pay, for each of its members, the provisional payments under the terms of Article 106 of this Law. To the result obtained in accordance with this section, the rate of said article shall be applied in the case of individuals, or the rate established in article 9 of the same, in the case of corporations.

II. In order to calculate and pay the tax for the year for each of its members, they will determine the taxable income for the year by applying the provisions of Article 109 of this Law. To the taxable income determined in the terms of this section, the rate of Article 152 of this Law shall be applied in the case of individuals, or the rate established in Article 9 of the same, in the case of corporations.

Provisional payments made by the taxpayer may be credited against the tax payable under the terms of the preceding paragraph.

The tax for the year will be paid by means of a tax return to be filed by corporations during the month of March of the following year, before the authorized offices, except in the case of corporations whose members are individuals, in which case the tax return will be filed during the month of April of the following year.

Individuals or legal entities that comply with their tax obligations through several coordinates of which they are members, instead of applying the provisions of the first paragraph of this section, may opt for each coordinate of which they are members to pay income tax on their own account, with respect to the income obtained by the coordinated entity in question, applying to the taxable income referred to in the preceding paragraph the rate established in Article 9 of this Law, in the case of corporations, or the maximum rate to be applied on the excess of the lower limit established in Article 152 of this Law in the case of individuals. Such payment will be considered as definitive. Once the option referred to in this paragraph has been exercised, it may not be changed during a period of five years from the year in which the option was exercised. The option referred to in this paragraph may also be applied by individuals or corporations that are members of a single coordinated group.

III. They shall make withholdings on behalf of their members and the payment of such withholdings and, if applicable, they shall issue proof of such withholdings, when required by this Law or other tax provisions, as well as the corresponding tax voucher.

IV. They shall keep a separate record of the income, expenses and investments of the operations carried out on behalf of each of their members, complying with the provisions of this Law and the provisions of the Federal Fiscal Code. In the case of liquidations issued under the terms of the sixth paragraph of Article 73 of this Law, the aforementioned record will be made globally.

V. To issue and obtain tax receipts for the income received and expenditures made, for the transactions carried out on behalf of each of its members, complying with the provisions of this Law and other tax provisions.

VI. They shall provide their members with proof of income and expenses, as well as the tax paid by the member on behalf of the member, no later than January 31 of each year.

For the purposes of this article, the coordinated entities will comply with their own obligations and will do so jointly by their members in the appropriate cases. Likewise, the tax determined by each of its members will be paid jointly in a single tax return.

For the purposes of this Law, the coordinated entity will be considered responsible for the compliance of the tax obligations of its members, with respect to the operations carried out through the coordinated entity, and the members will be jointly and severally liable for the compliance of such obligations for their corresponding part.

For the purposes of this article, two or more persons are not considered to be related parties when the trucking services are rendered to persons with whom the taxpayers are interrelated in the administration, control and capital participation, provided that the final trucking service is provided to third parties with whom they are not interrelated in the administration, control or capital participation, and such service is not rendered jointly with the alienation of goods. Related parties are not considered to be related parties when the trucking service is provided between coordinates or members of the same.

When individuals carry out activities in joint ownership and choose to be taxed through coordinates under the terms of this Chapter, such coordinates will be the ones to comply with the tax obligations of the joint ownership and will be considered as common representatives of the joint ownership.

Article 73. In the case of individuals who comply with their tax obligations through several coordinates of which they are members, when their income comes exclusively from the land transportation of cargo or passengers, they must request from the coordinates of which they are members, the information necessary to calculate and pay the income tax that corresponds to them. Except when they have exercised the option referred to in the fourth paragraph of section II of article 72 of this Law.

To calculate and pay the tax for the year, the provisions of Article 109 of this Law shall apply. To the taxable income determined in accordance with said provision, the rate set forth in Article 152 of this Law shall be applied.

Individuals who are members of legal entities engaged in land transportation of cargo or passengers may comply with the obligations established in this Law on an individual basis, provided that they directly manage the vehicles that correspond to them or have contributed them to the legal entity in question.

When they choose to pay the tax individually, they must notify the tax authorities and communicate it in writing to the respective legal entity, no later than the date on which the first provisional payment of the fiscal year in question must be made.

Individuals who have opted to pay the tax individually may deduct the expenses incurred during the year that correspond to the vehicle they manage, even when the tax receipts are in the name of the coordinated party, provided that such documentation meets the requirements set forth in the tax provisions and identifies the vehicle to which it corresponds.

The legal entities will not consider the income corresponding to their members that they have paid individually nor the deductions corresponding to them, and must deliver to the individuals and legal entities that pay the tax individually, the liquidation of the income and expenses. The aforementioned legal entities must keep a copy of the liquidation and of the receipts of the expenses incurred in the fiscal year, related to the vehicle managed by such individuals, during the term referred to in Article 30 of the Federal Tax Code.

The legal entities referred to in Article 72 of this Law will apply the provisions of Article 12 of this Law, when they enter into liquidation, and must comply with the requirements established in the Regulations of this Law.

Legal entities that do not carry out business activities on behalf of their members must comply with the obligations of this article and with articles 72, 76, 102 and 105 of this Law.

When the members of the legal entities referred to in this Chapter are grouped for the purpose of jointly incurring expenses necessary for the development of the activities referred to in this Chapter, they may deduct the proportional part of the expense individually, even when the tax receipts are in the name of one of the other members, provided that such receipts meet the other requirements established by the tax provisions.

CHAPTER VIII

AGRICULTURAL, LIVESTOCK, FORESTRY AND FISHING ACTIVITIES REGIME

Article 74. The following taxpayers shall comply with their income tax obligations in accordance with the regime established in this Chapter:

I. The legal entities under agrarian law that are exclusively engaged in agricultural, livestock or forestry activities, production cooperative societies and other legal entities that are exclusively engaged in such activities.

II . Legal entities engaged exclusively in fishing activities, as well as production cooperative societies engaged exclusively in such activities

III. Repealed.

Section repealed DOF 12-11-2021

The provisions of this Chapter shall not be applicable to corporations taxed under the terms of Chapter VI of Title II of this Law.

When individuals carry out activities in joint ownership and choose to be taxed through legal entities under the terms of this Chapter, such legal entities will be the ones to comply with the tax obligations of the joint ownership and will be considered as common representatives of the joint ownership.

For the purposes of this Law, when the legal entity complies on behalf of its members with the provisions of this Chapter, it will be considered as responsible for the compliance of the tax obligations of its members, with respect to the transactions carried out through the legal entity, being the members jointly and severally liable for such compliance for the part that corresponds to them.

The legal entities referred to in this Chapter shall apply the provisions of Article 12 of this Law, when they go into liquidation.

Taxpayers engaged exclusively in agricultural, livestock, fishing or forestry activities are considered to be those whose income from such activities represents at least 90% of their total income, not including income from the sale of fixed assets or fixed assets and land owned by them that have been used for their activity.

The legal entities referred to in this Chapter shall comply with the obligations set forth in this Law in accordance with the provisions of Section I of Chapter II of Title IV of this Law, as follows:

I. They must calculate and pay, for each of their members, the provisional payments under the terms of Article 106 of this Law. To the result obtained in accordance with this section, the rate of said article shall be applied in the case of individuals, or the rate established in article 9 of the same, in the case of corporations.

II . In order to calculate and pay the tax for the year of each of its members, they will determine the taxable income for the year by applying the provisions of Article 109 of this Law. To the taxable income determined under the terms of this section, the rate established in Article 152 of this Law shall be applied in the case of individuals, or the rate established in Article 9 of the same, in the case of corporations.

Provisional payments made by the legal entity may be credited against the tax payable under the terms of the preceding paragraph.

The tax for the year will be paid by means of a tax return to be filed by corporations during the month of March of the following year, before the authorized offices, except in the case of corporations that comply with the tax obligations of members that are only individuals, in which case the tax return will be filed during the month of April of the following year.

The taxpayers referred to in the twelfth and thirteenth paragraphs of this article will deduct as expenses the expenditures actually made in the year for the acquisition of fixed assets, expenses or deferred charges. The taxpayers referred to in the fourteenth paragraph of this article must apply the provisions of Section II, Chapter II, Title II of this Law.

III . They must comply with the other formal, withholding and reporting obligations established in the tax provisions

For the purposes of this article, legal entities will comply with their own obligations and will do so jointly by their members in the appropriate cases. Likewise, the tax determined by each of its members will be paid jointly in a single tax return.

Legal entities that do not carry out business activities on behalf of their members must comply with the obligations of this title and with articles 102 and 105 of this Law.

The entities referred to in this Chapter will not be required to determine at year-end the annual adjustment for inflation referred to in Chapter III of Title II of this Law.

Entities engaged exclusively in agricultural, livestock, forestry or fishing activities will not pay income tax on income from such activities up to an amount, in the fiscal year, of 20 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, for each of its partners or associates, provided that it does not exceed, in its totality, 200 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion. The limit of 200 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion will not be applicable to ejidos and communities. The entities referred to in this paragraph may add to the balance of their net tax profit account for the year in question, the profit corresponding to the exempt income; to determine such profit, the exempt income corresponding to the taxpayer will be multiplied by the profit coefficient for the year, calculated in accordance with the provisions of Article 14 of this Law.

Amended paragraph DOF 18-11-2015, 12-11-2021

In the case of legal entities engaged exclusively in agricultural, livestock, forestry or fishing activities, whose income for the year exceeds 20 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, but is less than 423 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, the provisions of the preceding paragraph will be applicable to them; for the excess, the tax will be paid under the terms of the seventh paragraph of this article, reducing the tax determined in accordance with section II of said paragraph by 30%. The entities referred to in this paragraph may add to the balance of their net tax profit account for the year in question, the profit corresponding to the exempt income; to determine such profit, the exempt income corresponding to the taxpayer will be multiplied by the profit coefficient for the year, calculated in accordance with the provisions of Article 14 of this Law.

Amended paragraph DOF 18-11-2015, 12-11-2021

In the case of companies or associations of producers engaged exclusively in agricultural, livestock, forestry or fishing activities, formed exclusively by partners or associates who are individuals and each partner or associate has income greater than 20 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, without exceeding 423 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, without the total income in the fiscal year of the company or association exceeding 4,230 times the annual value of the Unidad de Medida y Actualizacion y Actualizacion, the provisions of the eleventh paragraph of this precept will be applicable, for the excess the tax will be paid in the terms of the seventh paragraph of this article, reducing the tax determined in accordance with section II of said paragraph, by 30%.

Amended paragraph DOF 12-11-2021

Entities engaged exclusively in agricultural, livestock, forestry or fishing activities, whose income for the year exceeds the amounts indicated in the twelfth paragraph of this provision, the exemption provided in the eleventh paragraph of this article will be applicable to them; for the excess, the tax will be paid in the terms of the seventh paragraph of this article and the reduction referred to in the twelfth paragraph of this article will be applicable up to the amounts established therein. The corporations referred to in this paragraph may add to the balance of their net tax profit account for the year in question, the profit corresponding to the exempt income; to determine such profit, the exempt income corresponding to the taxpayer will be multiplied by the profit coefficient for the year, calculated in accordance with the provisions of Article 14 of this Law.

Amended paragraph DOF 12-11-2021

In the case of legal entities engaged exclusively in agricultural, livestock, fishing or forestry activities, in order to calculate the tax corresponding to dividends or profits distributed, instead of the provisions of the preceding paragraph, they must multiply the dividends or profits distributed by the factor obtained by dividing the unit by the factor obtained by subtracting from the unit the result of dividing the income tax payable under the terms of this article by the profit or dividends distributed.

Article 74-A. Repealed.

Article added DOF 18-11-2015. Repealed DOF 12-11-2021

Article 74-B. Legal entities under agrarian law that obtain at least 80% of their total income from the industrialization and commercialization of products derived from agricultural, livestock, forestry or fishing activities, constituted solely by partners or associates who are individuals who are recognized as ejidatarios or comuneros in accordance with the Agrarian Law, or by ejidos or communities constituted under the terms of said Law, that have had total income in the immediately preceding fiscal year, without including the income from the sale of fixed assets or fixed assets and land owned by them that have been subject to their activity, that have not exceeded the amount of five million pesos, without including income from disposals of fixed assets or fixed assets and land owned by them that had been subject to their activity, which had not exceeded the amount of five million pesos, will comply with the obligations established in this Law in accordance with the provisions of Section I of Chapter II of Title IV of this Law and will determine the corresponding income tax by applying the rate established in Article 9 of this Law. The tax determined will be reduced by 30%.

The legal entities referred to in this article that initiate activities may opt to apply the provisions of this article, when they estimate that their total income for the fiscal year, in which at least 80% is obtained from the industrialization and commercialization of products derived from agricultural, livestock, forestry or fishing activities, will not exceed the amount of five million pesos. When in the aforementioned fiscal year they carry out operations for a period of less than twelve months, in order to determine the aforementioned amount, they will divide the income declared by the number of days comprising the period and the result will be multiplied by 365 days.

Taxpayers who choose to apply the provisions of this article must file in January of the year in question, a notice before the tax authorities under the terms established for such purposes by the Tax Administration Service through general rules, in which they state that they will apply the provisions of this article.

When taxpayers fail to comply with the requirements referred to in this article or when their income in the period between the beginning of the fiscal year and the month in question exceeds the amount indicated in the first paragraph of this article, they will cease to apply the provisions of this article and must pay income tax under the terms of this Law in the corresponding regime, as of the fiscal year following the one in which the failure to comply with such requirements occurs. In the event that taxpayers obtain income exceeding the amount of five million pesos, such excess will not have the benefit of the tax reduction referred to in this article. When taxpayers fail to apply the provisions of this article, in no case may they apply it again under the terms of this article.

Provisional tax returns and tax returns for the year, as well as the registration of transactions, may be made through the means and formats indicated by the Tax Administration Service through general rules.

Article added DOF 09-12-2019

Article 75. The legal entity that complies with the tax obligations on behalf of its members under the terms of this Chapter, in addition to the obligations referred to in the preceding Article, shall have the following obligations:

I. To make withholdings on behalf of its members and the payment of such withholdings and, if applicable, to issue certificates of such withholdings, when required to do so by this Law or other tax provisions.

II . Keep a separate record of the income, expenses and investments of the operations carried out on behalf of each of its members, complying with the provisions of this Law and those of the Federal Fiscal Code

III . To issue and collect the supporting documentation for the income and expenditures, respectively, of the operations carried out on behalf of each of its members, complying with the provisions of this Law and other tax provisions

The legal entities referred to in this Chapter must be registered in the Federal Taxpayers Registry.

Reform DOF 12-11-2021: Repealed the then third paragraph of the article.

CHAPTER IX

OF THE OBLIGATIONS OF LEGAL ENTITIES

Article 76. Taxpayers who obtain income of those indicated in this Title, in addition to the obligations established in other articles of this Law, shall have the following:

I. To keep the accounting records in accordance with the Federal Fiscal Code, its Regulations and the Regulations of this Law, and to make the records therein.

II. Issue tax receipts for the activities they perform.

III. Issue tax receipts stating the amount of payments made that constitute income from a source of wealth located in Mexico in accordance with the provisions of Title V of this Law or payments made to establishments abroad of Mexican credit institutions, in the terms of Article 48 of this Law and, if applicable, the tax withheld from the resident abroad or the aforementioned credit institutions.

IV. To prepare a statement of financial position and an inventory of inventories as of the date on which the fiscal year ends, in accordance with the respective regulatory provisions.

V. File a tax return determining the taxable income for the year or the taxable profit for the year and the amount of the corresponding tax, before the authorized offices, within three months following the date of the end of such year. The taxable profit and the amount corresponding to employee profit sharing will also be determined in said return.

VI. Submit, no later than February 15 of each year, before the tax authorities and using the official form approved by such authorities, the following information:

a) The unpaid balance as of December 31 of the preceding year of loans granted or guaranteed by residents abroad; and b) The unpaid balance as of December 31 of the preceding year of loans granted or guaranteed by residents abroad.

b) The type of financing, name of the beneficial owner of the interest, type of currency, the applicable interest rate and the due dates of the principal and accessories of each of the financing transactions referred to in the preceding paragraph.

VII. File the returns referred to in this article through electronic means at the e-mail address indicated for such purpose by the Tax Administration Service through general provisions.

VIII. To keep a record of the transactions carried out with securities issued in series.

IX. Obtain and keep the supporting documentation, in the case of taxpayers that enter into transactions with related parties, with which they demonstrate that the amount of their income and deductions were made in accordance with the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions, which must contain the following data:

a) The name, denomination or corporate name, domicile and tax residence of the related persons with whom operations are carried out, as well as the documentation that proves the direct and indirect participation between the related parties.

b) Information regarding the functions or activities, assets used and risks assumed by the taxpayer and the related party or parties with which operations are entered into, for each type of operation.

c) Information and documentation on transactions with related parties and their amounts, for each related party and for each type of transaction according to the classification, as well as with the data and elements of comparability established in Article 179 of this Law.

d) The method applied in accordance with Article 180 of this Law, including the information and documentation on comparable transactions or companies for each type of transaction, as well as the details of the application of the adjustments, if any, that have been made under the terms of Article 179, third paragraph of this Law.

Paragraph with subparagraphs amended DOF 12-11-2021

Taxpayers engaged in business activities whose income in the immediately preceding fiscal year has not exceeded $13'000,000.00, as well as taxpayers whose income derived from the rendering of professional services has not exceeded $3'000,000.00 in such fiscal year will not be required to comply with the obligation established in this section, except those who are in the situation referred to in the penultimate paragraph of article 179 of this Law and those who are contractors or assignees under the terms of the Income Law on Hydrocarbons.

Amended paragraph DOF 30-11-2016

The exercise of the powers of verification with respect to the obligation set forth in this section may only be carried out with respect to completed fiscal years.

The documentation and information referred to in this section must be recorded in the accounting records, identifying in the same that they are related party transactions.

Amended paragraph DOF 12-11-2021

X. Submit, no later than May 15 of the year immediately following the end of the fiscal year in question, the information on transactions with related parties carried out during the immediately preceding calendar year, as requested by means of the official form approved by the tax authorities for such purpose.

Reformed fraction DOF 12-11-2021

XI. In the case of legal entities that make payments for dividends or profits to individuals or legal entities:

a) Make payments with a non-negotiable nominative check of the taxpayer issued in the name of the shareholder or through funds transfers regulated by Banco de México to the shareholder's account.

b) Provide to the persons to whom payments are made for the concepts referred to in this section, a tax receipt indicating the amount thereof, the income tax withheld in terms of Articles 140 and 164 of this Law, as well as whether such payments come from the accounts established in Articles 77 and 85 of this Law, as the case may be, or if they are dividends or profits referred to in the first paragraph of Article 10 of this Law. This voucher shall be delivered when the dividend or profit is paid.

XII. In the case of legal entities that enter into transactions with related parties, they must determine their taxable income and authorized deductions, considering for those transactions the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions. For these purposes, they will apply the methods established in Article 180 of this Law, in the order established in said Article.

Reformed fraction DOF 12-11-2021

XIII. To file, no later than February 15 of each year before the authorized offices, a declaration in which they provide the information of the operations carried out in the previous calendar year, through trusts through which business activities are carried out in which they are involved.

XIV. To keep an inventory control of merchandise, raw materials, products in process and finished products, as the case may be, according to the perpetual inventory system. Taxpayers may incorporate variations to the system indicated in this section, as long as they comply with the requirements established by general rules.

Taxpayers that choose to value their inventories in accordance with the fourth paragraph of Article 41 of this Law, must keep a record of the factors used to set the gross profit margins applied to determine the cost of goods sold during the fiscal year, identifying the homogeneous items by groups or departments with the profit margins applied to each one of them. The record referred to in this paragraph must be available to the tax authorities during the term established in Article 30 of the Federal Tax Code.

XV. Inform the tax authorities, through the electronic means and formats indicated by the Tax Administration Service by means of general rules, no later than the 17th day of the month immediately following the month in which the transaction is carried out, of the consideration received in cash in national or foreign currency, as well as in gold or silver pieces, the amount of which exceeds one hundred thousand pesos. The referred general rules may establish cases in which it is not necessary to submit the information referred to in this section.

The information referred to in this section shall be available to the Ministry of Finance and Public Credit under the terms of Article 69 of the Federal Fiscal Code.

XVI. Inform the tax authorities, through the means and formats indicated for such purpose by the Tax Administration Service by means of general rules, of the loans, contributions for future capital increases or capital increases received in cash, in local or foreign currency, in excess of $600,000.00, within fifteen days after the date on which the corresponding amounts are received.

XVII. Taxpayers residing in the country that have establishments abroad, in addition to the obligations established in other articles of this Law, shall have the following obligations:

a) To keep the accounting books and records that correspond to the establishment abroad, under the terms set forth in this Law and its Regulations. The corresponding entries may be made in accordance with the following:

1. In Spanish or in the official language of the country where such establishments are located. If the corresponding entries are made in a language other than Spanish, an authorized translation must be provided to the tax authorities when they so require in the exercise of their verification powers.

2. Recording the transactions in local currency or in the currency of legal tender in the country where such establishments are located. If it is recorded in a currency other than local currency, the conversion may be made, at the taxpayer's option, for each transaction or according to the exchange rate of the foreign currency in Mexico on the last day of each calendar month.

b) To keep the books, records and supporting documentation of the respective entries and proof of having complied with their tax obligations, related only to the establishment abroad, during the term established for such purpose by this Law and the Federal Tax Code. They may be kept in such establishment as long as the requirements and conditions established by the Regulations of this Law are complied with.

XVIII. The legal entities that distribute advances or yields under the terms of section II of article 94 of this Law, must issue a tax receipt stating the amount of the advances and yields distributed, as well as the tax withheld.

XIX. In the case of taxpayers that are obliged or have opted to file an audit in accordance with the terms of Article 32-A of the Federal Fiscal Code, they must submit to the General Ordinary Stockholders' Meeting a report on their compliance with their tax obligations for the fiscal year to which the audit corresponds.

Amended paragraph DOF 12-11-2021

The obligation set forth in the preceding paragraph shall be deemed fulfilled if at the aforementioned Meeting the report on the review of the tax situation referred to in Section III of Article 52 of the Federal Fiscal Code is distributed among the shareholders and the report on the review of the tax situation referred to in Article 52 of the Federal Fiscal Code is read.

XX. Inform the tax authorities, through the means and formats indicated for such purpose by the Tax Administration Service by means of general rules, of the sale of shares or securities representing the ownership of assets issued by the taxpayer, carried out between residents abroad without a permanent establishment in Mexico.

The information referred to in this section shall be submitted no later than the month following the date on which the transaction occurs, and shall contain at least the following information:

a) Date of disposal of shares or securities representing the ownership of assets in terms of Article 161 of this Law.

b) Name, company name or corporate name, tax identification number and country of residence of foreign residents without a permanent establishment in Mexico.

c) Date of payment of income tax.

d) Amount of tax paid.

Entities that do not submit the information referred to in this section will be jointly and severally liable for the calculation and payment of the tax corresponding to the resident abroad, in the terms of article 26, section XI of the Federal Fiscal Code.

Fraction added DOF 12-11-2021

Article 76-A. The taxpayers mentioned in Articles 32-A, second paragraph and 32-H, Sections I, II, III, IV and VI of the Federal Tax Code that enter into transactions with related parties, in addition to the provisions of Article 76, Sections IX and XII, and in connection with Article 179, first and last paragraphs of this Law, must provide the tax authorities with the annual informative declarations of related parties mentioned below:

Amended paragraph DOF 12-11-2021

I. Multinational corporate group related party master information statement, which shall contain information regarding the multinational corporate group, of the:

a) Organizational structure.

b) Description of the activity, intangible assets, financial activities with related parties.

c) Financial and tax position.

II. Local related parties informative declaration, which shall contain information on the:

a) Description of the organizational structure, strategic and business activities, as well as related party transactions.

b) Financial information of the obligated taxpayer and of the operations or companies used as comparable in their analysis.

III. Country-by-country informative declaration of the multinational corporate group containing:

a) Information at the tax jurisdiction level on the worldwide distribution of income and taxes paid.

b) Indicators of the location of economic activities in the tax jurisdictions in which the multinational corporate group operates in the corresponding fiscal year, which should include the tax jurisdiction; total income, distinguishing the amount obtained with related parties and with independent parties; pre-tax profits or losses; income tax actually paid; income tax incurred in the year; capital accounts; retained earnings or losses; number of employees; fixed assets and merchandise.

c) A list of all the entities comprising the multinational corporate group and their permanent establishments, including the main economic activities of each of the entities comprising the multinational corporate group; jurisdiction of incorporation of the entity, in the event that it is different from its tax residence, as well as any additional information that may facilitate the understanding of the above information.

The country-by-country information return must be filed by the taxpayers referred to in this article when they are in any of the following situations:

a) Are multinational controlling entities, understood as those that meet the following requirements:

1. Be residents of Mexico.

2. Have subsidiaries defined in terms of financial reporting standards, or permanent establishments, that reside or are located abroad, as the case may be.

3. Are not subsidiaries of another company resident abroad.

Are required to prepare, present and disclose consolidated financial statements in accordance with financial reporting standards.

Report in their consolidated financial statements results of entities resident in one or more other countries or jurisdictions .

6. Have obtained in the immediately preceding fiscal year consolidated revenues for accounting purposes equal to or greater than twelve billion pesos.

This amount may be modified by the Congress of the Union for the fiscal year in question in the Federal Revenue Law.

b) Are legal entities resident in Mexican territory or resident abroad with a permanent establishment in the country, that have been designated by the controlling legal entity of the multinational corporate group resident abroad as responsible for providing the country-by-country information return referred to in this section. The designated entity must file, no later than December 31 of the year following its designation, a notice before the tax authorities under the terms established for such purposes by the Tax Administration Service by means of general rules.

The returns referred to in sections I and III above must be filed no later than December 31 of the year immediately following the tax year in question and, in the case of the return referred to in section II, no later than May 15 of the year immediately following the tax year in question.

Paragraph added DOF 12-11-2021

The Tax Administration Service will establish general rules for the filing of the returns referred to in sections I, II and III of this article, through which it may request additional information, and will include the corresponding means and formats. On the other hand, said tax authority may request from companies resident in Mexican territory that are subsidiaries of a company resident abroad, or from residents abroad that have a permanent establishment in the country, the country-by-country information return referred to in section III of this article, in those cases in which the tax authorities cannot obtain the information corresponding to such declaration through the information exchange mechanisms established in the international treaties that Mexico has in force, for such purposes the taxpayers will have a maximum term of 120 business days from the date on which the request to provide the declaration referred to in this paragraph is notified.

Article added DOF 18-11-2015

Article 77. Entities shall maintain a net tax profit account. This account will be added with the net tax profit of each fiscal year, as well as with the dividends or profits received from other legal entities resident in Mexico and with the income, dividends or profits subject to preferential tax regimes in the terms of the tenth paragraph of Article 177 of this Law, and will be reduced with the amount of the dividends or profits paid, with the distributed profits referred to in Article 78 of this Law, when in both cases they come from the balance of said account. For the purposes of this paragraph, dividends or profits in shares or those reinvested in the subscription and capital increase of the same person that distributes them, within 30 calendar days following their distribution, are not included. In order to determine the net tax profit referred to in this paragraph, the amount resulting from the terms of Section II of Article 10 of this Law, if any, must be deducted.

The balance of the account provided for in this article as of the last day of each year, not including the net tax profit of such year, will be restated for the period from the month in which the last restatement was made until the last month of the year in question. When dividends or profits are distributed or received after the restatement provided for in this paragraph, the balance of the account held as of the date of the distribution or receipt will be restated for the period from the month in which the last restatement was made until the month in which the dividends or profits are distributed or received.

For the purposes of the provisions of this article, net tax profit for the year is considered to be the amount obtained by subtracting the following from the taxable income for the year:

I. The income tax paid under the terms of Article 9 of this Law.

II. The amount of non-deductible items for income tax purposes, except for those indicated in Article 28, Sections VIII and IX of this Law and the employee profit sharing referred to in Article 9, Section I, of this Law.

III. The amount determined in accordance with the following paragraph.

Paragraph with reformed fractions DOF 12-11-2021

When in the year for which the net tax profit referred to in the preceding paragraph is calculated, the legal entity in question is required to accrue the proportional amounts of income taxes paid abroad in accordance with the second and fourth paragraphs of Article 5 of this Law, the amount obtained in accordance with the preceding paragraph must be reduced by the amount resulting from the application of the following formula:

MRU

Where:

MRU: Amount to be subtracted from the amount obtained in accordance with the third paragraph of this article

MPI: Proportional amount of income tax paid abroad at the first corporate level, referred to in the second and third paragraphs of Article 5 of this Law

MPI 2 Proportional amount of income tax paid abroad at the second corporate level, referred to in the fourth and fifth paragraphs of Article 5 of this Law

DN: Dividend or profit distributed by the foreign resident company to the legal entity resident in Mexico reduced by the withholding or payment of income tax, if any, on the distribution

AC: Taxes creditable in accordance with the first, second and fourth paragraphs of Article 5 of this Law that correspond to the income accrued both for the dividend received and for its proportional amounts

When the sum of the income tax paid under the terms of Article 9 of this Law, the non-deductible items for income tax purposes, except for those indicated in Sections VIII and IX of Article 28 of this Law, the employees' profit sharing referred to in Section I of Article 9 of this Law, and the amount determined in accordance with the preceding paragraph, is greater than the taxable income for the year, the difference will be deducted from the balance of the net tax profit account at the end of the year or, as the case may be, from the net tax profit account at the end of the year, and the amount determined in accordance with the preceding paragraph is greater than the taxable income for the year, the difference will be deducted from the balance of the net tax profit account at the end of the year or, as the case may be, from the net tax profit determined in the following years, until it is exhausted. In the latter case, the amount to be reduced will be restated from the last month of the year in which it was determined until the last month of the year in which it is reduced.

When the tax result of a fiscal year is modified and the modification reduces the net tax profit determined, the restated amount of the reduction must be reduced from the balance of the net tax profit account that the entity has as of the date on which the supplementary return is filed. When the restated amount of the reduction is greater than the balance of the account as of the date of filing the referred return, the income tax resulting from applying the rate referred to in Article 9 of this Law to the amount resulting from adding to the difference between the reduction and the balance of the referred account, the tax corresponding to such difference, must be paid in the same return. To determine the tax to be added, the aforementioned difference will be multiplied by the factor of 1.4286 and the rate of Article 9 of this Law will be applied to the result. The amount of the reduction will be restated for the same periods in which the net tax profit of the year in question was restated.

The balance of the net tax profit account must be transferred to one or more other companies in the case of a merger or spin-off. In the latter case, such balance shall be divided between the splitting company and the spun-off companies, in the proportion in which the stockholders' equity of the statement of financial position approved by the stockholders' meeting and which served as the basis for the spin-off is divided.

Article 77-A. Entities engaged exclusively in the generation of energy from renewable sources or from efficient electricity cogeneration systems, in the fiscal year in which they apply the deduction provided in Article 34, Section XIII of this Law, may create a profit account for investment in renewable energies, which will be calculated in the same terms as the net tax profit account provided in Article 77 of this Law. For the purposes of calculating the profit account for investment in renewable energies, instead of the net tax profit for the year referred to in Article 77 of this Law, the profit for investment in renewable energies for the year will be added.

Taxpayers who choose to keep the profit account for investment in renewable energies will do so until the year in which they determine the net tax profit provided for in Article 77, third paragraph of this Law.

For purposes of the provisions of this article, the amount obtained by subtracting the income tax, both determined in accordance with the following paragraph and, if applicable, the items referred to in the third paragraph of Article 77 of this Law, from the taxable income for the same year, is considered income for investment in renewable energies for the year.

For purposes of the profit for investment in renewable energies, the tax result of the fiscal year will be calculated by applying in substitution of the deduction percentage established in Article 34, Section XIII of this Law, the percentage established in Article 35, Section I of this Law, during the fiscal years that correspond to the useful life of the asset and until the fiscal year in which the net tax profit is determined. To the tax result obtained, the rate provided in Article 9 of this Law will be applied and the amount obtained will be the income tax that is reduced in accordance with the preceding paragraph. The deduction provided for in this paragraph must be made in accordance with the terms of Title II, Chapter II, Section II of this Law, except for the provisions of Article 31, paragraph four of said Law.

No income tax is payable on dividends or profits distributed from the profit account for investment in renewable energies. The provisions of this paragraph will not be applicable in the case of the tax provided for in Articles 140, second paragraph and 164, sections I, fifth paragraph and IV of this Law.

Taxpayers that distribute dividends or profits from the profit account for investment in renewable energies must keep a cumulative record of the distribution of dividends or profits made in each fiscal year.

Taxpayers that distribute dividends or profits from the profit account for investment in renewable energies, as from the year in which they determine the net tax profit provided for in Article 77, third paragraph of this Law, must decrease from such net tax profit, the balance they have in the registry established in the preceding paragraph. Such reduction must be made up to the amount of the balance of the net tax profit account provided for in Article 77 of this Law, and up to the year in which they reduce the total dividends or profits distributed from the profit account for investment in renewable energies.

As from the year in which a balance is generated in the net tax profit account provided for in Article 77 of this Law, the undistributed remainder, if any, of the profit account for investment in renewable energies may not be distributed.

Taxpayers exclusively engaged in the generation of energy from renewable sources or efficient electricity cogeneration systems are considered to be those whose income from such activities represents at least 90% of their total income, not including income from the disposal of fixed assets or fixed assets and land owned by them that have been used for their activity.

Article added DOF 18-11-2015

Article 78. Entities resident in Mexico that reduce their capital shall determine the profit distributed in accordance with the following:

I.The balance of the capital contribution account per share as of the date on which the reimbursement is paid shall be deducted from the reimbursement per share.

The distributed profit will be the amount resulting from multiplying the number of shares to be redeemed or those considered for the capital reduction in question, as the case may be, by the amount resulting from the preceding paragraph.

The taxable distributed profit determined in accordance with the preceding paragraph may be taken from the net tax profit account up to the portion of the balance of such account corresponding to the number of shares being reimbursed. The amount of the net taxable income account corresponding to the shares indicated will be deducted from the balance of such account on the date on which the reimbursement was paid.

When the taxable distributed profit referred to in this section does not come from the net tax profit account, corporations must determine and pay the corresponding tax by applying to such profit the rate provided in Article 9 of this Law. For these purposes, the amount of the distributed profit must include the income tax that corresponds to it. In order to determine the tax corresponding to such profit, such profit shall be multiplied by the factor of 1.4286 and the rate set forth in Article 9 of this Law shall be applied to the result.

The amount of the balance of the capital contribution per share account determined for the calculation of distributed income will be multiplied by the number of shares to be reimbursed or by those considered for the capital reduction in question. The result obtained will be deducted from the balance of such account as of the date on which the reimbursement was paid.

To determine the amount of the balance of the capital contribution account per share, the balance of such account at the date on which the reimbursement is paid, without considering the reimbursement, will be divided by the total number of shares of the same person existing at the same date, including those corresponding to the reinvestment or capitalization of earnings, or any other item comprising the stockholders' equity of the same person.

II. Entities that reduce their capital shall additionally consider such reduction as distributed income up to the amount resulting from subtracting from stockholders' equity, according to the statement of financial position approved by the stockholders' meeting for purposes of such reduction, the balance of the capital contribution account as of the date on which the referred reduction is made, when such balance is lower.

The amount obtained in accordance with the preceding paragraph shall be reduced by the distributed profit determined under the terms of the second paragraph of Section I of this Article. The result will be the taxable distributed profit for the purposes of this section.

When the taxable distributed profit referred to in the preceding paragraph does not come from the net tax profit account, corporations must determine and pay the tax corresponding to such profit, applying to it the rate provided in Article 9 of this Law. For these purposes, the amount of the taxable distributed profit must include the income tax corresponding thereto. In order to determine the tax corresponding to such profit, the same shall be multiplied by the factor of 1.4286 and the rate provided in Article 9 of this Law shall be applied to the result. When the taxable distributed profit comes from the aforementioned net tax profit account, the provisions of the third paragraph of Article 10 of this Law shall apply and such profit shall be deducted from the balance of the aforementioned account. The profit determined in accordance with this section will be considered for subsequent capital reductions as a capital contribution under the terms of this article.

Stockholders' equity must be restated in accordance with Financial Reporting Standards, when the person uses such principles to integrate its accounting; otherwise, stockholders' equity must be restated in accordance with the general rules issued for such purpose by the Tax Administration Service.

The legal entities referred to in this article must pay, together with the tax that, if any, has corresponded to the profit or dividend under the terms of section I of this article, the amount of the tax determined under the terms of section II of this article.

The provisions of this article shall also be applicable in the case of liquidation of legal entities.

In the case of spin-off of companies, the provisions of this provision will not be applicable, except as indicated in the tenth paragraph thereof, provided that the sum of the capital of the spin-off company, in the event that it subsists, and of the spun-off companies, is equal to that held by the spin-off company and the shares issued as a consequence of such acts are exchanged to the same shareholders and in the same shareholding proportion that they held in the spin-off company.

The provisions of this article will be applicable in the case of the purchase of shares made by the issuing company itself with a charge to its capital stock or to the reserve for acquisitions of its own shares. Such companies will not consider as distributed profits under the terms of this article, the purchases of their own shares which added to those previously purchased, do not exceed 5% of the total of their paid-in shares, and provided that they are relocated within a maximum period of one year, counted from the date of the purchase. In the event that the acquisition of own shares referred to in this paragraph is made with resources obtained through the issuance of debentures convertible into shares, the term will be that of the issuance of such debentures. The Tax Administration Service may issue general rules to facilitate compliance with the provisions of this paragraph. The provisions of this paragraph will not be applicable in the case of variable income investment funds for the purchase of shares made by them to their members or shareholders.

Amended paragraph DOF 18-11-2015

For the purposes of the preceding paragraph, the distributed profit will be the amount obtained by deducting from the amount paid for the acquisition of each share, the balance of the capital contribution account per share, as of the date on which the shares are purchased, multiplying the result by the number of shares purchased. The profit distributed under the terms of this paragraph may be reduced, if applicable, by the balance of the net tax profit account of the issuing company. The amount of the balance of the net tax profit account and of the balance of the contribution capital account, which were reduced under the terms of this paragraph, will be reduced from the balances of the referred accounts held at the date of the purchase of shares by the issuing company itself.

When the distributed profit determined in accordance with the preceding paragraph does not come from the net tax profit account, the issuing company must determine and pay the corresponding tax in accordance with the terms of the third paragraph of section II of this article.

The acquisition by a company of shares issued by another company, which in turn is the direct or indirect holder of the shares of the acquiring company, is also considered a capital reduction under the terms of this article. In this case, the company issuing the shares that are acquired is considered to be the one reducing its capital. For these purposes, the amount of the reimbursement will be the amount paid for the acquisition of the share.

In the case of spin-off of companies, the transfer of monetary assets to the companies that arise as a result of the spin-off will be considered as a reduction of capital when such transfer causes the aforementioned assets to represent more than 51% of the total assets of the companies that arise. It will be considered a capital reduction when, as a result of the spin-off, the spin-off company retains monetary assets representing more than 51% of its total assets. For purposes of this paragraph, a capital reduction is considered to be an amount equivalent to the value of the monetary assets being transferred. The provisions of this paragraph will not be applicable in the case of spin-offs of companies that are part of the financial system under the terms of Article 7 of this Law. The amount of the capital reduction determined in accordance with this paragraph will be considered for subsequent reductions as a capital contribution under the terms of this article, provided that no reimbursement is made at the time of the spin-off.

In order to determine the restated contribution capital, corporations will maintain a contribution capital account, which will be added with the capital contributions, the net premiums for share subscription made by the partners or shareholders, and will be reduced with the capital reductions made. For the purposes of this paragraph, the capital corresponding to the reinvestment or capitalization of profits or any other concept that conforms the stockholders' equity of the legal entity will not be included as contribution capital, nor that which comes from reinvestments of dividends or profits in capital increases of the persons distributing them made within the thirty days following their distribution. The items corresponding to capital increases mentioned in this paragraph will be added to the contribution capital account at the time they are paid, and the items related to capital reductions will be deducted from the aforementioned account at the time the reimbursement is paid.

The balance of the account referred to in the preceding paragraph as of the closing date of each fiscal year will be restated for the period from the month in which the last restatement was made until the closing month of the fiscal year in question. When contributions or capital reductions are made after the restatement provided for in this paragraph, the balance of the account held at that date will be restated for the period from the month in which the last restatement was made until the month in which the contribution or reimbursement is paid, as the case may be.

In the event of a merger or spin-off of companies, the balance of the contribution capital account must be transferred to the companies that arise or subsist as a result of such acts, as applicable. In the case of a merger of companies, the balance of the contribution capital account of the merged companies will not be taken into consideration, in the proportion that the shares of such companies owned by the surviving companies at the time of the merger represent with respect to the total of their shares. In the case of a corporate spin-off, such balance will be divided between the spin-off company and the spun-off companies, in the proportion in which the stockholders' equity of the statement of financial position approved by the stockholders' meeting and which served as the basis for the spin-off is divided.

In the case of a merger, when the company holding the shares of the disappearing company survives, the balance of the contribution capital account of the surviving company will be the amount resulting from adding to the balance of the contribution capital account that the surviving company had before the merger, the amount of the balance of the contribution capital account corresponding to other shareholders of the disappearing company on the same date, other than the merging company.

When the surviving corporation is the corporation whose shares were held by a merged corporation, the amount of the contribution capital account of the surviving corporation will be the amount held by the merged corporation before the merger, plus the amount resulting from multiplying the balance of the contribution capital account held by the merging corporation before the merger by the equity interest held in such corporation on the same date by shareholders other than the merged corporation.

When a legal entity has increased its capital within a period of two years prior to the date on which the capital reduction is made and such reduction gives rise to the cancellation of shares or a decrease in the value of the shares, such legal entity will calculate the gain that would have corresponded to the holders of the shares if they had disposed of them, in accordance with Article 22 of this Law, considering for such purposes as income obtained per share the reimbursement per share. When the legal entity merges within the aforementioned two-year period and subsequently the legal entity that subsists or arises as a result of the merger reduces its capital giving rise to the cancellation of shares or a decrease in the value of the shares, the referred company will calculate the gain that would have corresponded to the holders of the shares if they had disposed of them, in accordance with the aforementioned article. In the event that this gain is greater than the distributed profit determined in accordance with sections I and II of this article, such gain will be considered as distributed profit for the purposes of this provision.

The provisions of this article shall be applicable, indistinctly, to the redemption, amortization or reduction of capital, regardless of whether or not there is cancellation of shares.

The provisions of this article shall also be applicable to joint ventures when they reimburse or reduce capital in favor of their members.

TITLE III

OF THE REGIME OF NON-PROFIT LEGAL ENTITIES

The following legal entities are not taxpayers of income tax:

I. Labor unions and the organizations that group them together.

II. Employer associations.

III. Chambers of commerce and industry, agricultural, livestock, fishing or forestry groups, as well as the organizations that bring them together.

IV. Professional associations and the organizations that group them together.

V. Civil associations and public interest limited liability companies that administer in a decentralized manner the irrigation districts or units, subject to the respective concession and permit.

VI. Assistance or charitable institutions, authorized by the laws of the matter, as well as civil societies or associations, organized on a non-profit basis and authorized to receive donations under the terms of this Law, which have as beneficiaries persons, sectors, and regions of scarce resources; which carry out activities to achieve better subsistence and development conditions for indigenous communities and vulnerable groups due to age, sex or disability problems, dedicated to the following activities:

a) The attention to basic subsistence requirements in terms of food, clothing or housing.

b) Medical assistance or rehabilitation or care in specialized facilities.

c) Legal assistance, support and promotion for the protection of the rights of minors, as well as for the social readaptation of persons who have carried out unlawful conduct.

d) Rehabilitation of alcoholics and drug addicts.

e) Assistance for funeral services.

f) Social orientation, education or job training.

g) Support for the development of indigenous peoples and communities.

h) Contribution of services for the attention of social groups with disabilities.

i) Promotion of actions to improve the popular economy.

VII. Consumer cooperative societies.

VIII. Organizations that, in accordance with the Law, group cooperative societies, whether of producers or consumers, as well as the cooperative organizations of integration and representation referred to in the General Law of Cooperative Societies.

Reformed fraction DOF 08-12-2020

IX. Mutual companies and Agricultural and Rural Insurance Funds, which do not operate with third parties, provided that they do not incur expenses for the acquisition of business, such as premiums, commissions and other similar items.

X. Civil societies or associations dedicated to education, with authorization or with recognition of official validity of studies under the terms of the General Education Law, as well as institutions created by presidential decree or by law, whose purpose is education, provided that they are considered as institutions authorized to receive deductible donations under the terms of this Law.

XI. Non-profit civil societies or associations authorized to receive deductible donations under the terms of this Law, dedicated to scientific or technological research and registered in the National Registry of Scientific and Technological Institutions.

Reformed fraction DOF 08-12-2020

XII. Associations or civil societies, organized on a non-profit basis and authorized to receive donations, engaged in the following activities:

a) The promotion and dissemination of music, plastic arts, dramatic arts, dance, literature, architecture and cinematography, in accordance with the Law that creates the National Institute of Fine Arts and Literature, as well as the Federal Law of Cinematography.

b) Support for artistic education and research activities in accordance with the provisions of the preceding paragraph.

c) The protection, conservation, restoration and recovery of the nation's cultural heritage, under the terms of the Federal Law on Archeological, Artistic and Historic Monuments and Zones and the General Law of National Assets; as well as the art of the indigenous communities in all the original manifestations of their own languages, uses and customs, crafts and traditions of the multicultural composition of the country.

d) The establishment and establishment of libraries that are part of the National Network of Public Libraries in accordance with the General Law of Libraries.

e) Support for the activities and objectives of the museums under the National Council for Culture and the Arts.

XIII. Civil institutions or corporations, incorporated solely for the purpose of managing savings funds or savings banks, and those referred to in labor legislation, as well as savings and loan cooperative societies referred to in the Law to regulate the activities of savings and loan cooperative societies.

XIV.Parent Associations constituted and registered under the terms of the Regulations for Parent Associations of the General Education Law.

XV. Collective management societies constituted in accordance with the Federal Copyright Law.

XVI. Associations or civil societies organized for political purposes, or religious associations constituted in accordance with the Law of Religious Associations and Public Worship.

XVII. Associations or civil societies, organized on a non-profit basis and authorized to receive deductible donations under the terms of this Law, that grant scholarships, as referred to in Article 83 of this Law.

Reformed fraction DOF 08-12-2020

XVIII. Civil associations of settlers and civil associations dedicated exclusively to the administration of a condominium property.

XIX. Civil societies or associations, organized without profit purposes and authorized to receive deductible donations in the terms of this Law, that are constituted and operate exclusively for the realization of research or preservation activities of wild flora or fauna, terrestrial or aquatic, within the geographic areas defined by the Tax Administration Service by means of general rules, as well as those that are constituted and operate exclusively to promote among the population the prevention and control of water, air and soil pollution, environmental protection and the preservation and restoration of the ecological balance.

Reformed fraction DOF 08-12-2020

XX. Non-profit associations and civil societies, authorized to receive deductible donations under the terms of this Law, that prove that they are exclusively dedicated to the reproduction of species in protection and danger of extinction and to the conservation of their habitat, provided that in addition to complying with the general rules issued by the Tax Administration Service, a prior opinion is obtained from the Ministry of the Environment and Natural Resources.

Reformed fraction DOF 08-12-2020

XXI. Specialized investment companies of retirement funds.

XXII. Political parties and associations, legally recognized.

XXIII. The Federation, the states, the municipalities and the institutions required by law to deliver to the Federal Government the full amount of their operating surplus.

XXIV. Decentralized entities that do not pay taxes in accordance with Title II of this Law.

XXV. Assistance or charitable institutions, authorized by the laws of the matter and organized on a non-profit basis, as well as civil societies or associations, organized on a non-profit basis and authorized to receive donations under the terms of this Law, engaged in the following activities:

a) The promotion of the organized participation of the population in actions that improve their own subsistence conditions for the benefit of the community or in the promotion of actions related to citizen security.

b) Support in the defense and promotion of human rights.

c) Civic, focused on promoting citizen participation in matters of public interest.

d) Promotion of gender equity.

e) Support for the use of natural resources, the protection of the environment, flora and fauna, the preservation and restoration of the ecological balance, as well as the promotion of sustainable development at the regional and community level, in urban and rural areas.

f) Promotion and encouragement of education, culture, art, science and technology.

g) Participation in civil protection actions.

h) Provision of support services for the creation and strengthening of organizations that carry out activities subject to promotion in terms of the Federal Law for the Promotion of Activities Carried out by Civil Society Organizations.

i) Promotion and defense of consumers' rights.

j) Support for projects of agricultural producers and artisans, with income in the immediately preceding fiscal year of up to 4 times the annual value of the Unidad de Medida y Actualizacion, located in the most underdeveloped areas of the country according to the National Population Council and that comply with the general rules issued by the Tax Administration Service.

Subsection added DOF 30-11-2016

XXVI. Sports Associations recognized by the National Sports Commission, provided they are members of the National Sports System, in terms of the General Law of Physical Culture and Sports.

The legal entities referred to in sections V, VI, VII, IX, X, XI, XIII, XVI, XVII, XVIII, XIX, XX, XXIV and XXV of this article, as well as the legal entities and trusts authorized to receive tax-deductible donations, and the investment funds referred to in this Title, will consider as distributable surplus, even if they have not delivered it in cash or in goods to their members or partners, the amount of the omissions of income or purchases not made and improperly registered; the disbursements they make that are not deductible under the terms of Title IV of this Law; the loans they make to their partners or members, or to the spouses, ascendants or descendants in a straight line of said partners or members, except in the case of loans to the partners or members of the savings and loan cooperative societies referred to in Section XIII of this Article. In the case of loans that in the terms of this paragraph are considered as distributable remainder, the amount of the same will be reduced from the distributable remainders that the legal entity distributes to its partners or members.

Amended paragraph DOF 18-11-2015, 08-12-2020

In the event that distributable surplus is determined in the terms of the preceding paragraph, the legal entity in question shall pay as tax payable the tax resulting from applying to such distributable surplus, the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law, in which case it shall be considered as definitive tax, and must make the corresponding payment no later than the month of February of the year following that in which any of the events referred to in said paragraph occurs.

Article 80. The corporations referred to in the preceding article will determine the distributable remainder of a calendar year corresponding to its members or shareholders, by deducting from the income obtained in that period, except for those indicated in Article 93 of this Law and those for which the definitive tax has been paid, the authorized deductions, in accordance with Title IV of this Law.

When the majority of the members or shareholders of such corporations are taxpayers of Title II of this Law, the distributable remainder will be calculated by adding the income and deducting the corresponding deductions, in the terms of the provisions of said Title. When the majority of the members of such corporations are taxpayers of Title IV, Chapter II, Section I of this Law, the distributable remainder will be calculated by adding the income and deducting the corresponding deductions, in the terms of said Section, as applicable.

The members or shareholders of the legal entities referred to in Article 79 of this Law will consider as distributable surplus only the income that such entities deliver to them in cash or goods.

The provisions of this Title will be applicable in the case of investment funds referred to in the Investment Funds Law, except in the case of capital investment funds. The members or shareholders of the investment funds referred to in this paragraph shall be taxpayers in accordance with the provisions of this Law.

Amended paragraph DOF 18-11-2015

The members or shareholders of the legal entities referred to in this Title will not consider as income the reimbursements made by them of the contributions they have made. For such purposes, the provisions of Article 78 of this Law shall apply.

In the event that the legal entities referred to in this Title dispose of goods other than their fixed assets or provide services to persons other than their members or partners, they must determine the tax corresponding to the profit from the income derived from the aforementioned activities, under the terms of Title II of this Law, at the rate provided in Article 9 of the same, provided that such income exceeds 5% of the total income of the legal entity in the fiscal year in question.

Legal entities and trusts authorized to receive tax-deductible donations may obtain income from activities other than the purposes for which they were authorized to receive such donations, provided they do not exceed 10% of their total income in the fiscal year in question. Income from activities other than the aforementioned purposes is not considered to be income received from donations; support or incentives provided by the Federation, federal entities, or municipalities; disposal of fixed or intangible assets; membership fees; recovery fees; interest; patrimonial rights derived from intellectual property; temporary use or enjoyment of real estate, or income obtained from shares or other debt securities, placed among the general investing public under the terms established by general rules established by the Tax Administration Service. In the event that their income not related to the purposes for which they were authorized to receive such donations exceeds the aforementioned limit, the aforementioned legal entities must determine the tax corresponding to such excess, in accordance with the provisions of the preceding paragraph.

Amended paragraph DOF 30-11-2016

In the event that the persons referred to in the preceding paragraph obtain income from activities other than the purposes for which they were authorized to receive donations in a percentage greater than 50% of the total income of the fiscal year, they will lose the corresponding authorization, which will be determined by means of a resolution issued and notified by the tax authority. If within the twelve months following the loss of the authorization to receive donations deductible from income tax, such authorization is not obtained again, they must allocate all their assets to another donataria authorized to receive deductible donations.

Paragraph added DOF 08-12-2020

The entities referred to in this Title, with the exception of those indicated in Article 86 of this Law, investment companies specialized in retirement funds and entities authorized to receive deductible donations under the terms of this Law, will be taxpayers of income tax when they receive income from those mentioned in Chapters IV, VI and VII of Title IV of this Law, regardless of whether the income referred to in the aforementioned Chapter VI is received in foreign currency. For these purposes, the provisions contained in said Title will be applicable and the withholding, if any, will be considered as a definitive payment.

The debt and equity investment funds referred to in Article 87 of this Law will not be taxpayers of income tax when they receive income of those indicated in Chapter VI of Title IV of this Law and both these and their members or shareholders will be subject to the provisions of Articles 87, 88 and 89 of the same Law.

Amended paragraph DOF 18-11-2015

Non-profit entities referred to in Sections VI, X, XI, XII, XIX, XX and XXV of Article 79 of this Law must comply with the following in order to be considered as institutions authorized to receive deductible donations under the terms of this Law.

I. That they are constituted and operate exclusively as entities dedicated to any of the purposes referred to in sections VI, X, XI, XII, XIX, XX and XXV of Article 79 of this Law and that, in accordance with the general rules issued for such purpose by the Tax Administration Service, a substantial part of their income is received from funds provided by the Federation, federal entities or municipalities, from donations or from income derived from the realization of their corporate purpose. In the case of those entities in whose favor an authorization is issued to receive deductible donations abroad in accordance with international treaties, in addition to complying with the above, they may not receive income in excessive amounts from leasing, interest, dividends or royalties or from activities not related to their corporate purpose.

II. That the activities they carry out have as their primary purpose the fulfillment of their corporate purpose, without being able to intervene in political campaigns or engage in propaganda activities.

III. The persons referred to in this article may carry out activities aimed at influencing legislation, provided that such activities are not remunerated and are not carried out in favor of persons or sectors that have granted them donations and, in addition, they provide the Tax Administration Service with the following information:

a) The subject matter.

b) The legislation to be promoted.

c) The legislators with whom the promotional activities are carried out.

d) The social sector, industry or branch of economic activity that would benefit from the proposal.

e) The materials, data or information provided to the legislative bodies, clearly identifiable as to their origin and authorship.

f) Conclusions.

g) Any other related information determined by the Tax Administration Service through general rules.

IV. That they use their assets exclusively for the purposes of their corporate purpose, for which they have been authorized to receive donations deductible from income tax, and may not grant benefits on the distributable remainder to any individual or to their members, whether individuals or legal entities, except in the latter case, in the case of any of the legal entities or trusts authorized to receive tax-deductible donations or in the case of remuneration for services actually received.

Reformed fraction DOF 08-12-2020

V. That at the time of their liquidation or change of residence for tax purposes, they allocate all of their assets to entities authorized to receive deductible donations.

In cases of revocation of the authorization or when its validity has expired and the authorization has not been obtained again or renewed, within twelve months following the date on which such events occur, the totality of its assets must be destined to other entities authorized to receive donations deductible from income tax, who must issue the corresponding tax receipt for the donation, which will not be deductible for income tax purposes.

Amended paragraph DOF 08-12-2020

The legal entities referred to in the preceding paragraph will be taxed under the terms and conditions established in Title II of this Law. The resources to be destined to other authorized donatarias must be transferred within a term of 6 months counted from the end of the term to obtain again the authorization when it was revoked or from the conclusion of the validity of the authorization.

Amended paragraph DOF 08-12-2020

The provisions of the preceding paragraph shall also apply in the event that an authorized donee's request for cancellation of its authorization is approved, who must allocate all of its assets to another donee authorized to receive donations deductible for income tax purposes, and the latter must issue the corresponding tax receipt for the donation, which will not be deductible for income tax purposes.

Paragraph added DOF 08-12-2020

Reformed fraction DOF 30-11-2016

VI. Maintain at the disposal of the general public the information related to the authorization to receive donations, the use and destination given to the donations received and its assets, as well as compliance with its tax obligations, and if applicable, the information referred to in section II of this article, for the term and under the terms established by general rules established by the Tax Administration Service.

In those cases in which non-profit legal entities or trusts have had their authorization to receive donations revoked or not renewed due to non-compliance with the obligation to make the information referred to in the preceding paragraph available to the general public, they must comply with the obligation referred to in the preceding paragraph within the month following the month in which the revocation took effect or the month in which the non-renewal of the authorization was published, they must comply with the obligation referred to in said paragraph within the month following the month in which the notice of revocation took effect or the month in which the non-renewal of the authorization was published, through the means and formats established in the general provisions issued by the tax authority for such purpose, and they will only be able to obtain a new authorization once they comply with the omitted obligation.

Reformed fraction DOF 30-11-2016, 08-12-2020

VII. Inform the tax authorities, through the electronic means and formats indicated by the Tax Administration Service through general rules, no later than the 17th day of the month immediately following the month in which the transaction takes place, of the donations received in cash in national or foreign currency, as well as in gold or silver pieces, whose amount exceeds one hundred thousand pesos.

The information referred to in this section shall be available to the Ministry of Finance and Public Credit, pursuant to the terms of the second paragraph of Article 69 of the Federal Fiscal Code.

VIII. Inform the tax authorities, in the terms indicated by the Tax Administration Service by means of general rules, of the transactions entered into with related parties and of the services received or goods acquired from persons who have granted them deductible donations under the terms of this Law.

IX. That they have corporate governance structures and processes for the management and control of the legal entity, in accordance with the general rules issued by the Tax Administration Service.

The provisions of this section shall only apply in the case of non-profit entities with total annual income of more than 100 million pesos or with assets of more than 500 million pesos.

Fraction added DOF 30-11-2016

The requirements referred to in sections IV and V of this article must be included in the articles of incorporation of the legal entity in question as irrevocable.

In all cases, the authorized donees must comply with the administrative control and transparency requirements established in the Regulations of this Law and the general rules issued by the Tax Administration Service.

The Tax Administration Service may revoke or not renew the authorizations to receive deductible donations under the terms of this Law, to those entities that fail to comply with the requirements or obligations that in their capacity as authorized donatarias must comply with according to the tax provisions, by means of a resolution notified personally. Such decentralized body will publish the details of such entities in the Official Gazette of the Federation and on its website.

For the purposes of the preceding paragraph, in the case of the persons referred to in Articles 79, Sections VI, X, XII and XXV, and 84 of this Law, except for assistance or charitable institutions authorized by the laws of the matter, whose authorization is revoked or not renewed, as from the effective date of the notification of the corresponding resolution and as a result thereof, they may make donations to authorized donees without being subject to the limit established in Article 27, section I, last paragraph of this Law during the fiscal year in which their authorization is revoked or not renewed.

Foundations, trusts and other entities whose purpose is to economically support the activities of legal entities authorized to receive deductible donations under the terms of this Law, may obtain deductible donations, provided they comply with the following requirements:

a) Allocate all of their income to the purposes for which they were created.

b) Those established in this article, except for the provisions of section I thereof.

The requirement referred to in paragraph a) of the preceding paragraph must be included in the articles of incorporation of the legal entity in question as irrevocable.

Article 82-Bis. The institutions authorized to receive deductible donations in terms of this Law, which are in the cases referred to in Article 82, Section V, of this ordinance, must inform the tax authorities the amount and identification data of the assets, as well as the identity of the legal entities to whom the totality of their assets were destined, through the means and formats issued for such purpose by the Tax Administration Service by means of general rules. If the above is not complied with, the value of the assets subject to transfer will be considered as omitted income and income tax must be paid in accordance with the provisions of Title II of this Law.

The entity authorized to receive deductible donations that receives the assets referred to in the preceding paragraph, will have to issue the corresponding tax receipt for the donation in accordance with the general rules issued for such purpose by the Tax Administration Service. In this case, the donation will not be deductible for income tax purposes.

Article added DOF 30-11-2016

Article 82-Ter. Repealed.

Article added DOF 30-11-2016. Repealed DOF 08-12-2020

Article 82-Quater. For the purposes of the fourth paragraph of Article 82 of this Law, the following shall apply:

A. There are grounds for revocation of the authorization to receive deductible donations which will initiate the revocation procedure:

I. Use their assets for purposes other than the corporate purpose for which they obtained the corresponding authorization, pursuant to Section I of Article 82 of this Law.

II. Not issuing the tax receipt that covers the donations received or issuing tax receipts of deductible donations to cover any other operation different from the donation.

III. When as a result of the exercise of the powers of verification or of the files, documents or databases of the Tax Administration Service or those to which said decentralized administrative body has access or has in its possession, it becomes known the updating of any fact that constitutes noncompliance with the obligations or requirements established by the tax provisions in charge of the authorized donees.

IV. Be included in the list referred to in the fourth paragraph of Article 69-B of the Federal Fiscal Code.

V. If the legal representative(s), partners or associates or any member of the Board of Directors or Administration of a civil organization or trust whose authorization has been revoked for being located in the case referred to in the previous section, within the last five years, are part of the civil organizations and trusts authorized to receive deductible donations during the term of the same.

VI. Be in the situation established in the last paragraph of Article 80 of this Law.

Civil organizations and trusts whose authorization to receive deductible donations for income tax purposes has been revoked for the reasons referred to in sections I to V of this section, may not obtain again the authorization to receive deductible donations, until they correct the reason for which they were revoked or, if applicable, pay the corresponding income tax.

In the event that civil organizations and trusts whose authorization to receive deductible donations for income tax purposes have been revoked on one occasion for the reason referred to in section VI of this paragraph, they may not obtain the authorization again and must allocate all their assets to another donee authorized to receive donations deductible from income tax.

B. The Tax Administration Service will carry out the procedure for revocation of the authorization to receive donations deductible from income tax in accordance with the following:

I. It shall issue an official notice informing the authorized donee of the cause for revocation set forth in the preceding section, granting it a term of ten business days following the date on which the notice of such official notice becomes effective, in order for it to state before the tax authority what it deems appropriate, providing the documentation and information it deems pertinent to disprove such cause for revocation.

All kinds of evidence will be admitted, except for testimonial and confessional evidence at the expense of the authorities. The evidence will be evaluated in accordance with the terms of Article 130 of the Federal Fiscal Code.

II. Once the term referred to in the preceding section has expired, the tax authority shall issue the corresponding resolution within a term not to exceed three months, counted as of the day following the day in which such term expired.

III. The resolution referred to in the preceding section shall be notified in accordance with the applicable tax provisions.

Article added DOF 08-12-2020

Article 83. Associations or civil societies, which are constituted for the purpose of granting scholarships may obtain authorization to receive deductible donations, provided that they comply with the following requirements:

I. That the scholarships are granted for studies in educational institutions that have authorization or recognition of official validity of studies under the terms of the General Education Law or, in the case of foreign institutions, these are recognized by the National Council of Science and Technology.

II. That the scholarships are awarded through a competition open to the general public and their allocation is based on objective data related to the candidate's academic ability.

III. That they comply with the requirements referred to in sections II to VIII of Article 82 of this Law.

Article 84 .

Article repealed DOF 08-12-2020

For the purposes of Articles 80 and 88 of this Law, variable income investment funds that distribute dividends received from other companies must keep a net dividend account.

Amended paragraph DOF 18-11-2015

The account referred to in this article will be integrated with the dividends received from other legal entities resident in Mexico and will be reduced by the amount of dividends paid to its members from said account. For the purposes of this article, dividends in shares or those reinvested in the subscription or capital increase of the same person that distributes them, within thirty days following their distribution, are not included. The balance of the account provided for in this article shall be restated under the terms of article 77 of this Law.

Article 86. The legal entities referred to in this Title, in addition to the obligations established in other articles of this Law, shall have the following:

I. To maintain the accounting systems in accordance with the Federal Fiscal Code, its Regulations and the Regulations of this Law and to make records therein with respect to their operations.

II. Issue and collect the tax receipts evidencing the disposals and expenditures made, the services rendered or the granting of the temporary use or enjoyment of goods.

III. File with the authorized offices no later than February 15 of each year, a statement determining the distributable remainder and the proportion of this concept corresponding to each member.

IV. To provide its members with a certificate and tax receipt indicating the amount of the distributable remainder, if any.

V. To issue the certificates and the tax receipt and provide the information referred to in Section III of Article 76 of this Law; to withhold and pay the tax payable by third parties and require the respective receipt, when they make payments to third parties and are obligated to do so under the terms of this Law. They must comply with the obligations referred to in Article 99 of the same Law, when they make payments that are also income under the terms of Title IV, Chapter I of this Law.

Reformed fraction DOF 18-11-2015

Labor unions and the organizations that group them together are relieved from complying with the obligations established in Sections I and II of this article, except for those activities that if performed by another person would be included in Article 16 of the Federal Fiscal Code. The persons referred to in Article 79 of this Law who do not determine distributable surplus are relieved from complying with the obligations referred to in Sections III and IV of this Article.

The persons referred to in Sections V to XIX and XXV of Article 79 of this Law, as well as the legal entities or trusts authorized to receive tax-deductible donations and the investment funds referred to in this Title, will file an annual tax return in which they will inform the tax authorities of the income obtained and the expenditures made. Such return must be filed no later than February 15 of each year.

Amended paragraph DOF 18-11-2015

Legally recognized political parties and associations will have the obligation to withhold and pay the tax and require tax receipts when they make payments to third parties and are required to do so by law, as well as to keep accounting records and maintain them in accordance with the Federal Tax Code and its Regulations.

The Federation, the federal entities, the municipalities and the institutions required by law to deliver to the Federal Government the full amount of their operating surplus, will only have the obligation to withhold and pay the tax, issue tax receipts for the taxes, products and benefits they collect as well as for the support or incentives they grant, and require tax receipts when they make payments to third parties and are required to do so by law.

Amended paragraph DOF 30-11-2016

Decentralized entities that do not pay taxes in accordance with Title II of this Law will only have the obligations referred to in the preceding paragraph.

Legally recognized political parties and associations, the Federation, federal entities, municipalities and institutions required by law to deliver to the Federal Government the full amount of their operating surplus and decentralized entities that do not pay taxes pursuant to Title II of this Law are required to issue and deliver tax receipts to persons receiving payments for salaries and, in general, for the rendering of subordinate personal services, on the date on which the corresponding disbursement is made, In general, for the rendering of a subordinated personal service, on the date on which the corresponding disbursement is made, which may be used as proof or receipt of payment for purposes of the labor legislation referred to in Articles 132 sections VII and VIII, and 804 first paragraph sections II and IV of the Federal Labor Law.

When a legal entity included in this Title is dissolved, the obligations referred to in sections III and IV of this article must be fulfilled within three months following the dissolution.

Article 87. The investment funds in debt instruments referred to in the Investment Funds Law shall not be income tax payers and their members or shareholders shall accrue the interest income accrued in their favor by such funds.

The accrued interest income referred to in the preceding paragraph will be accrued in real terms for individuals and in nominal terms for corporations, and will be accrued in the year in which the fund accrues it, in the amount of such interest corresponding to each of them according to their investment.

The interest accrued in favor of the shareholders of debt instrument investment funds will be the sum of the profits received from the sale of their shares issued by such funds and the increase in the valuation of their investments in the same fund as of the last business day of the year in question, in real terms for individuals and nominal terms for corporations, both determined in accordance with Article 88 of this Law.

The legal entities that are members of such funds will be subject to the provisions of Chapter III of Title II of this Law with respect to the investments made in this type of funds.

The investment funds referred to in the first paragraph of this article must pay monthly, no later than the 17th day of the month following the month in which the taxable interest is accrued, the tax referred to in Article 54 of this Law, which corresponds to its members or shareholders. The persons who pay interest to such funds shall be relieved from making the withholding referred to in Article 54 of this Law.

The monthly tax referred to in the preceding paragraph will be the sum of the daily tax corresponding to the investment portfolio subject to the investment fund tax and will be calculated as follows: in the case of securities whose yield is paid in full on the maturity date, what results from multiplying the number of taxed securities of each species by their weighted average acquisition cost multiplied by the rate referred to in the article mentioned in the preceding paragraph and, in the case of the other securities referred to in Article 8 of this Law, what results from multiplying the number of taxed securities of each species by their nominal value, multiplied by the same rate.

The tax paid by the investment funds under the terms of the preceding paragraph will be creditable for its members or shareholders who are taxpayers of Title II and Title IV of the Law against their provisional or final payments, provided that they accrue the taxable interest earned on their investments in such investment funds to their other income for the year.

To determine the creditable withholding for each member or shareholder, debt instrument investment funds must divide the tax corresponding to the daily taxable accrued interest by the number of shares outstanding at the end of each day. The amount of the daily tax per share will be multiplied by the number of shares held by the shareholder at the end of each day in question. For such purpose, the amount of the creditable tax must be recorded in the account statement, certificate, record or liquidation notice issued for such purpose.

The variable income investment funds referred to in the Investment Funds Law will not be taxpayers of income tax and their members or shareholders will apply to the yields of these funds the regime that corresponds to their interest components, dividends and gain on disposal of shares, according to the provisions of this article and other applicable provisions of this Law.

The individuals who are members of the funds referred to in the preceding paragraph will accrue only the real taxable interest accrued in their favor by the same fund, from the debt securities contained in the portfolio of such fund, according to the investment in it corresponding to each of its members.

The portion corresponding to the actual interest of the daily income accrued in the year in favor of the individual shareholder will be calculated by multiplying the income determined in accordance with Article 88 of this Law by the factor resulting from dividing the taxable interest accrued daily in favor of the investment fund by the total daily income of the same fund during the shareholder's holding of the shares. The total income will include the valuation of the shareholding of the company's portfolio on the date of disposal of the share issued by the same fund or on the last business day of the fiscal year in question, as the case may be.

Entities that are members or shareholders of variable income investment funds will determine the interest accrued in their favor from their investments in such funds by adding the profits received from the sale of their shares and the increase in the valuation of their investments in the same fund as of the last business day of the year in question, in nominal terms, both types of income determined in accordance with Article 88 of this Law, and will be subject to the provisions of Chapter III of Title II of the same Law with respect to the investments made in this type of funds.

The variable income investment funds will withhold the tax monthly under the terms of Article 54 of this Law for the total taxable interest accrued in their favor and will pay it no later than the 17th day of the month following the month in which it is accrued. For these purposes, the provisions of the sixth paragraph of this article shall apply. The withholding corresponding to each member of the fund will be determined in accordance with the provisions of the eighth paragraph of this article and will be creditable for its members or shareholders who are taxpayers of Title II and Title IV of the Law against their provisional or final payments, provided that they accrue the taxable interest earned on their investments in said investment funds to their other income for the year. Persons who pay interest to such funds shall be relieved from making the withholding referred to in Article 54 of this Law.

The members or shareholders of the investment funds referred to in this Article and Article 88 of this Law, who are individuals, may deduct the loss determined in accordance with the fifth paragraph of Article 134 of this Law, under the terms of said provision.

Article amended DOF 18-11-2015

The members or individual shareholders of the investment funds in debt instruments or of the variable income investment funds will accumulate in the fiscal year the income they obtain from the interest generated by the taxed instruments that are part of the portfolio of such funds in accordance with Article 87 of this Law. Such income will be calculated by the operators, distributors or administrators of the funds, as the case may be.

Amended paragraph DOF 18-11-2015

Individuals who obtain gains derived from the sale of shares issued by variable income investment funds, whose purpose is the acquisition and sale of assets subject to investment with resources from the placement of shares representing their capital stock among the investing public, as provided in the Investment Funds Law, will determine by adding or decreasing, as appropriate, the gain or loss obtained in the year derived from the sale of shares of each investment fund carried out by such individual. Such individuals will be required to pay the income tax resulting from applying the 10% rate to the gain obtained in the year. The tax paid will be considered definitive.

Amended paragraph DOF 18-11-2015

The gain or loss obtained by the taxpayer, derived from the sale of shares of each investment fund, will be determined by decreasing the price of the assets subject to equity investment on the date of sale of the shares of such investment fund, by the price of the assets subject to equity investment on the date of acquisition, restated for the period from the date of acquisition to the date of sale.

Amended paragraph DOF 18-11-2015

When the restated acquisition price of the equity investee assets is higher than the price of the equity investee assets at the date of sale, the difference will be the amount of the loss on the transaction in question.

In the case of investment funds that issue shares that represent, in addition to the securities referred to in the first paragraph of Article 129 of this Law, other assets subject to investment other than these, referring to currencies, rates, credits, traded goods, among others, both the acquisition price of the assets subject to variable income investment and the disposal price shall not contain the proportion of the gain from the disposal of shares corresponding to such assets, which shall be subject to the provisions of Article 87 of this Law.

Amended paragraph DOF 18-11-2015

When taxpayers generate a loss in the year from the disposals of the shares referred to in the second paragraph, they may reduce such loss only against the amount of the gain, if any, obtained by the same taxpayer in the year or in the following ten years from the disposals referred to in the second paragraph of this article. The amount to be reduced for the losses referred to in this paragraph may not exceed the amount of such gains.

For the purposes of the preceding paragraph, losses will be restated for the period from the month in which they occurred until the closing month of the same fiscal year. The part of the losses that are not reduced in a fiscal year will be restated for the period from the month of the closing of the fiscal year in which it was last restated until the last month of the fiscal year immediately preceding the one in which it will be reduced.

When the taxpayer does not reduce the tax loss during a fiscal year when it could have done so in accordance with this article, it will lose the right to do so in subsequent fiscal years and up to the amount by which it could have done so.

Taxpayers must file a tax return for the profits obtained in accordance with the preceding paragraphs and make, if applicable, the payment of the tax corresponding to the year, which must be submitted together with the annual tax return.

In the case of real accrued interest earned by equity investment funds, the gain on the sale of shares as well as the increase in the real valuation of the holding of shares at the end of the year will be determined in accordance with the provisions established for debt investment funds, but only for the proportion represented by the income from dividends received and taxable interest of the fund, with respect to the total income during the holding of the shares by the shareholder or taxpayer paying the tax.

Amended paragraph DOF 18-11-2015

Through general rules, the Tax Administration Service may issue provisions that simplify the determination of taxable interest by the members of equity investment funds, based on a formula for apportioning the total income of the fund with respect to the taxable interest accrued in its favor for debt securities and the gains recorded for holding shares exempt from income tax during the period of holding of the shares by its members. The Tax Administration Service may issue in general rules a prorate mechanism to simplify the calculation of taxable interest for investment funds in debt instruments that have exempt securities in their portfolio.

Amended paragraph DOF 18-11-2015

Article 89. The debt instrument investment funds and the variable income investment funds referred to in Articles 87 and 88 of this Law, through their operators, administrators or distributors, as the case may be, must provide the members or shareholders thereof, as well as the financial intermediaries who have custody and administration of the investments, with a record indicating the following information no later than February 15 of each year:

Amended paragraph DOF 18-11-2015

I. The amount of nominal and real interest accrued by the fund in favor of each of its shareholders during the year.

Reformed fraction DOF 18-11-2015

II. The amount of withholdings to be credited to the member in question, pursuant to the terms of Article 87 of this Law and, if applicable, the amount of the deductible loss pursuant to Article 88 of this Law.

The investment funds referred to in this article, through their operators, administrators or distributors, as the case may be, must inform the Tax Administration Service, no later than February 15 of each year, the data contained in the certificates, as well as the average monthly balance of the investments in the fund in each of the months of the fiscal year, They will be jointly and severally liable for any omissions in the payment of taxes that may be incurred by the members or shareholders of such funds, when the information contained in the certificates is incorrect or incomplete.

Amended paragraph DOF 18-11-2015

TITLE IV

OF NATURAL PERSONS

GENERAL PROVISIONS

Article 90. Individuals residing in Mexico who obtain income in cash, in goods, accrued when under the terms of this Title, in credit, in services in the cases indicated in this Law, or of any other type, are obligated to pay the tax established in this Title. Individuals residing abroad who carry out business activities or provide independent personal services in Mexico through a permanent establishment are also obligated to pay the tax on the income attributable to such establishment.

Individuals resident in Mexico are required to report, in the tax return for the year, loans, donations and prizes obtained during the year, provided that these, individually or in the aggregate, exceed $600,000.00.

Individuals residing in Mexico must inform the tax authorities, through the means and formats indicated for such purpose by the Tax Administration Service through general rules, regarding the amounts received for the items mentioned in the preceding paragraph at the time of filing the annual tax return for the fiscal year in which they are obtained.

Income obtained by taxpayers is not considered to be income obtained from assets delivered in trust, as long as such income is only used for scientific, political or religious purposes or for the educational establishments and welfare or charitable institutions mentioned in Section III of Article 151 of this Law, or to finance the education up to the bachelor's degree level of their lineal descendants, as long as the studies are officially recognized as valid.

Income from economic or monetary support received by taxpayers through programs provided for in the federal or state budgets are not considered income for purposes of this Title.

Paragraph added DOF 30-11-2016

For purposes of the preceding paragraph, in the event that the resources received by taxpayers are destined to support business activities, the corresponding programs must have a list of beneficiaries; the resources must be distributed through electronic transfer of funds in the name of the beneficiaries who, in turn, must comply with the obligations established in the operating rules of said programs and must have a favorable opinion from the competent authority regarding compliance with tax obligations, when they are obligated to request it under the terms of the tax provisions. The expenses or disbursements made with the economic support referred to in this paragraph, which are not considered income, will not be deductible for purposes of this tax. The federal or state agencies or entities in charge of granting or administering the economic or monetary support, must make available to the general public and keep updated in their respective electronic media, the list of beneficiaries referred to in this paragraph, which must contain the following data: name of the beneficiary individual, the amount, resource, benefit or support granted for each of them, the territorial unit, age and sex.

Paragraph added DOF 30-11-2016

When individuals have debts or credits in foreign currency and obtain exchange gain derived from the fluctuation of such currency, they will consider as income the gain determined in accordance with the provisions of Article 143 of this Law.

Income obtained by individuals is considered to be that which corresponds to them in accordance with Title III of this Law, as well as the amounts they receive to make expenses on behalf of third parties, unless such expenses are supported with tax receipts in the name of the person on whose behalf the expense is made.

In the case of income from a source of wealth located abroad, taxpayers will not consider it for the purposes of the provisional payments of this tax, except as provided in Article 96 of this Law.

Individuals residing in the country who change their residence during a calendar year to another country will consider the provisional payments made as a final tax payment and will not be able to file an annual tax return.

Taxpayers under this Title that enter into transactions with related parties are required, for purposes of this Law, to determine their taxable income and authorized deductions, considering, for those transactions, the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions. Otherwise, the tax authorities may determine the taxpayers' taxable income and allowable deductions by determining the price, amount of consideration or profit margins in transactions between related parties, considering, for such transactions, the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions, through the application of the methods established in Article 180 of this Law, whether these are with legal entities, residents in the country or abroad, individuals and permanent establishments in the country of residents abroad, as well as in the case of activities carried out through trusts.

Amended paragraph DOF 12-11-2021

Two or more persons are considered related parties when one participates directly or indirectly in the management, control or capital of the other, or when a person or group of persons participates, directly or indirectly, in the management, control or capital of such persons, or when there is a relationship between them in accordance with customs legislation.

Individuals may be subject to the tax discrepancy procedure when it is proven that the amount of expenditures in a calendar year is higher than the income declared by the taxpayer, or the income that should have been declared by the taxpayer.

For this purpose, expenditures made by any individual will also be considered to be those consisting of expenses, acquisitions of goods and deposits in bank accounts, financial investments or credit cards.

The expenditures referred to in the preceding paragraph will be presumed to be income in the case of individuals who are not registered in the Federal Taxpayers' Registry, or who, being registered, do not file the returns they are required to file, or who, even if they do file them, declare income lower than the expenditures referred to. In the case of taxpayers who pay taxes under Chapter I of Title IV of this Law and who are not required to file an annual tax return, the income declared by the taxpayers who make the withholding will be considered as the income declared.

Deposits made by the taxpayer in accounts that are not his own, which qualify as expenditures under the terms of this article, will not be taken into consideration when it is proven that such deposit was made as payment for the acquisition of goods or services, or as consideration for the granting of the use or temporary enjoyment of goods or to make financial investments, or transfers between accounts of the taxpayer or to accounts of his spouse, ascendants or descendants, in the first degree in a straight line, will not be taken into consideration.

The income determined under the terms of this article, net of those declared, will be considered omitted for the preponderant activity of the taxpayer or, if applicable, other income under the terms of Chapter IX of this Title in the case of loans and donations that are not declared or reported to the tax authorities, in accordance with the provisions of the second and third paragraphs of Article 90 of this Law. In the case of a taxpayer that is not registered in the Federal Taxpayers Registry, the tax authorities will also proceed to register it in Chapter II, Section I of this Title.

In order to know the amount of the expenditures referred to in this article, the tax authorities may use any information in their possession, either because it is contained in their files, documents or databases, or because it has been provided by a third party or another authority.

For the purposes of this article, the tax authorities shall proceed as follows:

I. Notify the taxpayer of the amount of the expenditures detected, the information used to obtain them, the means by which it was obtained and the resulting discrepancy.

II. Upon notification of the official notice referred to in the preceding section, the taxpayer shall have a period of twenty days to inform the tax authorities in writing, counted from the day following the date of notification, the origin or source of the resources with which the detected expenditures were made and shall offer, if applicable, the evidence it deems appropriate to prove that the resources do not constitute taxable income under the terms of this Title. The tax authorities may, only once, request additional information or documentation from the taxpayer, which must be provided within the term provided in Article 53, paragraph c) of the Federal Tax Code.

III. Once the discrepancy is proven, it will be presumed to be taxable income and the respective liquidation will be formulated, considering as omitted income the amount of the disbursements not clarified and applying the rate provided in Article 152 of this Law to the result thus obtained.

When the income of individuals derives from jointly owned property, one of the co-owners must be designated as the common representative, who must keep the books, issue the tax receipts and collect the documentation determined by the tax provisions, as well as comply with the tax withholding obligations referred to in this Law.

When two or more taxpayers are co-owners of a business, the provisions of Article 108 of this Law shall apply.

The co-owners shall be jointly and severally liable for the default of the common representative.

The provisions of the preceding paragraphs are applicable to the members of the marital partnership.

The legal representative of the succession shall pay the tax in each calendar year on behalf of the heirs or legatees, considering the income jointly, until the liquidation of the succession has been finalized. The payment made in this manner shall be considered as definitive, unless the heirs or legatees choose to accumulate the respective income corresponding to them, in which case they may credit the proportional part of the tax paid.

Article 93. Income tax shall not be paid on the obtaining of the following income:

I. Benefits other than the salary received by workers of the general minimum salary for one or more geographic areas, calculated on the basis of such salary, when they do not exceed the minimums set forth in the labor legislation, as well as the remunerations for overtime or the rendering of services performed on days off without enjoying others in substitution, up to the limit set forth in the labor legislation, received by such workers. In the case of other workers, 50% of the remunerations for overtime or for the rendering of services performed on days off without taking other days off in substitution, which does not exceed the limit established in the labor legislation and without this exemption exceeding the equivalent of five times the general minimum wage of the geographic area of the worker for each week of services.

II. For the excess of the benefits exempted from the payment of the tax referred to in the preceding section, the tax shall be paid in accordance with the terms of this Title.

III. Compensation for occupational hazards or illnesses, which are granted in accordance with the law, collective bargaining agreements or by law.

IV. Retirements, pensions, retirement assets, as well as lifetime pensions or other forms of retirement, from the retirement insurance subaccount or from the subaccount for retirement, severance at advanced age and old age, provided for in the Social Security Law and those from the individual account of the retirement savings system provided for in the Law of the Institute of Security and Social Services for State Workers, in the cases of disability, incapacity, unemployment, old age, retirement and death, the daily amount of which does not exceed fifteen times the general minimum wage of the taxpayer's geographic area, and the benefit provided for in the Universal Pension Law. For the excess, the tax will be paid in accordance with the terms of this Title.

V. In order to apply the exemption on the items referred to in the preceding section, the totality of the pensions and retirement assets paid to the worker referred to therein shall be considered, regardless of who pays them. On the excess, the withholding shall be made under the terms established for such purpose in the Regulations of this Law.

VI. Those received for reimbursement of medical, dental, hospital and funeral expenses, which are generally granted in accordance with the laws or labor contracts.

VII. Social security benefits granted by public institutions.

VIII. Those received in connection with disability allowances, educational scholarships for workers or their children, day care centers, cultural and sports activities, and other social welfare benefits, of a similar nature, which are granted in a general manner, in accordance with the law or employment contracts.

IX. The social welfare referred to in the preceding section is that established in Article 7, fifth paragraph of this Law.

X. The delivery of the contributions and their yields coming from the housing subaccount of the individual account provided for in the Social Security Law, from the Housing Fund subaccount of the individual account of the retirement savings system, provided for in the Law of the Institute of Security and Social Services for State Workers or from the Housing Fund for active members of the Army, Air Force and Navy, provided for in the Law of the Institute of Social Security for the Mexican Armed Forces, as well as the housing houses provided to the workers, including by the companies when the requirements for deductions are met, as well as the houses provided to the workers, including by the companies when the requirements for deductions are met, Air Force and Navy, provided for in the Law of the Institute of Social Security for the Mexican Armed Forces, as well as the housing provided to the workers, including by the companies when the deductibility requirements of Title II of this Law or, if applicable, of this Title are met.

XI. Those coming from workers' savings banks and savings funds established by companies for their workers when they meet the deductibility requirements of Title II of this Law or, as the case may be, of this Title.

XII. The workers' social security contribution paid by the employers.

XIII. Those obtained by persons who have been subject to an employment relationship at the time of their separation, for seniority premiums, retirement and indemnities or other payments, as well as those obtained from the retirement insurance subaccount or the retirement, severance at advanced age and old age subaccount, provided for in the Social Security Law and those obtained by workers in the service of the State from the individual account of the retirement savings system, provided for in the Law of the Institute of Security and Social Services of State Workers, and those obtained from the benefit provided for in the Universal Pension Law, up to the equivalent of ninety times the general minimum wage of the taxpayer's geographic area for each year of service or contribution in the case of the retirement insurance subaccount, the retirement, severance at advanced age and old age subaccount or the individual account of the retirement savings system. The years of service will be those that would have been considered for the calculation of the aforementioned concepts. Any fraction of more than six months will be considered a full year. For the excess, the tax will be paid in accordance with the terms of this Title.

XIV. The bonuses that workers receive from their employers during a calendar year, up to the equivalent of the general minimum wage of the worker's geographic area raised to 30 days, when such bonuses are granted in general; as well as the vacation bonuses granted by the employers during the calendar year to their workers in general and the participation of the workers in the profits of the companies, up to the equivalent of 15 days of the general minimum wage of the worker's geographic area, for each of the mentioned concepts. In the case of Sunday bonuses, up to the equivalent of one general minimum wage of the employee's geographic area for each Sunday worked.

XV. For the excess of the income referred to in the preceding section, the tax shall be paid in accordance with the terms of this Title.

XVI. Remunerations for subordinate personal services received by foreigners, in the following cases:

a) Diplomatic agents.

b) Consular agents, in the exercise of their functions, in cases of reciprocity.

c) Employees of foreign embassies, legations and consulates, who are nationals of the countries represented, provided there is reciprocity.

d) Members of official delegations, in the case of reciprocity, when representing foreign countries.

e) Members of scientific and humanitarian delegations.

f) Representatives, officers and employees of international organizations with headquarters or offices in Mexico, when so established by treaties or agreements.

g) Foreign technicians hired by the Federal Government, when so provided in the agreements between Mexico and the country on which they depend.

XVII. Per diems, when they are effectively disbursed in the employer's service and this circumstance is proven with the corresponding tax vouchers.

XVIII. Those arising from lease agreements extended by law.

XIX. Those derived from the sale of:

a) The taxpayer's dwelling house, provided that the amount of the consideration obtained does not exceed seven hundred thousand investment units and the transfer is formalized before a notary public. For the excess, the gain will be determined and the annual tax and the provisional payment will be calculated under the terms of Chapter IV of this Title, considering the deductions in the proportion resulting from dividing the excess by the amount of the consideration obtained. The calculation and payment of the tax corresponding to the provisional payment will be made by the notary public in accordance with said Chapter.

The exemption provided in this subsection will be applicable provided that during the three years immediately prior to the date of sale in question, the taxpayer has not sold another dwelling house for which the exemption provided in this subsection has been obtained and declares, under oath, such circumstances before the notary public before whom the transaction is notarized.

Amended paragraph DOF 18-11-2015

The notary public must consult the Tax Administration Service through the Internet page of said decentralized agency and in accordance with the general rules issued for such purpose by the latter, if the taxpayer has previously disposed of any dwelling house during the five years prior to the date of the disposition in question, for which the exemption provided for in this subsection has been obtained, and shall notify said decentralized agency of said disposition, indicating the amount of the consideration and, if applicable, the tax withheld.

b) Personal property, other than shares, partnership interests, securities and investments of the taxpayer, when in a calendar year the difference between the total amount of the disposals and the proven cost of the acquisition of the property disposed of does not exceed three times the general minimum wage of the taxpayer's geographic area raised per year. For the profit that exceeds this amount, the tax will be paid in accordance with the terms of this Title.

XX. Interest:

a) Paid by credit institutions, provided they come from checking accounts, for the deposit of wages and salaries, pensions or retirement assets or savings deposits, whose average daily balance of the investment does not exceed 5 general minimum wages of the geographic area of the Federal District, raised per year.

b) Paid by savings and loan cooperative societies and popular financial societies, from investments whose average daily balance does not exceed 5 general minimum wages of the geographic area of the Federal District, raised per year.

For the purposes of this section, the average daily balance will be obtained by dividing the sum of the daily balances of the investment by the number of days of the investment, without considering unpaid accrued interest.

XXI. The amounts paid by the insurance companies to the insured or their beneficiaries when the risk covered by the contracted policies occurs, provided that it is not insurance related to fixed assets. In the case of insurance policies in which the risk covered is the survival of the insured, income tax will not be paid on the amounts paid by the insurance companies to the insured or beneficiaries, provided that the indemnity is paid when the insured reaches the age of sixty years and at least five years have elapsed from the date of contracting the insurance and the time at which the indemnity is paid. The provisions of this paragraph shall only apply when the premium is paid by the insured.

Income tax will also not be paid on the amounts paid by insurance institutions to their policyholders or their beneficiaries, which come from life insurance contracts when the premium has been paid directly by the employer in favor of its workers, provided that the benefits of such insurance are delivered only for death, disability, organic losses or incapacity of the insured to perform paid personal work in accordance with the social security laws and provided that in the case of insurance covering the death of the policyholder the beneficiaries of such policy are the persons related to the policyholder referred to in Section I of Article 151 of this Law and the other requirements established in Section XI of Article 27 of the same Law are complied with. The exemption provided for in this paragraph will not be applicable in the case of the amounts paid by the insurance companies as dividends derived from the insurance policy or its collectivity.

Income tax will not be paid on amounts paid by insurance institutions to their policyholders or their beneficiaries arising from life insurance contracts, when the person paying the premium is different from the one mentioned in the preceding paragraph and the beneficiaries of such insurance are delivered for death, disability, organic loss or inability of the insured to perform personal work.

The covered risk referred to in the preceding paragraph shall be calculated taking into account all insurance policies covering the risk of death, disability, organic loss or incapacity of the insured to perform paid personal work in accordance with the social security laws, contracted for the benefit of the same insured by the same employer.

In the case of amounts paid by insurance companies for retirement, pension or retirement benefits, as well as medical expense insurance, the provisions of sections IV and VI of this article, as applicable, shall apply.

The provisions of this section shall only be applicable to income received from insurance institutions incorporated under Mexican law, which are authorized to organize and operate as such by the competent authorities.

XXII. Those received by inheritance or legacy.

XXIII. Donations in the following cases:

a) Between spouses or those received by the descendants of their ascendants in a straight line, regardless of the amount.

b) Those received by ascendants from their descendants in a straight line, provided that the assets received are not alienated or donated by the ascendant to another descendant in a straight line without limitation of degree.

c) Other donations, provided that the total value of those received in a calendar year does not exceed three times the general minimum wage of the taxpayer's geographic area raised per year. For the excess, tax will be paid in accordance with the terms of this Title.

XXIV. The prizes obtained on the occasion of a scientific, artistic or literary contest, open to the general public or to a certain guild or group of professionals, as well as the prizes granted by the Federation to promote civic values.

XXV. Compensations for damages that do not exceed the market value of the property in question. For the excess, the tax shall be paid in accordance with the terms of this Title.

XXVI. Those received as alimony by individuals who have the character of alimony creditors in terms of the applicable civil legislation.

XXVII. Withdrawals made from the retirement, advanced age severance and old age subaccount of the individual account opened under the terms of the Social Security Law, for assistance for marriage expenses and unemployment. The transfer of the resources of the individual account between retirement fund administrators, between credit institutions or between both, as well as between said administrators and insurance institutions authorized to operate pension insurance derived from the social security laws, for the sole purpose of contracting a life annuity and survivorship insurance in accordance with the social security laws and the Law of the Retirement Savings Systems, will also be treated in this manner.

XXVIII. Those derived from the alienation of land rights, of the parcels over which the full domain or communal rights have been adopted, as long as it is the first transfer made by the ejidatarios or communal owners and the same is carried out under the terms of the legislation on the matter.

The alienation referred to in this section must be made before a notary public, and the alienating party must prove that he is the holder of such land rights or communal rights, as well as his status as ejidatario or communal owner by means of the corresponding certificates or titles referred to in the Agrarian Law.

In the event that the status of ejidatario or communal owner is not accredited in accordance with the provisions of the preceding paragraph, or if it is not the first transfer made by the ejidatarios or communal owners, the notary public will calculate and pay the tax in accordance with the terms of this Title.

XXIX. Those obtained, up to the equivalent of twenty general minimum wages of the geographic area corresponding to the taxpayer, raised per year, for allowing third parties to publish written works of their creation in books, newspapers or magazines, or the serial reproduction of recordings of musical works of their creation, provided that the books, newspapers or magazines, as well as the goods in which the recordings are contained, are intended for sale to the public by the person making the payments for these concepts and provided that the creator of the work issues the respective tax receipt for such income. For the excess, the tax shall be paid in accordance with the terms of this Title.

The exemption referred to in this section shall not apply in any of the following cases:

a) When the person who receives this income also obtains from the person who pays it income of those indicated in Chapter I of this Title.

b) When the person receiving this income is a partner or shareholder of more than 10% of the capital stock of the legal entity making the payments.

c) In the case of income derived from advertising ideas or phrases, logos, emblems, distinctive seals, industrial designs or models, operating manuals or works of applied art.

The provisions of this section shall not apply when the income is derived from the exploitation of written or musical works of their creation in business activities other than the sale to the public of their works, or in the rendering of services.

The provisions of sections XIX paragraph b), XX, XXI, XXI, XXIII paragraph c) and XXV of this article shall not be applicable in the case of income from business or professional activities referred to in Chapter II of this Title.

Contributions made by employers and the Federal Government to the retirement, severance at advanced age and old age sub-account of the individual account established under the terms of the Social Security Law, as well as contributions made to the individual account of the retirement savings system under the terms of the Law of the Institute of Security and Social Services for State Workers, including the income generated, will not be accumulated income of the employee in the year in which they are contributed or generated, as applicable.

Contributions made by employers, under the terms of the Law of the National Workers' Housing Fund Institute, to the housing sub-account of the individual account opened under the terms of the Social Security Law, and those made by the Federal Government to the Housing Fund sub-account of the individual account of the retirement savings system, under the terms of the Law of the Institute of Security and Social Services for State Workers, or of the Housing Fund for active members of the Army, Air Force and Navy, provided for in the Law of the Institute of Social Security for the Mexican Armed Forces, as well as the yields they generate, will not be accumulated income of the worker in the fiscal year in which they are contributed or generated, as applicable.

The exemptions provided for in sections XVII, XIX paragraph a) and XXII of this article will not be applicable when the corresponding income is not declared under the terms of the third paragraph of article 150 of this Law, being obligated to do so.

The exemption applicable to income obtained for social welfare benefits will be limited when the sum of the income for the rendering of subordinated personal services or those received by the cooperative societies, the partners or members thereof and the amount of the exemption exceeds an amount equivalent to seven times the general minimum wage of the taxpayer's geographic area, raised per year; when such amount exceeds the aforementioned amount, only an amount up to one general minimum wage of the taxpayer's geographic area, raised per year, will be considered as income not subject to the payment of the tax. This limitation shall in no case result in the sum of the income for the rendering of subordinated personal services or those received by the cooperative societies, the partners or members thereof and the amount of the exemption, being less than seven times the general minimum wage of the taxpayer's geographic area, raised per year.

The provisions of the preceding paragraph shall not apply in the case of retirements, pensions, retirement benefits, life pensions, indemnifications for work risks or illnesses, which are granted in accordance with the laws, collective bargaining agreements or legal contracts, reimbursement of medical, dental, hospital and funeral expenses, granted in a general manner in accordance with the laws or labor contracts, medical expense insurance, life insurance and savings funds, provided that the requirements established in Sections XI and XXI of Article 27 of this Law are met, even when the person granting such social welfare benefits is not a taxpayer of the tax established in this Law.

CHAPTER I

OF INCOME FROM SALARIES AND, IN GENERAL, FROM THE RENDERING OF SUBORDINATE PERSONAL SERVICES.

Salaries and other benefits derived from an employment relationship, including employee profit sharing and benefits received as a consequence of the termination of the employment relationship, are considered income for the rendering of a subordinated personal service. For the purposes of this tax, the following are assimilated to this income:

I. Remunerations and other benefits obtained by officials and workers of the Federation, federal entities and municipalities, even when they are for expenses not subject to verification, as well as those obtained by members of the armed forces.

II. Income and advances obtained by members of cooperative production societies, as well as advances received by members of civil societies and associations.

III. Fees paid to members of boards of directors, supervisory, advisory or any other type of boards, as well as fees paid to administrators, statutory auditors and general managers.

IV. Fees to persons rendering services predominantly to a borrower, provided that such services are carried out at the latter's premises.

For the purposes of the preceding paragraph, it is understood that a person renders services mainly to a borrower, when the income received from such borrower in the immediately preceding calendar year represents more than 50% of the total income obtained from the items referred to in Section II of Article 100 of this Law.

Before the first payment of fees is made in the calendar year in question, the persons referred to in this section must communicate in writing to the service provider in whose facilities the service is rendered, if the income obtained from said service provider in the immediately preceding year exceeded 50% of the total income received in said calendar year for the items referred to in section II of Article 100 of this Law. In the event that such communication is omitted, the borrower will be obliged to make the corresponding withholdings.

V. Fees received by individuals from corporations or individuals with business activities to whom they render independent personal services, when they communicate in writing to the service provider that they opt to pay the tax under the terms of this Chapter.

VI. The income received by individuals from corporations or individuals with business activities, for the business activities they perform, when they communicate in writing to the person making the payment that they opt to pay the tax under the terms of this Chapter.

VII. Income obtained by individuals for exercising the option granted by the employer, or a related party thereof, to acquire, including by subscription, shares or securities representing assets, at no cost or at a price less than or equal to the market price of such shares or securities at the time the option is exercised, regardless of whether the shares or securities are issued by the employer or a related party thereof.

The taxable income will be the difference between the market value of the shares or securities subject to the option at the time the taxpayer exercises the option and the price established at the time the option was granted.

When the officers of the Federation, of the federal entities or of the municipalities have assigned automobiles that do not meet the requirements of Article 36, Section II of this Law, they will consider as income from services, for the purposes of this Chapter, the amount that would not have been deductible for purposes of this tax had the aforementioned legal entities been taxpayers of this tax.

The income referred to in the preceding paragraph will be calculated considering as monthly income one-twelfth of the amount resulting from applying the maximum annual deduction percentage to the amount pending deduction of the investments in automobiles, as if they had been deducted since the year in which they were acquired, as well as the expenses for their maintenance and repair.

The payment of the tax referred to in this article shall be made by means of withholding made by the aforementioned legal entities.

The income provided for in this Article is deemed to be obtained in full by the person performing the work. For the purposes of this Chapter, credit income shall be declared and the corresponding tax shall be calculated up to the calendar year in which it is collected.

Canteen and meal services provided to employees and the use of goods provided by the employer to employees for the performance of their own activities will not be considered as income in goods, provided that, in the latter case, they are in accordance with the nature of the work provided.

When the income received in the fiscal year for the items referred to in Sections IV, V and VI of this Article has exceeded, individually or as a whole, seventy-five million pesos, the provisions of this Chapter will not be applicable to them, in which case the individuals who receive them must pay the respective tax under the terms of Chapter II, Section I, of this Title as from the year following the one in which such amount was exceeded. Individuals who are in the situation established in this paragraph must communicate this situation in writing to the borrowers or to the persons who make the payments to them, for which purpose the provisions of the general rules issued by the Tax Administration Service will apply. If the tax is not paid in the terms of the referred Section, the tax authority will update the economic activities and obligations of the taxpayer to the corresponding tax regime. Taxpayers who do not agree with such update may carry out the clarification procedure determined by the Tax Administration Service through general rules.

Paragraph added DOF 08-12-2020. Amended DOF 12-11-2021

Article 95. When income is obtained from seniority premiums, retirement and severance payments or other payments, by separation, the annual tax shall be calculated in accordance with the following rules:

I. From the total income for this concept, an amount equal to the last regular monthly salary shall be set aside, which shall be added to the other income on which the tax must be paid in the calendar year in question and the tax corresponding to such income shall be calculated in accordance with the terms of this Title. When the total income is less than the last regular monthly salary, such income shall be added in its totality to the other income on which the tax must be paid and Section II of this Article shall not be applied.

II.An amount equal to the amount of the last regular monthly salary shall be subtracted from the total amount received for this concept, and to the result shall be applied the rate that corresponds to the tax indicated in the preceding section. The resulting tax shall be added to the tax calculated in accordance with the preceding section.

The rate referred to in Section II above shall be calculated by dividing the tax indicated in Section I above by the amount to which the rate of Article 152 of this Law was applied; the quotient thus obtained is multiplied by one hundred and the product is expressed as a percentage.

Those who make payments for the concepts referred to in this Chapter are obliged to make monthly withholdings and payments that will be considered provisional payments on account of the annual tax. No withholding shall be made from those persons who in the month only receive a general minimum wage corresponding to the taxpayer's geographic area.

The withholding shall be calculated by applying the following to the total income obtained in a calendar month:

Those who make payments for annual bonuses, profit sharing, Sunday bonuses and vacation bonuses, may withhold the tax in accordance with the requirements established in the Regulations of this Law; the provisions of said Regulations shall provide that the withholding may be made on other income obtained during the calendar year.

Those who make the withholdings referred to in this article must deduct from the total income obtained in the calendar month, the local tax on income from salaries and in general for the rendering of a subordinated personal service that, if applicable, would have been withheld in the calendar month in question, provided that the rate of such tax does not exceed 5%.

In the case of fees paid to members of boards of directors, supervisory, advisory or any other type of boards, as well as fees paid to administrators, statutory auditors and general managers, the withholding and payment referred to in this article may not be less than the amount resulting from applying the maximum rate to be applied to the amount in excess of the lower limit established in article 152 of this Law, unless there is also an employment relationship with the withholder, in which case, the procedure shall be in accordance with the terms of the second paragraph of this article.

Persons who make payments for the concepts referred to in Article 95 of this Law, shall make the withholding by applying to the total income for this concept, a rate that shall be calculated by dividing the tax corresponding to the last ordinary monthly salary, by said salary; the quotient obtained shall be multiplied by one hundred and the product shall be expressed as a percent. When the payments for these concepts are lower than the last regular monthly salary, the withholding shall be calculated by applying the rate established in this article.

Individuals, as well as the legal entities referred to in Title III of this Law, shall pay the withholdings referred to in this article no later than the 17th day of each month of the calendar year, by means of a declaration to be filed with the authorized offices.

Taxpayers who render subordinated services to persons not obliged to withhold, in accordance with the last paragraph of Article 99 of this Law, and those who obtain income from abroad for these concepts, will calculate their provisional payment in the terms of this provision and will pay it no later than the 17th day of each month of the calendar year, by means of a declaration that they will file with the authorized offices.

Article 96-Bis. Legal entities that make payments in a single installment to individuals charged to the retirement insurance subaccount or to the retirement, severance at advanced age and old age subaccount, provided for in the Social Security Law and those obtained by State employees charged to the individual account of the retirement savings system, provided for in the Law of the Institute of Security and Social Services of State Employees, other than the concepts indicated in Article 93, Section IV of this Law, must withhold and pay the tax in accordance with the following:

I. The total amount of income received will be divided by the total number of years in which the workers contributed to the retirement insurance subaccounts or to the retirement, severance at advanced age and old age subaccount, provided for in the Social Security Law or to the retirement savings and retirement, severance at advanced age and old age subaccounts, provided for in the Law of the Institute of Social Security and Services for State Workers.

II. To the result obtained in accordance with the previous section, the corresponding rate shall be applied in accordance with article 152 of this Law.

III. The amount resulting in accordance with the preceding section shall be divided by the result obtained in accordance with section I of this article, the quotient thus obtained shall be multiplied by one hundred and the product shall be expressed as a percentage.

IV. The percentage resulting from the previous section shall be applied to the excess of the exempt amount of the total resources to be delivered, in accordance with the provisions of Article 93, Section XIII of this Law, and the result shall be the withholding to be made to each taxpayer.

V.The withholding shall be reported to the authorized offices no later than the 17th day of the month immediately following the month to which the payment corresponds, and a tax receipt shall be issued stating the amount of the payment, as well as the tax withheld.

The tax withheld in terms of this article may be considered as a final payment when the individuals only obtain income in the same fiscal year for the payments referred to in the first paragraph of this article.

Article added DOF 09-12-2019

The persons obliged to make withholdings under the terms of Article 96 of this Law shall calculate the annual tax of each person who has rendered subordinated personal services.

The annual tax shall be determined by deducting from the total income obtained in a calendar year, for the concepts referred to in this Chapter, the local tax on income from salaries and in general for the rendering of a subordinated personal service that would have been withheld in the calendar year. The rate set forth in Article 152 of this Law shall be applied to the result obtained. The amount of the provisional payments made under the terms of Article 96 of this Law will be credited against the tax payable by the taxpayer.

The reduction of the local tax referred to in the preceding paragraph must be made by the persons obligated to make withholdings under the terms of Article 96 of this Law, provided that the rate of such tax does not exceed 5%.

The difference payable by the taxpayer under the terms of this article shall be paid to the authorized offices no later than the month of February following the calendar year in question. The difference in favor of the taxpayer must be offset against the withholding of the month of December and the successive withholdings, at the latest within the following calendar year. The taxpayer may request to the tax authorities the refund of the amounts not offset, under the terms established by the Tax Administration Service through general rules.

The withholder must offset the balances in favor of a taxpayer against the amounts withheld from other persons to whom he makes payments that are income of those mentioned in this Chapter, provided that they are taxpayers who are not required to file annual returns. The withholder will collect the supporting documentation of the compensated amounts delivered to the worker with a balance in favor.

When it is not possible to offset the balances in favor of an employee referred to in the preceding paragraph or it is only possible to do so partially, the employee may request the corresponding refund, provided that the withholder indicates the amount that has been offset in the certificate referred to in section III of article 99 of this Law.

The calculation of the annual tax referred to in this article shall not be made in the case of taxpayers who:

a) Have begun rendering services after January 1 of the year in question or have ceased rendering services to the withholder before December 1 of the year for which the calculation is made.

b) Have obtained annual income for the items referred to in this Chapter that exceeds $400,000.00.

c) Communicate in writing to the withholder that they will file an annual tax return.

Article 98. Taxpayers who obtain income of those indicated in this Chapter, in addition to making the payments of this tax, shall have the following obligations:

I. To provide the persons who make the payments referred to in this Chapter with the necessary data for such persons to register them in the Federal Taxpayers' Registry, or when they have already been registered previously, to provide their registration code to the employer.

II. Request the certificates referred to in Section III of Article 99 of this Law and provide them to the employer within the month following the month in which the service is rendered or, as the case may be, to the employer who is going to calculate the definitive tax or accompany the annual tax return. The employer shall not be required to provide the employer with the proof of payment of the tax for the year.

III. File an annual tax return in the following cases:

a) When in addition they obtain accruable income other than those indicated in this Chapter.

b) When the withholder has been notified in writing that an annual return will be filed.

c) When they cease to render services before December 31 of the year in question or when they have rendered services to two or more employers simultaneously.

d) When they obtain income, for the concepts referred to in this Chapter, from a source of wealth located abroad or from persons not obligated to make the withholdings of Article 96 of this Law.

e) When they obtain annual income for the concepts referred to in this Chapter that exceeds $400,000.00.

IV. Communicate in writing to the employer, before the employer makes the first payment corresponding to them for the rendering of subordinated personal services in the calendar year in question, if they render services to another employer and the latter applies the employment subsidy to them, so that it is no longer applied again.

Article 99. Those who make payments for the concepts referred to in this Chapter shall have the following obligations:

I. To make the withholdings indicated in Article 96 of this Law.

II. Calculate the annual tax of the persons who have rendered subordinate services to them, under the terms of Article 97 of this Law.

III. Issue and deliver tax receipts to persons receiving payments for the items referred to in this Chapter, on the date on which the corresponding disbursement is made, which may be used as proof or receipt of payment for purposes of the labor legislation referred to in Articles 132, Sections VII and VIII, and 804, first paragraph, Sections II and IV, of the Federal Labor Law.

IV. Request, if applicable, the certificates and vouchers referred to in the preceding section, from the persons hired to provide subordinate services, no later than within the month following the month in which the service is rendered and make sure that they are registered in the Federal Taxpayers' Registry.

In addition, they must request the employees to inform them in writing before the first payment is made for the rendering of subordinated personal services in the calendar year in question, if they render services to another employer and the latter applies the employment subsidy to them, so that it is no longer applied again.

V. To request the persons hired to render subordinate services to provide them with the necessary data in order to register them in the Federal Taxpayers' Registry, or when they have already been registered previously, to provide them with their code of the aforementioned registry.

VI. Provide no later than February 15 of each year, to the persons to whom they have rendered subordinate personal services, proof and the tax receipt of the total amount of the per diem paid in the calendar year in question, for which the provisions of Article 93, Section XVII of this Law were applied.

VII. File, before the authorized offices no later than February 15 of each year, a declaration providing information on the persons who have exercised the option referred to in Section VII of Article 94 of this Law, in the previous calendar year, in accordance with the general rules issued for such purpose by the Tax Administration Service.

International organizations are exempted from the obligations set forth in this article when so established in the respective treaties or agreements, and foreign states.

CHAPTER II

OF INCOME FROM BUSINESS AND PROFESSIONAL ACTIVITIES

SECTION I

OF INDIVIDUALS WITH BUSINESS AND PROFESSIONAL ACTIVITIES

Article 100. Individuals who receive income derived from the performance of business activities or the rendering of professional services are obligated to pay the tax established in this Section.

Individuals residing abroad who have one or more permanent establishments in the country will pay income tax under the terms of this Section on the income attributable to them, derived from business activities or the rendering of professional services.

For the purposes of this Chapter, the following are considered:

I. Income from business activities, those derived from commercial, industrial, agricultural, livestock, fishing or forestry activities.

II. Income for rendering a professional service, the remunerations derived from an independent personal service and whose income is not considered in Chapter I of this Title.

It is understood that the income is obtained in its entirety by the persons performing the business activity or rendering the professional service.

For the purposes of this Section, the following shall be considered as accruable income for the performance of business activities or for the rendering of professional services, in addition to those indicated in the preceding Article and in other Articles of this Law:

I. In the case of waivers, write-offs or remissions of debts related to business activities or professional services, as well as the aforementioned debts that are not paid due to the creditor's statute of limitations, the difference resulting from subtracting from the principal updated for inflation, the amount of the waiver, forgiveness or remission, at the time of liquidation or restructuring, provided that the total liquidation is less than the updated principal and in the case of waivers, forgiveness or remissions granted by institutions of the financial system.

In the case of remissions, waivers or remissions of debts granted by persons other than institutions of the financial system, the total amount of such remissions, waivers or remissions will be accumulated.

Taxpayers subject to an insolvency proceeding may reduce the amount of the debts forgiven in accordance with the agreement entered into with their recognized creditors, under the terms established in the Bankruptcy Law, from the losses pending to be reduced in the year in which such creditors forgive the aforementioned debts. When the amount of the forgiven debts is greater than the tax loss carryforwards, the resulting difference will not be considered as taxable income, unless the forgiven debt arises from transactions between and with related parties referred to in Article 179 of this Law.

II. The proceeds from the sale of accounts and documents receivable and debt securities other than shares, related to the activities referred to in this Chapter.

III. The amounts recovered for insurance, bonds or liabilities charged to third parties, in the case of losses of the taxpayer's property related to the business activity or professional service.

IV. Amounts received for expenses incurred on behalf of third parties, unless such expenses are supported by tax receipts issued in the name of the party on whose behalf the expense is incurred.

V. Those derived from the sale of works of art made by the taxpayer.

VI. Those obtained by agents of credit, insurance, bonding or securities institutions, securities promoters or retirement fund administrators, for professional services rendered to such institutions.

VII. Those obtained through the exploitation of a customs patent.

VIII. Those obtained from the exploitation of written works, photographs or drawings, in books, newspapers, magazines or electronic pages via Internet, or the serial reproduction of recordings of musical works and in general any other derived from the exploitation of copyrights.

IX. The interest charged derived from the business activity or from the rendering of professional services, without any adjustment.

X. Refunds made or discounts or allowances received, provided that the corresponding deduction has been made.

The gain derived from the disposal of assets related to the activity .

The income determined presumptively by the tax authorities, in the cases in which it is applicable in accordance with the Federal Tax Code, will be considered accruable income under the terms of this Section, when in the fiscal year in question the taxpayer receives predominantly income corresponding to business activities or the rendering of professional services.

For the purposes of the preceding paragraph, it is considered that the taxpayer receives income mainly from business activities or the rendering of professional services, when such income represents in the year in question or in the previous year, more than 50% of the taxpayer's taxable income.

The tax authorities may determine the income of the permanent establishments in Mexico of a resident abroad, based on the total profits of such resident, considering the proportion that the income or assets of the establishments in Mexico represent of the total income or assets, respectively.

For the purposes of this Section, income shall be considered accruable at the time it is actually received.

Income is considered effectively received when it is received in cash, goods or services, even when it corresponds to advances, deposits or any other concept, regardless of the name by which it is designated. Likewise, the income is considered to be received when the taxpayer receives credit titles issued by a person other than the person making the payment. When they are received by check, the income is considered to be received on the date of collection thereof or when the taxpayers transfer the checks to a third party, except when such transfer is by proxy. It is also understood to be effectively received when the creditor's interest is satisfied through any form of extinction of the obligations.

In the case of the income referred to in Section I of Article 101 of this Law, such income will be considered effectively received on the date on which the remission, remission or remission is agreed, or on the date on which the statute of limitations expires.

In the case of the sale of goods that are exported, the income must be accrued when it is actually received. In the event that the income is not received within the twelve months following the month in which the export takes place, the income must be accrued after such period has elapsed.

Individuals who obtain income from business activities or professional services may make the following deductions:

I. Refunds received or discounts or allowances made, provided that the corresponding income has been accrued.

II. Acquisitions of merchandise, as well as raw materials, semi-finished or finished products, used to render services, to manufacture goods or to sell them.

Fixed assets, land, shares, stocks, shares of stock, debentures and other marketable securities, securities representing the ownership of goods, except for certificates of deposit of goods or merchandise, foreign currency, gold or silver pieces that have had the character of national or foreign currency, and pieces denominated in troy ounces are not deductible under this section.

In the case of income from the sale of land and shares, the provisions of Articles 19 and 22 of this Law, respectively, shall apply.

III. Expenses.

IV. Investments.

V. The interest paid derived from the business activity or professional service, without any adjustment, as well as those generated by capital borrowed as long as such capital has been invested for the purposes of the activities referred to in this Section and the corresponding tax voucher is obtained.

VI. Employer's contributions paid to the Mexican Social Security Institute.

VII. Payments made for the local tax on income from business activities or professional services.

In the case of individuals residing abroad who have one or more permanent establishments in Mexico, they may make the deductions corresponding to the activities of the permanent establishment, whether they are incurred in Mexico or elsewhere, even if they are apportioned with an establishment located abroad, applying the provisions of Article 26 of this Law.

The taxpayers referred to in this Section shall consider the non-deductible expenses and investments of the year, under the terms of Article 28 of this Law.

The taxpayers referred to in this Section shall determine the deduction for investments by applying the provisions of Section II of Chapter II of Title II of this Law. For these purposes, investments are considered to be those indicated in Article 32 of this Law.

For the purposes of this article, the deduction percentages will be applied to the original amount of the investment, even if it has not been paid in full in the year in which the deduction is applicable. When the original amount of the investment cannot be separated from the interest paid on the financing, if any, the corresponding percent will be applied to the total amount, in which case the interest cannot be deducted under the terms of Section V of Article 103 of this Law.

Article 105. The deductions authorized in this Section, in addition to complying with the requirements established in other tax provisions, shall meet the following:

I. That they have been effectively disbursed in the fiscal year in question. They are considered effectively disbursed when the payment has been made in cash, through transfers of accounts in credit institutions or brokerage firms, in services or in other goods that are not debt securities. In the case of payments by check, it will be considered effectively disbursed on the date on which the check has been cashed or when the taxpayers transfer the checks to a third party, except when such transfer is by proxy. Likewise, it is considered to be effectively disbursed when the taxpayer delivers credit instruments subscribed by a different person. It is also understood to be effectively disbursed when the creditor's interest is satisfied through any form of extinction of the obligations.

It is presumed that the subscription of debt instruments by the taxpayer, other than checks, constitutes a guarantee of payment of the price or consideration agreed for the business activity or professional service. In these cases, payment will be deemed to have been received when it is actually made, or when the taxpayers transfer the receivables to a third party, except when such transfer is in procuration.

In the case of investments, these must be deducted in the year in which their use begins or in the following year, even if the original amount of the investment has not been fully expended in that year.

II. That are strictly indispensable for obtaining the income for which the taxpayer is obligated to pay this tax under the terms of this Section.

III. That when this Law allows the deduction of investments, the procedure is in accordance with the terms of Article 104 of this Law. In the case of financial leasing contracts, the requirements of Article 38 of this Law must also be complied with.

IV. That they are subtracted only once, even when they are related to the obtaining of different incomes.

V. That the payments of premiums for insurance or bonds are made in accordance with the laws of the matter and correspond to items that this Law indicates as deductible or that other laws establish the obligation to contract them and provided that, in the case of insurance, during the term of the policy no loans are granted by the insurer to any person as a guarantee of the insured amounts, of the premiums paid or of the mathematical reserves.

VI. When the payment is made in installments, the deduction shall be for the amount of the installments effectively paid in the month or fiscal year in question, except in the case of the deductions referred to in Article 104 of this Law.

VII. That in the case of investments, no tax effects are given to their revaluation.

VIII. That when the corresponding transactions are carried out or no later than the last day of the fiscal year, the requirements established by this Law for each particular deduction are met. In the case of the tax receipts referred to in the first paragraph of Section III of Article 27 of this Law, these must be obtained no later than the day on which the taxpayer must file its tax return for the year, and the date of issuance of such tax receipt must correspond to the year in which the deduction is made.

For the purposes of this section, the provisions of Article 27, Sections III, IV, V, VI, X, XI, XIII, XIV, XVII, XVIII, XIX and XXI of this Law shall apply.

The taxpayers referred to in this Section shall make monthly provisional payments on account of the tax for the year, no later than the 17th day of the month immediately following the month to which the payment corresponds, by means of a declaration to be filed with the authorized offices. The provisional payment will be determined by subtracting from the total income referred to in this Section obtained in the period from the beginning of the year to the last day of the month to which the payment corresponds, the deductions authorized in this Section corresponding to the same period and the workers' profit sharing paid in the year, under the terms of Article 123 of the Political Constitution of the United Mexican States and, if applicable, the tax losses occurring in previous years that have not been reduced.

To the result obtained in accordance with the preceding paragraph, the rate determined in accordance with the following shall be applied:

The rate of Article 96 of this Law will be taken as a base, adding the amounts corresponding to the columns related to the lower limit, upper limit and fixed fee, which in the terms of said article result for each of the months of the period to which the provisional payment in question refers, and which correspond to the same line item identified by the same percent to be applied on the excess of the lower limit. The tax authorities will perform the arithmetic operations provided in this paragraph to calculate the applicable rate and will publish it in the Official Gazette of the Federation.

Provisional payments previously made for the same fiscal year shall be credited against the provisional payment determined in accordance with this article.

When taxpayers provide professional services to corporations, the latter must withhold, as provisional payment, the amount resulting from applying the rate of 10% on the amount of the payments made to them, without any deduction, and must provide the taxpayers with a tax receipt showing the amount of the tax withheld, which must be paid, if applicable, together with the withholdings indicated in Article 96 of this Law. The tax withheld under the terms of this paragraph will be creditable against the tax payable resulting in the provisional payments in accordance with this article.

Amended paragraph DOF 09-12-2019

The legal entities obligated to withhold tax may choose not to provide the tax receipt referred to in the preceding paragraph, provided that the individual providing the professional services issues a tax receipt that complies with the requirements referred to in Articles 29 and 29-A of the Federal Tax Code and the receipt expressly states the amount of tax withheld. In this case, the individuals issuing the tax voucher may consider it as a tax withholding voucher and credit it in accordance with the terms of the tax provisions. The provisions of this paragraph in no case release the legal entities from the obligations to withhold and remit the tax, in due time and form, in accordance with the terms of the tax provisions with respect to the persons to whom such withholdings have been made.

Paragraph added DOF 09-12-2019. Amended DOF 12-11-2021

Those who, during the fiscal year, sporadically obtain income derived from the rendering of professional services and do not obtain other taxable income pursuant to this Chapter, shall cover, as a provisional payment on account of the annual tax, the amount resulting from applying the rate of 20% on the income received, without any deduction whatsoever. The provisional payment shall be made by means of a declaration to be filed before the authorized offices within 15 days following the receipt of the income. These taxpayers will be relieved of the obligation to keep books and records, as well as to file provisional returns other than those mentioned above.

The taxpayers referred to in the preceding paragraph must file an annual tax return under the terms of Article 152 of this Law and may deduct only the expenses directly related to the rendering of the professional service.

When business activities are carried out through a joint ownership, the appointed common representative will determine, under the terms of this Section, the tax profit or tax loss of such activities and will comply on behalf of all the joint owners with the obligations set forth in this Law, including the obligation to make provisional payments. For the purposes of the tax for the year, the co-owners will consider the tax profit or tax loss determined in accordance with Article 109 of this Law, in the proportional part that corresponds to them and will credit, in the same proportion, the amount of the provisional payments made by such representative.

The taxpayers referred to in this Section must calculate the tax for the year for which they are liable under the terms of Article 152 of this Law. For these purposes, the taxable income for the year shall be determined by deducting from the total taxable income obtained from business activities or from the rendering of professional services, the deductions authorized in this Section, both corresponding to the year in question. The taxable profit thus determined shall be reduced by the workers' profit sharing paid in the year, in the terms of Article 123 of the Political Constitution of the United Mexican States and, if applicable, the tax losses determined in accordance with this Article, pending application from previous years; the result shall be the taxable profit.

The tax loss will be obtained when the income referred to in this Section obtained in the year is less than the deductions authorized in the same. The employees' profit sharing paid in the year referred to in the preceding paragraph shall be added to the result obtained. In this case, the following shall apply:

I. The tax loss incurred in a fiscal year may be deducted from the taxable income determined under the terms of this Section of the following ten fiscal years, until it is exhausted.

For purposes of this section, the amount of the tax loss carryforward in a fiscal year will be restated by multiplying it by the restatement factor corresponding to the period from the first month of the second half of the fiscal year in which it occurred until the last month of the same fiscal year. The portion of the tax loss from prior years that has already been restated and is pending to be applied against taxable income will be restated by multiplying it by the restatement factor corresponding to the period from the month in which it was last restated through the last month of the first half of the year in which it will be applied.

For the purposes of the preceding paragraph, when the number of months of the fiscal year in which the tax loss occurred is odd, the first month of the second half will be considered to be the month immediately following the month to which the half of the fiscal year corresponds.

When the taxpayer does not reduce in a fiscal year the tax loss incurred in previous years, when he could have done so in accordance with this article, he will lose the right to do so subsequently up to the amount by which he could have done so.

II. The right to reduce tax losses is personal to the taxpayer who suffers them and may not be transferred by an inter vivos act or as a consequence of the disposal of the business. In the case of carrying out business activities, the right may only be transferred by death to the heirs or legatees, who continue to carry out the business activities from which the loss was derived.

Tax losses obtained by taxpayers from the activities referred to in this Section may only be deducted from the taxable income derived from the activities referred to in this Section.

For the purposes of this Section, for the participation of workers in the profits of the companies, the taxable income referred to in Articles 123, Section IX, paragraph e) of the Political Constitution of the United Mexican States, 120 and 127, Section III of the Federal Labor Law, will be the taxable income resulting in accordance with this Article.

In the event that the taxpayer obtains income from business activities and professional services in the same fiscal year, it must determine the taxable income that in terms of this Section corresponds to each of the activities individually; for these purposes, the same proportion that is determined in terms of the preceding article will be applied.

Article 110. Individual taxpayers subject to the regime established in this Section, in addition to the obligations established in other articles of this Law and in the other tax provisions, shall have the following obligations:

I. Apply for registration in the Federal Taxpayers Registry.

II. To keep accounting records in accordance with the Federal Fiscal Code and its Regulations.

Amended paragraph DOF 12-11-2021

Taxpayers residing in the country that have establishments abroad, for the purposes of complying with the obligations referred to in this section, section III and V of this article, with respect to such establishments, may do so in accordance with the provisions of article 76 of this Law.

III. To issue tax receipts evidencing the income they receive.

IV. To keep the accounting records and vouchers of the respective entries, as well as those necessary to prove that the tax obligations have been complied with, in accordance with the provisions of the Federal Fiscal Code.

V. Taxpayers that carry out business activities must prepare a statement of financial position and inventory of inventories as of December 31 of each year, in accordance with the respective regulatory provisions.

When the taxpayer begins or ceases to carry out business activities, the taxpayer must prepare a statement of financial position for each of the aforementioned periods.

VI. In the annual tax return to be filed, the tax profit and the amount corresponding to the employee profit sharing of the company shall be determined.

In the case of the returns referred to in section VII of this article, the information must be provided through electronic means at the e-mail address indicated for such purpose by the Tax Administration Service through general rules.

VII. Submit and maintain at the disposal of the tax authorities the information referred to in sections VI and XV of Article 76 of this Law.

VIII. Issue tax certificates and receipts stating the amount of payments made that constitute income from a source of wealth located in Mexico in accordance with the provisions of Title V of this Law or payments made to foreign establishments of Mexican credit institutions, in the terms of Article 48 of this Law and, if applicable, the tax withheld from the resident abroad or from the aforementioned credit institutions.

IX. Taxpayers making payments for the concepts referred to in Chapter I of this Title must comply with the obligations established therein.

X. Submit, no later than May 15 of the year immediately following the end of the fiscal year in question, the information referred to in Article 76, Section X of this Law.

Reformed fraction DOF 12-11-2021

XI. Obtain and keep the documentation referred to in Article 76, Section IX of this Law. The provisions of this section will not apply in the case of taxpayers whose income in the immediately preceding fiscal year has not exceeded $13'000,000.00, except for those who are in the case referred to in the penultimate paragraph of Article 179 of this Law. The exercise of the powers of verification with respect to this obligation may only be carried out for completed fiscal years.

SECTION II

TAX INCORPORATION REGIME

Repealed

Section repealed DOF 12-11-2021

Article 111 .

Article amended DOF 18-11-2015, 30-11-2016, 09-12-2019. Repealed DOF 12-11-2021

Article 112. Repealed.

Article amended DOF 18-11-2015. Repealed DOF 12-11-2021

Article 113 .

Article amended DOF 18-11-2015. Repealed DOF 12-11-2021

Section III

Income from the sale of goods or the rendering of services through the Internet, by means of technological platforms, computer applications and similar.

Section added DOF 09-12-2019

Article 113-A. Individual taxpayers with business activities that sell goods or provide services through the Internet, by means of technological platforms, computer applications and similar that provide the services referred to in Section II of Article 18-B of the Value Added Tax Law, are obligated to pay the tax established in this Section, for the income generated through the mentioned media for the performance of the mentioned activities, including those payments received for any additional concept through the same.

The tax referred to in the preceding paragraph shall be paid by means of withholding by entities resident in Mexico or resident abroad with or without a permanent establishment in the country, as well as foreign entities or legal entities that provide, directly or indirectly, the use of the aforementioned technological platforms, computer applications and similar.

The withholding shall be made on the total income effectively received by the individuals through the aforementioned means referred to in the first paragraph of this article, without including value added tax. This withholding shall be considered a provisional payment. The following withholding rates will be applied to the total amount of the aforementioned income:

I. In the case of the rendering of services of land transportation of passengers and delivery of goods, the withholding shall be made at 2.1%.

II. In the case of the rendering of lodging services, the withholding shall be 4%

III. In the case of sale of goods and rendering of services, the withholding shall be 1%.

Paragraph with reformed fractions DOF 08-12-2020

When the individuals referred to in the first paragraph of this article receive a portion of the payment of consideration for the rendering of services or the alienation of goods directly from the users or acquirers thereof, and their total income, including those effectively received through the aforementioned platforms, does not exceed three hundred thousand pesos per year, may opt to pay income tax on such income received directly from the users of the services or purchasers of goods, applying the withholding rates referred to in this article to the total income received, including those actually received through the aforementioned technological platforms, computer applications and similar, and must credit the tax that, if any, would have been withheld under the terms of this article. The tax paid in terms of this paragraph will be considered as a final payment.

Reform DOF 08-12-2020: Repealed the then fourth paragraph of the article.

Article added DOF 09-12-2019

Article 113-B. The individuals referred to in the preceding Article, may choose to consider as final payments the withholdings made in accordance with this Section, in the following cases:

I. When they only obtain income referred to in the first paragraph of Article 113-A of this Law, which in the immediately preceding fiscal year has not exceeded the amount of three hundred thousand pesos.

Individuals who initiate activities may choose to consider the withholding referred to in this Section as a definitive payment when they estimate that their income for the year will not exceed the aforementioned limit. When in the aforementioned fiscal year they carry out operations for a period of less than twelve months, in order to determine the amount referred to in the preceding paragraph, they will divide the income declared by the number of days comprising the period and the result will be multiplied by 365 days; if the amount obtained exceeds the amount of the aforementioned amount, in the following fiscal year they will not be able to opt for the provisions of this article.

II. In the case of the individuals referred to in the preceding section who also obtain income from those indicated in Chapters I and VI of this Title.

Individuals exercising the option set forth in this article shall be subject to the following:

a) They may not make the corresponding deductions for the activities carried out through the technological platforms, computer applications and similar referred to in the preceding article, with respect to the tax calculated at the rates set forth in this Section.

b) They must keep the digital tax receipt by Internet provided by the technological platform, computer applications and similar, for the income effectively collected by the technological platform from the users of the goods and services, including those payments received for any additional concept through the same, and the withholdings made.

c) They must issue tax receipts evidencing the income they receive, in those cases in which the rendering of services or the sale of goods is carried out independently through the technological platforms, computer applications and the like referred to in the preceding article.

For the purposes of this subsection, it is understood that the rendering of services or the sale of goods are independent when they are not carried out on behalf of technological platforms, computer applications and similar.

d) They must file with the Tax Administration Service, under the terms and conditions established by general rules issued for such purpose by such decentralized agency, a notice in which they state their intention to opt for the withholdings made in terms of the preceding article to be considered as definitive, within 30 days following the day in which the taxpayer receives the first income from the payment of the consideration for the activities referred to in this Section.

Once the option referred to in this article has been exercised, it may not be changed for a period of five years from the date on which the taxpayer has filed the notice referred to in paragraph d) of this article. When the taxpayer ceases to be in the cases referred to in sections I and II of this article, the exercise of the option provided for in this article shall cease and may not be exercised again.

Additionally, the individual taxpayers referred to in Article 113-A of this Law, must provide to the legal entities resident in Mexico or resident abroad with or without permanent establishment in the country, as well as the foreign entities or legal entities that provide, directly or indirectly, the use of the mentioned technological platforms, computer applications and similar, the information referred to in section III of Article 18-J of the Value Added Tax Law, under the terms and conditions established in the last paragraph of said section. This obligation will be independent of the exercise of the option established in this article.

Article added DOF 09-12-2019

Article 113-C. Legal entities resident in Mexico or resident abroad with or without a permanent establishment in the country, as well as the foreign entities or legal entities referred to in the second paragraph of Article 113-A of this Law, will have the following obligations:

I. In the case of residents abroad without a permanent establishment in the country and foreign entities or legal entities, they must comply with the obligations set forth in Sections I, VI and VII of Article 18-D and subsection d), Section II of Article 18-J of the Value Added Tax Law.

II. Provide tax receipts to the individuals to whom the withholding referred to in Article 113-A of this Law has been made, stating the amount of the payment and the tax withheld, no later than five days following the month in which the withholding is made, which must be accompanied by the information specified by the Tax Administration Service through general rules.

III. Provide the Tax Administration Service with the information referred to in Section III of Article 18-J of the Value Added Tax Law, in accordance with the provisions of the last paragraph of said Section.

IV. Withhold and pay the corresponding income tax in accordance with the provisions of Article 113-A of this Law, by means of a tax return to be filed with the authorized offices no later than the 17th day of the month immediately following the month for which the withholding was made.

In the event that taxpayers do not provide their Federal Taxpayers' Registry Code provided for in paragraph b) of section III of Article 18-J of the Value Added Tax Law, the corresponding tax must be withheld for the income referred to in Article 113-A of this Law, applying the rate of 20% on the referred income.

V. Keep as part of their accounting the documentation that proves that they withheld and paid the corresponding income tax.

The obligations established in sections III, IV and V of this article must be complied with in accordance with the general rules issued for such purpose by the Tax Administration Service.

Article added DOF 09-12-2019

Article 113-D. The penalty set forth in Article 18-H BIS of the Value Added Tax Law will be applicable in the event of noncompliance with the obligations to withhold and remit income tax under the terms of Article 113-C, Section IV of this Law, incurred during three consecutive months by legal entities resident abroad without a permanent establishment in the country, as well as by the foreign entities or legal entities referred to in Article 113-A, second paragraph of this Law.

The sanction referred to in this article is independent of that which corresponds in accordance with the provisions of the Federal Fiscal Code.

For the purposes of the temporary blocking of access to the digital service provided for in this article and, if applicable, for its unblocking, Articles 18-H TER, 18-H QUÁTER and 18-H QUINTUS of the Value Added Tax Law will be applicable when the foreign legal entities or entities referred to in the first paragraph of this article fail to comply with the obligations to withhold and pay income tax under the terms of Article 113-C, Section IV of this Law, for three consecutive months.

Article added DOF 08-12-2020

SECTION IV

OF THE SIMPLIFIED TRUST REGIME

Section added DOF 12-11-2021

Article 113-E. Individual taxpayers who only carry out business or professional activities or grant the temporary use or enjoyment of property may opt to pay income tax under the terms established in this Section, provided that their total income from the aforementioned activity or activities they carry out, obtained in the immediately preceding fiscal year, does not exceed the amount of three million five hundred thousand pesos.

The taxpayers referred to in the preceding paragraph that initiate activities may opt to pay the tax in accordance with the provisions of this Section, when they estimate that their income for the year will not exceed the limit established in the preceding paragraph. When in the mentioned fiscal year they carry out operations for a period of less than twelve months, in order to determine the amount referred to in the preceding paragraph, they will divide the income declared by the number of days comprising the period and the result will be multiplied by 365.

For the purposes of the preceding paragraphs, in the event that the income referred to in this Article exceeds three million five hundred thousand pesos at any time during the taxable year, or if any of the obligations referred to in Article 113-G of this Law are not complied with, or if the situation provided for in Article 113-I of the same Law regarding returns arises, the provisions of this Section will not be applicable to the taxpayers, and they must pay the respective tax in accordance with the provisions of Title IV, Chapter II, Section I or Chapter III of this Law, as applicable, as of the month in which the tax is due, the provisions of this Section will not be applicable to the taxpayers, and they must pay the respective tax in accordance with the provisions of Title IV, Chapter II, Section I or Chapter III of this Law, as applicable, as of the month following the date on which such income exceeds the referred amount. If applicable, the tax authorities may assign the taxpayer to the corresponding regime, without the taxpayer's request.

The taxpayers referred to in this article will calculate and pay the tax on a monthly basis no later than the 17th day of the month immediately following the month to which the payment corresponds, and must file the annual return referred to in Article 113-F of this Law.

Taxpayers will determine the monthly payments considering the total income received for the activities referred to in the first paragraph of this article and covered by the digital tax receipts by Internet effectively collected, without including value added tax, and without applying any deduction, considering the following table:

MONTHLY TABLE

Amount of income supported by tax receipts actually received, excluding value-added tax (pesos per month)	Applicable rate
Up to 25,000.00	1.00%
Up to 50,000.00	1.10%
Up to 83,333.33	1.50%
Up to 208,333.33	2.00%
Up to ,500,000.00	2.50%

The taxpayers referred to in this Article may also apply the provisions of this Section when they also obtain income of those indicated in Chapters I and VI of Title IV of this Law, provided that the total income obtained in the immediately preceding fiscal year from the aforementioned activities, as a whole, does not exceed the amount referred to in the first paragraph of this Article.

When taxpayers cease to pay taxes in accordance with this Section, due to noncompliance with their tax obligations, in no case may they return to pay taxes under the terms of this Section. In the case of those taxpayers that have exceeded the amount of three million five hundred thousand pesos referred to in the first paragraph of this Article, they may return to pay taxes in accordance with this Section, provided that the income obtained in the fiscal year immediately prior to the one in question does not exceed three million five hundred thousand pesos and they have been up to date in the compliance of their tax obligations.

The individuals referred to in the first paragraph of this Article may not apply the provisions of this Section in the following cases:

I. Are partners, shareholders or members of legal entities or when they are related parties under the terms of Article 90 of this Law.

II. Are residents abroad who have one or more permanent establishments in the country.

III. Have income subject to preferential tax regimes.

IV. Receive the income referred to in Sections III, IV, V and VI of Article 94 of this Law.

Individuals engaged exclusively in agricultural, livestock, forestry or fishing activities, whose income for the year does not exceed nine hundred thousand pesos effectively collected, will not pay income tax on income from such activities. In the event that the referred income exceeds such amount, starting with the corresponding monthly return, the tax must be paid in accordance with Title IV, Chapter II, Section IV of this Law, under the terms determined by general rules issued by the Tax Administration Service for such purpose.

For purposes of the preceding paragraph, taxpayers are considered to be engaged exclusively in agricultural, livestock, forestry or fishing activities when their total income represents 100% of these activities.

Article added DOF 12-11-2021

Article 113-F. The taxpayers referred to in this Section are required to file their annual return in the month of April of the year following the year to which the return corresponds, considering the total income received for the activities referred to in the first paragraph of Article 113-E of this Law in the fiscal year and covered by the digital tax receipts by Internet effectively collected, without including value added tax, and without applying any deduction, in accordance with the following table:

ANNUAL TABLE

Amount of income supported by tax receipts actually received, excluding value added tax (annual pesos)	Applicable rate
Up to 300,000.00	1.00%
Up to 600,000.00	1.10%
Up to ,000,000.00	1.50%
Up to ,500,000.00	2.00%
Up to ,500,000.00	2.50%

Taxpayers may deduct from the resulting amount the income tax paid in the monthly returns referred to in Article 113-E of this Law and, if applicable, the income tax withheld in accordance with Article 113-J of this Law.

Article 109, section I of the Federal Tax Code is considered to be applicable when taxpayers cancel digital tax receipts through the Internet, even though the recipients have given tax effects to them.

Article added DOF 12-11-2021

Article 113-G. Taxpayers subject to the regime provided for in this Section shall have the following obligations:

I. Apply for registration in the Federal Taxpayers Registry and keep it updated.

II. To have an advanced electronic signature and an active tax mailbox.

III. To have digital tax receipts through the Internet for the totality of its income effectively collected.

IV. Obtain and keep digital tax receipts through the Internet to support its expenses and investments.

V. To issue and deliver to its clients digital tax receipts through the Internet for the transactions carried out with them.

In the event that the purchasers of goods, services or the temporary use or enjoyment of goods do not request the digital tax receipt through the Internet, taxpayers must issue a global receipt for the transactions carried out with the general public in accordance with the general rules issued for such purpose by the Tax Administration Service, which may only be cancelled in the month in which it was issued. The Tax Administration Service, by means of general rules, will establish the form and the means to carry out the cancellation of the global tax voucher.

In the case of expenditures for salaries, taxpayers must make withholdings under the terms of Chapter I of Title IV of this Law, in accordance with the provisions set forth therein and in its Regulations, and make monthly, on the 17th day of the immediately following month, the payment of the income tax of their employees.

VI. Submit the monthly payment in terms of this Section, no later than the 17th day of the month immediately following the month to which the payment corresponds.

When derived from the information contained in the files, documents, databases kept, accessed or held by the tax authorities, as well as those provided by other authorities or third parties, the authority detects that the taxpayer received income without issuing the corresponding tax receipts, such taxpayer shall cease to pay taxes under the terms of this Section and must do so under the terms of Title IV, Chapter II, Section I or Chapter III of this Law, as applicable.

VII. File its annual tax return in April of the year following the year to which the return corresponds.

For purposes of employee profit sharing, in terms of this Section, the taxable income referred to in paragraph e) of section IX of Article 123, paragraph A of the Political Constitution of the United Mexican States and Articles 120 and 127, section III of the Federal Labor Law, will be determined by the taxpayer by reducing the total income for the year actually collected and covered by the digital tax receipts by Internet, which correspond to the activities for which the profit must be determined, the amount of the income for the year actually collected and covered by the digital tax receipts by Internet, will be determined by the taxpayer by subtracting from the total income of the fiscal year effectively collected and covered by the digital tax receipts by Internet, which correspond to the activities for which the profit must be determined, the amount of the payments for services and the acquisition of goods or the temporary use or enjoyment of goods, effectively paid in the same fiscal year and strictly indispensable for the performance of the activities for which the profit must be calculated; As well as the payments that in turn are exempt for the worker in the terms of article 28, section XXX of this Law.

Article added DOF 12-11-2021

Article 113-H. Taxpayers who opt to pay income tax in terms of this Section, shall comply with the following:

I. Be active in the Federal Taxpayers Registry.

II. In the case of resumption of activities, that in the immediately preceding fiscal year, the income covered by digital tax receipts via Internet has not exceeded three million five hundred thousand pesos.

III.To be up to date in the fulfillment of its tax obligations in accordance with the provisions of Article 32-D of the Federal Fiscal Code.

IV. Not being in the list of taxpayers published by the Tax Administration Service in terms of article 69-B, fourth paragraph of the Federal Fiscal Code.

Article added DOF 12-11-2021

Article 113-I. Taxpayers who omit three or more monthly payments in a calendar year, whether consecutive or not, or who fail to file their annual return, shall cease to be taxed in accordance with this Section and shall be required to do so under the terms of Title IV, Chapter II, Section I or Chapter III of this Law, as the case may be.

In the event that, after a fiscal year has elapsed without the taxpayer issuing tax receipts and the taxpayer has not submitted any monthly payment, as well as the annual return, the tax authority may suspend the taxpayer from the Federal Taxpayers Registry, with respect to the activities referred to in Article 113-E of this Law, without prejudice to the exercise of verification powers carried out by the authority, as well as the imposition of penalties.

Taxpayers taxed under this Section may not jointly apply other tax treatments that grant benefits or incentives.

Article added DOF 12-11-2021

Article 113-J . When the taxpayers referred to in Article 113-E of this Law carry out business or professional activities or grant the temporary use or enjoyment of goods to legal entities, the latter must withhold, as a monthly payment, the amount resulting from applying the rate of 1.25% on the amount of the payments made to them, without considering the value added tax, and must provide the taxpayers with the tax voucher stating the amount of the tax withheld, which must be paid by said legal entity no later than the 17th day of the month immediately following the month to which the payment corresponds.

The tax withheld under the terms of this article will be considered in the monthly payment to be filed by individuals.

Article added DOF 12-11-2021

CHAPTER III

OF INCOME FROM LEASING AND, IN GENERAL, FROM GRANTING THE TEMPORARY USE OR ENJOYMENT OF REAL ESTATE.

Article 114. The following are considered income for granting the temporary use or enjoyment of real property:

I. The proceeds from leasing or subleasing and in general from granting for valuable consideration the temporary use or enjoyment of real estate, in any other form.

II. Income from non-amortizable real estate participation certificates.

For the purposes of this Chapter, credit income will be declared and the corresponding tax will be calculated up to the calendar year in which it is collected.

Article 115. Persons who obtain income for the items referred to in this Chapter may make the following deductions:

I. Payments made for the property tax corresponding to the calendar year on such real estate, as well as for local contributions for improvements, planning or cooperation for public works affecting such real estate and, if applicable, the local tax paid on income for granting the temporary use or enjoyment of real estate.

II. Maintenance expenses that do not imply additions or improvements to the property in question and for water consumption, provided they are not paid by those who use or enjoy the property.

III. Real interest paid on loans used for the purchase, construction or improvement of real estate, provided that the corresponding tax receipt is obtained. The amount by which such interest exceeds the annual adjustment for inflation is considered real interest. In order to determine the real interest, the provisions of Article 134 of this Law will be applied.

IV. The salaries, commissions and fees paid, as well as the taxes, quotas or contributions that, in accordance with this Law, they are required to pay on said salaries, actually paid.

V. The amount of insurance premiums covering the respective assets.

VI. Investments in construction, including additions and improvements.

Taxpayers who grant the temporary use or enjoyment of real estate may elect to deduct 35% of the income referred to in this Chapter, in lieu of the deductions referred to in this Article. Those who exercise this option may also deduct, in addition, the amount of the expenditures for the property tax of such real estate corresponding to the calendar year or to the period during which the income was obtained in the fiscal year, as the case may be.

In the case of subleasing, only the amount of rent paid by the lessee to the lessor will be deducted.

When the taxpayer occupies part of the real estate from which the income derives for granting the temporary use or enjoyment thereof or grants its temporary use or enjoyment free of charge, he may not deduct the part of the expenses, as well as the property tax and the public works cooperation rights that correspond proportionally to the unit occupied by him or to the one granted free of charge. In cases of subleasing, the sublessor may not deduct the proportional part of the amount of the rents paid corresponding to the unit occupied or granted free of charge.

The proportional part referred to in the preceding paragraph will be calculated considering the number of square meters of construction of the unit occupied or granted free of charge in relation to the total square meters of construction of the real estate.

When the temporary use or enjoyment of the property in question has not been granted for the entire fiscal year, the deductions referred to in sections I to V of this article shall be applied only when they correspond to the period for which the temporary use or enjoyment of the property was granted or to the three months immediately preceding the month in which such use or enjoyment is granted.

Article 116. Taxpayers who obtain income of those indicated in this Chapter for the granting of the temporary use or enjoyment of real property, shall make the monthly or quarterly provisional payments, no later than the 17th day of the month immediately following the month to which the payment corresponds, by means of a declaration to be filed with the authorized offices.

The provisional payment will be determined by applying the corresponding rate in accordance with the provisions of the third paragraph of Article 106 of this Law, to the difference resulting from deducting from the income of the month or quarter for which the payment is made, the amount of the deductions referred to in Article 115 of this Law, corresponding to the same period.

Taxpayers who only obtain income of those indicated in this Chapter, whose monthly amount does not exceed ten general minimum wages in force in the Federal District raised per month, may make the provisional payments on a quarterly basis.

In the case of subleasing, the deduction will only be considered for the amount of the rentals for the month or quarter paid by the sublessor to the lessor.

When the income referred to in this Chapter is obtained from payments made by corporations, they must withhold as provisional payment the amount resulting from applying the rate of 10% on the amount thereof, without any deduction, and must provide taxpayers with a tax receipt showing the amount of the tax withheld; such withholdings must be paid, if applicable, together with those indicated in Article 96 of this Law. The tax withheld under the terms of this paragraph may be credited against the tax resulting in accordance with the second paragraph of this article.

Amended paragraph DOF 09-12-2019

Entities obligated to withhold tax may choose not to provide the tax receipt referred to in the preceding paragraph, provided that the individual who has granted the temporary use or enjoyment of goods issues a tax receipt that complies with the requirements referred to in Articles 29 and 29-A of the Federal Tax Code and the receipt expressly states the amount of tax withheld. In this case, the individuals issuing the tax voucher may consider it as a tax withholding voucher and credit it in accordance with the terms of the tax provisions. The provisions of this paragraph in no case release the legal entities from the obligations to withhold and remit the tax in due time and form, and to file the corresponding informative returns, in the terms of the tax provisions with respect to the persons to whom such withholdings have been made.

Paragraph added DOF 09-12-2019

In trust operations whereby the temporary use or enjoyment of real property is granted, the yields are considered to be income of the settlor even when the trustee is a different person, except for irrevocable trusts in which the settlor does not have the right to reacquire the real property from the trustee, in which case the yields are considered to be income of the trustee from the moment the settlor loses the right to reacquire the real property.

The trust institution will make provisional payments on behalf of the party to whom the income corresponds under the terms of the preceding paragraph, during the months of May, September and January of the following year, by means of a declaration to be filed with the authorized offices. The provisional payment will be the amount resulting from applying the rate of 10% on the income of the previous four-month period, without any deduction.

No later than January 31 of each year, the fiduciary institution will provide to those to whom the income corresponds, the tax voucher of such income; of the provisional payments made and of the deductions, corresponding to the previous calendar year.

Article 118. Taxpayers who obtain income of those indicated in this Chapter, in addition to making the payments of this tax, shall have the following obligations:

I. Apply for registration in the Federal Taxpayers Registry.

II. To keep accounting records in accordance with the Federal Fiscal Code and its Regulations.

Reformed fraction DOF 12-11-2021

III. Issue tax receipts for the consideration received.

In the case of real estate leasing lawsuits in which the lessee is ordered to pay overdue rent, the judicial authority will require the creditor to prove that it has issued the tax receipts referred to in this section. In the event that the creditor does not prove that it has issued such receipts, the judicial authority must inform the Tax Administration Service of the omission within a maximum period of 5 days from the expiration of the term granted by the judicial authority to the creditor to comply with the requirement.

Paragraph added DOF 09-12-2019

The information referred to in the preceding paragraph must be sent to the aforementioned decentralized body in accordance with the general rules issued for such purpose by said body.

Paragraph added DOF 09-12-2019

IV. File provisional and annual returns under the terms of this Law.

V. Inform the tax authorities, through the electronic means and formats indicated by the Tax Administration Service by means of general rules, no later than the 17th day of the month immediately following the month in which the transaction is carried out, of the consideration received in cash, in local currency, as well as in gold or silver pieces, the amount of which exceeds one hundred thousand pesos.

The information referred to in this section shall be available to the Ministry of Finance and Public Credit, pursuant to the terms of the second paragraph of Article 69 of the Federal Fiscal Code.

When the income referred to in this Chapter is received through trust operations, it will be the trust institution that will keep the books, issue the tax receipts and make the provisional payments. The persons to whom the income corresponds must request from the trust institution the voucher referred to in the last paragraph of the preceding article.

Amended paragraph DOF 12-11-2021

CHAPTER IV

OF INCOME FROM DISPOSAL OF ASSETS

SECTION I

OF THE GENERAL REGIME

Article 119. Income derived from the cases provided for in the Federal Fiscal Code shall be considered income from the alienation of goods.

In the case of an exchange, it will be considered that there are two disposals.

The amount of the consideration obtained, including credit, on the occasion of the sale will be considered as income; when due to the nature of the transfer there is no consideration, the appraisal value performed by a person authorized by the tax authorities will be taken into account.

Income derived from the transfer of ownership of property by death, donation or merger of companies, as well as income derived from the sale of bonds, securities and other debt securities, provided that the income from the sale is considered as interest under the terms of Article 8 of this Law, will not be considered as income from the sale.

Article 120. Persons who obtain income from the alienation of property may make the deductions referred to in Article 121 of this Law; with the profit thus determined, the annual tax shall be calculated as follows:

I. The gain will be divided by the number of years elapsed between the date of acquisition and the date of disposal, without exceeding 20 years.

II. The result obtained in accordance with the preceding section shall be the part of the profit that shall be added to the other accruable income of the calendar year in question and the tax corresponding to the accruable income shall be calculated in accordance with the terms of this Title.

III. The portion of the non-cumulative gain shall be multiplied by the tax rate obtained in accordance with the following paragraph. The resulting tax shall be added to the tax calculated in accordance with the preceding paragraph.

The taxpayer may choose to calculate the rate referred to in the preceding paragraph in accordance with the provisions of either of the following two paragraphs:

a) The rate resulting from Article 152 of this Law will be applied to the total accumulated income obtained in the year in which the sale was made, reduced by the deductions authorized by the Law itself, except for those established in Sections I, II and III of Article 151 of the Law. The result thus obtained will be divided by the amount to which the rate was applied and the quotient will be the rate.

b) The average rate resulting from adding the rates calculated in accordance with the preceding paragraph for the last five fiscal years, including the year in which the disposal took place, divided by five.

When the taxpayer had not obtained accruable income in the four fiscal years prior to that in which the sale takes place, it may determine the average rate referred to in the preceding paragraph with the tax it would have had to pay if it had accrued in each fiscal year the part of the gain from the sale of goods referred to in section I of this article.

When the payment is received in installments, the tax corresponding to the part of the non-cumulative gain may be paid in the calendar years in which the income is effectively received, provided that the term to obtain it is greater than 18 months and the tax interest is guaranteed. To determine the amount of the tax to be paid in each calendar year, the tax calculated in accordance with section III of this article will be divided by the total income from the sale and the quotient will be multiplied by the income actually received in each calendar year. The resulting amount will be the amount of the tax to be paid for this concept in the annual tax return.

Article 121. Individuals who obtain income from the alienation of goods may make the following deductions:

I. The proven acquisition cost, which will be restated in accordance with the terms of Article 124 of this Law. In the case of real estate, the restated cost will be at least 10% of the amount of the sale in question.

II. The amount of investments made in construction, improvements and expansions, when real estate or non-amortizable real estate participation certificates are disposed of. These investments do not include conservation expenses. The amount will be restated in accordance with the terms of Article 124 of this Law.

III. Notary expenses, taxes and duties, for deeds of acquisition and sale, as well as the local tax on income from the sale of real estate, paid by the transferor. Payments made for the appraisal of real estate will be deductible.

IV. The commissions and mediations paid by the transferor in connection with the acquisition or sale of the property.

The difference between the income from the sale and the deductions referred to in this article will be the gain on which, following the procedure set forth in article 120 of this Law, the tax will be calculated.

The deductions referred to in sections III and IV of this article will be restated for the period from the month in which the respective expenditure was made until the month immediately preceding the month in which the disposal takes place.

When taxpayers make the deductions referred to in this article and suffer losses on the sale of real estate, shares, equity contribution certificates issued by national credit companies and corporate shares, they may reduce such losses in the calendar year in question or in the following three years, in accordance with the provisions of article 122 of this Law, provided that in the case of shares, equity contribution certificates and corporate shares, the requirements established in the Regulations of this Law are complied with. The part of the loss that is not deducted in a fiscal year, except for that incurred in the sale of real estate, will be restated for the period from the month of the closing of the fiscal year in which the loss was incurred or was restated for the last time and up to the last month of the fiscal year immediately preceding the fiscal year in which it is deducted.

Article 122. Taxpayers who suffer losses on the disposal of real estate, shares, partnership interests or certificates of equity contribution issued by national credit companies, shall reduce such losses in accordance with the following:

I. The loss shall be divided by the number of years elapsed between the date of acquisition and the date of disposal of the property in question; when the number of years elapsed exceeds ten, only ten years shall be considered. The result obtained will be the part of the loss that may be reduced from the other income, except for the income referred to in Chapters I and II of this Title, that the taxpayer must accrue in the annual tax return of that same year or in the following three calendar years.

II. The part of the loss not reduced in accordance with the preceding section will be multiplied by the tax rate that corresponds to the taxpayer in the calendar year in which the loss is incurred; when the tax return for such year does not result in tax, the rate corresponding to the following calendar year in which the tax results, without exceeding three, will be considered. The result obtained in accordance with this section may be credited in the calendar years referred to in the preceding section, against the amount resulting from applying the tax rate corresponding to the year in question to the total gain from the sale of goods obtained in the same year.

The rate referred to in Section II of this Article shall be calculated by dividing the tax that would have corresponded to the taxpayer in the annual return in question, by the amount to which the rate of Article 152 of this Law was applied to obtain such tax; the quotient thus obtained shall be multiplied by one hundred and the product shall be expressed as a percentage.

When the taxpayer in a calendar year does not deduct the part of the loss referred to in section I above or does not make the crediting referred to in section II of this article, when he could have done so, he will lose the right to do so in subsequent years up to the amount by which he could have done so.

Article 123. The acquisition cost shall be equal to the consideration paid to acquire the property, without including interest or the expenses referred to in the preceding article; when the property has been acquired free of charge or by merger or spin-off of companies, the provisions of article 124 of this Law shall apply.

Article 124. In order to update the proven acquisition cost and, if applicable, the amount of deductible investments, in the case of real estate and non-amortizable real estate participation certificates, the following procedure shall be followed:

I. The portion corresponding to the land will be subtracted from the proven acquisition cost, and the result will be the construction cost. When this separation cannot be made, 20% of the total cost will be considered as the cost of the land.

II. The construction cost must be reduced at the rate of 3% per year for each year elapsed between the date of acquisition and the date of disposal; in no case will such cost be less than 20% of the initial cost. The resulting cost will be restated for the period from the month in which the acquisition was made to the month immediately preceding the month in which the sale is made. Improvements or adaptations involving deductible investments must be subject to the same treatment.

In the case of personal property other than securities and corporate shares, the cost will be reduced at the rate of 10% per year, or 20% in the case of transportation vehicles, for each year elapsed between the date of acquisition and the date of disposal. The resulting cost will be restated for the period from the month in which the acquisition was made until the month immediately preceding the month in which the disposal takes place. When the years elapsed are more than 10 years, or 5 years in the case of transportation vehicles, it will be considered that there is no acquisition cost.

The taxpayer may, provided it complies with the requirements set forth in the Regulations of this Law, not reduce the acquisition cost based on the years elapsed, in the case of personal property that does not lose value with the passage of time and without prejudice to updating such cost under the terms of the preceding paragraph.

In the case of land, the acquisition cost will be restated for the period from the month in which the acquisition was made through the month immediately preceding the month in which the disposal is made.

In the case of shares, the average cost per share will be calculated in accordance with the provisions of Article 22 of this Law; in the case of disposal of shares of investment funds referred to in Articles 87 and 88 of said Law, the provisions of said precepts will apply.

Amended paragraph DOF 18-11-2015

In the case of assets acquired by inheritance, bequest or donation, the acquisition cost or average cost per share, as the case may be, shall be considered to be that paid by the author of the estate or the donor, and the date of acquisition shall be considered to be that which would have corresponded to the latter. When in turn the author of the succession or the donor had acquired such assets free of charge, the same rule shall apply. In the case of a donation for which income tax has been paid, the appraisal value used to calculate such tax will be considered as the acquisition cost or average cost per share, as the case may be, and the date of acquisition will be the date on which the aforementioned tax was paid.

In the case of a merger or spin-off of companies, the average cost per share that, under the terms of Article 23 of this Law, corresponds to the shares of the merged or spin-off companies at the time of the merger or spin-off, as applicable, will be considered as the proven acquisition cost of the shares issued as a consequence of the merger or spin-off, as the case may be.

Taxpayers may request the practice of an appraisal by a certified public broker or credit institution, authorized by the tax authorities. Said authorities will be empowered to practice, order or take into account, the appraisal of the property subject to alienation and when the value of the appraisal exceeds by more than 10% of the consideration agreed for the alienation, the total of the difference will be considered income of the purchaser under the terms of Chapter V of Title IV of this Law; in which case, its cost will be increased with the total of the aforementioned difference.

In the case of securities that are placed among the general investor public, in accordance with the general rules issued for such purpose by the Tax Administration Service, when they are sold outside the stock exchange, the tax authorities will consider the stock exchange quotation of the last event on the day of the sale, instead of the appraisal value.

Taxpayers who obtain income from the sale of real estate will make a provisional payment for each operation, applying the rate determined in accordance with the following paragraph to the amount obtained by dividing the gain by the number of years elapsed between the date of acquisition and the date of sale, without exceeding 20 years. The result obtained in accordance with this paragraph will be multiplied by the same number of years in which the gain was divided, the result being the tax corresponding to the provisional payment.

The applicable rate for the calculation of the provisional payments to be made under the terms of this Article, will be determined taking as a base the rate of Article 96 of this Law, adding the amounts corresponding to the columns relating to the lower limit, upper limit and fixed fee, which under the terms of said Article result for each of the months of the year in which the sale is made and which correspond to the same line item identified by the percent to be applied on the excess of the lower limit. In the case of the months of the same year, subsequent to that in which the alienation takes place, the monthly rate to be considered for the effects of this paragraph, will be equal to that of the month in which the alienation takes place. The tax authorities will perform the arithmetic operations provided for in this paragraph on a monthly basis to calculate the applicable rate for such month, which will be published in the Official Gazette of the Federation.

In transactions recorded in public deeds, the provisional payment will be made by means of a declaration to be filed within fifteen days following the date on which the deed or minutes are signed. Notaries, brokers, judges and other notaries, who by legal provision have notarial functions, will calculate the tax under their responsibility and will pay it in the authorized offices; they must also provide the taxpayer who carries out the corresponding transaction, in accordance with the general rules issued by the Tax Administration Service, the information related to the determination of such calculation and must issue a tax receipt, stating the transaction, as well as the tax withheld that was paid. Said notaries, within fifteen days following the date on which the deed or minutes are signed, in the month of February of each year, must present before the authorized offices, the information established by the Federal Tax Code regarding the transactions carried out in the immediately preceding fiscal year.

In the case of the sale of other goods, the provisional payment will be for the amount resulting from applying the 20% rate to the total amount of the transaction, and will be withheld by the acquirer if he is a resident in the country or a resident abroad with a permanent establishment in Mexico, except in those cases in which the transferor states in writing to the acquirer that he will make a lower provisional payment and provided that the requirements set forth in the Regulations of this Law are complied with. In the event that the acquirer is not a resident in the country or is a resident abroad without a permanent establishment in Mexico, the transferor will pay the corresponding tax by means of a declaration to be filed with the authorized offices within fifteen days after obtaining the income. In the case of the sale of shares of the investment funds referred to in Articles 87 and 88 of this Law, the provisions of said precept will apply. In the case of sale of shares through corporations that obtain a concession from the Ministry of Finance and Public Credit to act as stock exchanges under the terms of the Securities Market Law, the provisions of Article 56 of this Law will apply. In all cases, a tax receipt must be issued specifying the total amount of the transaction, as well as the tax withheld and paid.

Amended paragraph DOF 18-11-2015, 12-11-2021

When the acquirer makes the withholding referred to in the preceding paragraph, it will issue a tax receipt to the transferor and proof thereof, and the transferor will attach a copy of such documents when filing its annual tax return. Neither the withholding nor the provisional payment referred to in the preceding paragraph will be made in the case of personal property other than securities or corporate shares and the amount of the transaction is less than $227,400.00.

Taxpayers who obtain income from the assignment of rights of non-amortizable real estate participation certificates or housing certificates or rights of trustor or trustee, which are related to real estate, must calculate and pay the provisional payment in accordance with the provisions of the first two paragraphs of this article.

The legal entities referred to in Title III of this Law, with the exception of those mentioned in Article 86 of the same and those authorized to receive deductible donations under the terms of Articles 27, Section I and 151, Section III of this Law, that dispose of real estate, will make provisional payments under the terms of this Article, which will have the character of a definitive payment.

Notwithstanding the provisions of Article 126 of this Law, taxpayers who dispose of land, buildings or land and buildings, shall make a payment for each operation, applying the rate of 5% on the profit obtained under the terms of this Chapter, which shall be paid by means of a declaration to be filed with the authorized offices of the federal entity in which the property in question is located.

The tax paid under the terms of the preceding paragraph will be creditable against the provisional payment made for the same operation under the terms of Article 126 of this Law. When the payment referred to in this article exceeds the provisional payment determined in accordance with the aforementioned provision, only the tax resulting in accordance with the aforementioned article 126 of this Law will be paid to the federal entity in question.

In the case of transactions recorded in public deeds, notaries, brokers, judges and other notaries, who by law have notarial functions, shall calculate the payment referred to in this Article under their responsibility and shall pay it in the authorized offices referred to in the same term indicated in the third paragraph of Article 126 of this Law, and shall issue a tax receipt, stating the amount of the transaction, as well as the tax withheld that was paid.

Taxpayers who exercise the option referred to in the last paragraph of Article 120 of this Law, will apply the 5% rate on the profit determined in accordance with said paragraph in the year in question, which will be paid by means of a tax return to be filed with the federal entity on the same payment dates established in Article 150 of this Law.

The payment made pursuant to this article shall be creditable against the tax for the year.

Taxpayers who obtain income from the sale of goods must inform the tax authorities, through the electronic means and formats indicated by the Tax Administration Service by means of general rules, no later than the 17th day of the month immediately following the month in which the transaction is carried out, of the consideration received in cash in national or foreign currency, as well as in gold or silver pieces, the amount of which exceeds one hundred thousand pesos. The referred general rules may establish cases in which it is not necessary to submit the information referred to in this article.

The information referred to in this article will be available to the Ministry of Finance and Public Credit, under the terms of the second paragraph of article 69 of the Federal Fiscal Code.

SECTION II

ON THE SALE OF SHARES ON THE STOCK EXCHANGE

Article 129. Individuals shall be obliged to pay income tax, which payment shall be considered as definitive, applying the rate of 10% to the profits obtained in the fiscal year derived from:

I. The alienation of shares issued by Mexican companies or of securities exclusively representing such shares, when the alienation is carried out in the concessioned stock exchanges or derivative markets recognized under the terms of the Securities Market Law or of shares issued by foreign companies listed in such stock exchanges or derivative markets.

II. The sale of securities representing stock indexes sold in the stock exchanges or derivative markets referred to in the preceding section.

III. The sale of shares issued by Mexican companies or of securities that exclusively represent such shares, provided that the sale of such shares or securities is carried out in stock exchanges or derivatives markets located in recognized markets referred to in section II of article 16-C of the Federal Tax Code of countries with which Mexico has a treaty in force to avoid double taxation.

IV. Financial transactions derived from capital referring to shares placed in stock exchanges granted in accordance with the Securities Market Law, as well as those referring to stock indexes that represent such shares, provided that they are carried out in the recognized markets referred to in sections I and II of article 16-C of the Federal Fiscal Code.

The gain or loss obtained in the year will be determined by adding or subtracting, as appropriate, the gain or loss derived from the sale of shares of each issuing company or securities representing shares or stock indexes carried out by the taxpayer or obtained in derivative financial transactions carried out through each of the stock market intermediaries with which it operates or foreign financial entities with which it has an intermediation agreement.

Gains or losses derived from the disposal of shares and securities referred to in sections I to III above will be determined for each issuing company or securities representing such indexes as follows:

a) The average acquisition cost, plus the brokerage commissions paid for their acquisition, will be deducted from the sale price of the shares or securities, which will be calculated by dividing the amount effectively paid for the purchase of shares or securities by the number of shares or securities effectively purchased.

This average acquisition cost will be restated from the acquisition date to the month immediately preceding the date on which the shares are sold on stock exchanges or recognized derivatives markets.

When the acquisition cost is higher than the selling price, the difference will be the amount of the loss on the transaction in question.

b) In the case of stock or securities lending transactions carried out in accordance with the legal provisions that regulate the securities market in the stock exchanges or recognized derivatives markets, the gain of the borrower derived from the sale in the stock exchanges or recognized derivatives markets to a third party of the shares or securities obtained on loan will be determined by decreasing the restated sale price of the shares or securities, the proven acquisition cost of the shares of the same issuer or the securities acquired on the stock exchanges or recognized derivatives markets during the term of the respective contract to settle the transaction with the lender. For these purposes, the cost of the shares acquired by the borrower, if any, by virtue of capitalization of profits or other items of stockholders' equity that the issuing company may have decreed during the term of the contract may be included in the proven acquisition cost. The amount equivalent to the dividends paid by the issuing company for the shares subject to the loan may also be part of such proven acquisition cost when the dividends are collected by a third party other than the borrower and the latter returns them to the lender by way of equity rights. The sale price of the shares or securities may be reduced by the amount of the commissions charged by the intermediary for the loan of the shares or securities, their sale, acquisition and settlement of the loan.

When the borrower does not acquire all or part of the shares or securities that it is obliged to deliver to the lender within the term established in the contract, the gain on the disposal will be determined, with respect to the shares or securities not acquired, by decreasing from the updated sale price of the shares or securities, the price of the average quotation on the stock exchange or derivatives market of the shares or securities on the last day on which, in accordance with the contract, it should have returned them to the lender. The amount equivalent to the dividends paid by the issuing company for the shares not acquired as the object of the loan during the period they have been loaned may also be deducted from said sale price, when the dividends are collected by a third party other than the borrower and the latter returns them to the lender by way of patrimonial rights. The sale price of the shares or securities may be reduced by the amount of the commissions charged by the intermediary for the loan operations of the shares or securities, their sale and liquidation of the loan.

The sale price of the shares or securities will be restated from the date on which the loaned shares or securities were disposed of to the date on which the borrower acquires them or should have acquired them, as the case may be, to settle the loan transaction.

When the proven acquisition cost is higher than the selling price, the difference will be the amount of the loss on the transaction in question.

In the event that the borrower does not return to the lender, within the established terms, the shares or securities that the lender has loaned to the borrower, such shares or securities will be deemed to have been sold by the lender to the borrower on the date on which they should have been returned. For these purposes, the lender's gain will be determined in accordance with paragraph a) of this paragraph, considering as the sale price of the shares or securities that are the object of the contract their average quoted price on the stock exchange or recognized derivatives market, on the last day on which they should have been acquired by the borrower. Likewise, shares obtained by the lender from the borrower in excess of those loaned at the beginning of the contract, due to the issuance of shares by capitalization of profits or other items comprising stockholders' equity, which the issuing company may have decreed during the term of the contract, will not be considered to have an average acquisition cost.

In the case of financial transactions derived from capital referring to shares placed in stock exchanges granted in accordance with the Securities Market Law, as well as those referring to stock indexes representing such shares, provided that they are carried out in the recognized markets referred to in sections I and II of article 16-C of the Federal Fiscal Code, the result will be determined in accordance with article 20 of this Law.

The financial entities authorized under the Securities Market Law to act as intermediaries in the securities market that intervene in the disposals or transactions referred to in the first paragraph of this article must calculate the gain or loss for the year. The information referring to such calculation must be delivered to the taxpayer for purposes of the payment of the income tax referred to in this article. In the event that a tax loss is generated in the fiscal year, the stock market intermediaries must issue to the alienating individuals a statement of such loss. For purposes of the delivery of the information referred to in this paragraph, stock market intermediaries must issue the corresponding certificates per brokerage contract, provided that they contain in detail all the information required for compliance with the obligations established in this article.

When the stock market intermediation contract entered into between the taxpayer and the stock market intermediary concludes before the end of the fiscal year in question, the intermediary must calculate the profit or loss generated during the period in which the contract was in force during the fiscal year and submit the information referred to in the preceding paragraph. When taxpayers change their stock market intermediary, they will be obligated to submit to the new intermediary all the information related to the contract, including the disposals or transactions referred to in the first paragraph of this article that have been carried out during the fiscal year in question. The stock market intermediaries that carry out the transfer of a taxpayer's account must deliver to the receiving stock market intermediary the information of the average cost of the shares or securities acquired by the taxpayer updated to the date on which said transfer is carried out. The stock market intermediary receiving the transfer of the account will consider such information for the calculation of the average acquisition cost of the shares or securities when their disposal takes place.

Taxpayers that carry out the disposals or transactions referred to in the first paragraph of this article, through intermediation contracts they have with foreign financial entities that are not authorized under the Securities Market Law, must calculate the tax gain or loss for the year and, if applicable, the corresponding tax, as well as have available for the tax authority the account statements in which the necessary information for the calculation of the gains or losses derived from the disposals carried out in each of the months of the year in question is observed.

In the event that the taxpayers referred to in the preceding paragraph replace a foreign financial entity with a stock market intermediary, they must send to the new intermediary contracted all the information related to their contract, including the disposals or transactions referred to in the first paragraph of this article carried out by such taxpayers, in order for such intermediary to calculate the tax gain or loss for the year.

When taxpayers generate a loss in the year for the disposals or transactions referred to in this Section, they may reduce such loss only against the amount of the gain, if any, obtained by the same taxpayer in the year or in the following ten years for the disposals or transactions referred to in the first paragraph of this Article. The amount to be reduced for the losses referred to in this paragraph may not exceed the amount of such profits.

Taxpayers must file a tax return for the profits obtained in accordance with this Section and make, if applicable, the payment of the tax corresponding to the year, which must be submitted together with the annual tax return referred to in Article 150 of this Law.

The Tax Administration Service by means of general rules may establish mechanisms to facilitate the calculation, payment and payment of the tax referred to in this article.

Individuals who obtain profits derived from the sale of shares issued by specialized investment companies of retirement funds, when such sale is registered in stock exchanges under the terms of the Securities Market Law, will not pay the income tax referred to in this article.

The provisions of this article will not be applicable, so the tax must be paid and paid in accordance with the other provisions applicable to the sale of shares provided for in this Title:

1. To the sale of shares or securities that are not considered placed among the general investing public or to the execution of transactions referred to in Sections I, II, III and IV of this Article, whose acquisition has not been made in recognized markets referred to in Sections I and II of Article 16-C of the Federal Fiscal Code, with the exception of when they are sold on authorized stock exchanges, shares or securities that are considered placed among the general investor public, provided that the securities that are sold, through one or several simultaneous or successive operations in a period of twenty-four months, do not represent in any case more than 1% of the outstanding shares of the company issuing the shares, and that in no case does the seller of the shares or securities fall within the cases contained in paragraph 2 below.

In these cases, the transferor of the shares or securities will be obliged to provide the stock market intermediary involved in the transfer with the information necessary to determine the gain or loss on the transaction.

When the person or group of persons, who directly or indirectly hold 10% or more of the shares representing the capital stock of the issuing company, referred to in Article 111 of the Securities Market Law, within a period of twenty-four months, disposes of 10% or more of the paid-in shares of the company in question, through one or several simultaneous or successive transactions, including those carried out through derivative financial transactions or of any other analogous or similar nature. Nor will it be applicable to the person or group of persons who, having control of the issuer, dispose of it through one or several simultaneous or successive transactions within a period of twenty-four months, including those carried out through derivative financial transactions or any other analogous or similar transaction. For the purposes of this paragraph, control and group of persons shall be understood as those defined as such in Article 2 of the Securities Market Law.

3. When the disposal of the shares is carried out outside the aforementioned stock exchanges, those carried out therein as registration transactions or protected crosses or under any other denomination that prevents the persons carrying out the disposals from accepting more competitive offers than those received before and during the period in which they are offered for disposal, even when the National Banking and Securities Commission has treated them as transactions arranged on the stock exchange in accordance with Article 179 of the Securities Market Law.

In cases of merger or spin-off of companies, for the shares that are disposed of and that have been obtained from the exchange of the shares of the merged or spin-off companies if the shares of the latter companies are in any of the cases indicated in the two preceding paragraphs.

CHAPTER V

OF INCOME FROM THE ACQUISITION OF GOODS

Article 130. Income from the acquisition of goods shall be considered as income from the acquisition of goods:

I. The donation.

II. Treasures.

III. Acquisition by prescription.

IV. The cases indicated in Articles 125, 160 and 161 of this Law.

V. The constructions, installations or permanent improvements in real estate that, in accordance with the contracts by which their use or enjoyment was granted, are for the benefit of the owner. The income will be understood to be obtained at the end of the contract and in the amount that at that date the investments have according to the appraisal made by a person authorized by the tax authorities.

In the case of sections I to III of this article, the income shall be equal to the appraisal value made by a person authorized by the tax authorities. In the case indicated in section IV of this article, the total of the difference mentioned in article 125 of this Law will be considered as income.

Article 131. Individuals who obtain income from the acquisition of goods may make the following deductions for the calculation of the annual tax:

I. Local and federal taxes, with the exception of income tax, as well as notarial expenses incurred in connection with the acquisition.

II. Other expenses incurred in connection with lawsuits in which the right to acquire is recognized.

III. The payments made in connection with the appraisal.

IV. The commissions and mediations paid by the acquirer.

Article 132. Taxpayers who obtain income as indicated in this Chapter shall pay, as a provisional payment on account of the annual tax, the amount resulting from applying the rate of 20% on the income received, without any deduction whatsoever. The provisional payment shall be made by means of a declaration to be filed with the authorized offices within 15 days following the receipt of the income. In the case referred to in Section IV of Article 130 of this Law, the term will be counted as of the notification made by the tax authorities.

In transactions recorded in a public deed in which the value of the property in question is determined by appraisal, the provisional payment shall be made by means of a declaration to be filed within fifteen days following the date on which the deed or minutes are signed. Notaries, brokers, judges and other notaries, who by law have notarial functions, will calculate the tax under their responsibility and will pay it by means of the aforementioned declaration in the authorized offices and must issue a tax receipt, stating the amount of the transaction, as well as the tax withheld that was paid. Said notaries, within the fifteen days following the date on which the deed or minutes are signed and no later than February 15 of each year, must submit to the authorized offices, the information established in the Federal Tax Code regarding the transactions carried out in the immediately preceding fiscal year.

CHAPTER VI

OF INTEREST INCOME

Article 133. For the purposes of this Chapter, interest income is considered to be that established in Article 8 of this Law and the others which, in accordance therewith, are treated as interest.

Payments made by insurance companies to policyholders or their beneficiaries for partial or total withdrawals made by such persons of the premiums paid, or of the yields thereof, before the occurrence of the risk or event covered by the policy, will be treated as interest, as well as payments made to the insured or their beneficiaries in the case of insurance whose covered risk is the survival of the insured when in the latter case the requirements of Section XXI of Article 93 of this Law are not met and provided that the premium has been paid directly by the insured. In these cases, in order to determine the tax, the following shall apply:

From the premium paid, the portion corresponding to the death risk insurance coverage and other accessories that do not generate surrender value will be deducted, and the result will be considered as investment contributions. The sum of the surrender value and the dividends to which the insured or his beneficiaries are entitled shall be reduced by the sum of the updated investment contributions and the difference shall be the real accumulated interest. The investment contributions will be updated for the period from the month in which the premium in question was paid or from the month in which the last partial withdrawal referred to in the fifth paragraph of this article was made, as the case may be, and up to the month in which the corresponding withdrawal is made.

The death insurance coverage will be the result of multiplying the difference resulting from subtracting the mathematical reserve for current risks of the policy from the amount insured for death, by the probability of death of the insured on the anniversary date of the policy in the fiscal year in question. The probability of death shall be the one established by the National Insurance and Bonding Commission to determine the referred reserve.

When partial withdrawals are paid prior to the cancellation of the policy, the amount withdrawn will be considered to include investment contributions and actual interest. For these purposes, the following shall apply:

I. The partial withdrawal shall be divided by the sum of the surrender value and the dividends to which the insured is entitled at the date of withdrawal.

II. The actual interest shall be determined by multiplying the result obtained in accordance with section I of this article by the amount of actual interest determined as of the same date in accordance with the third paragraph of this article.

III. To determine the amount of the investment contribution to be withdrawn, the result obtained in accordance with Section I shall be multiplied by the sum of the updated investment contributions determined as of the date of withdrawal, in accordance with the third paragraph of this Article. The amount of the restated investment contributions withdrawn in accordance with this paragraph shall be reduced by the amount of the sum of the restated investment contributions determined in accordance with the third paragraph of this Article.

The taxpayer must pay the tax on the real interest by applying the average tax rate that corresponded to it in the immediately preceding fiscal years in which it has paid this tax to the one in which the calculation is made, without these exceeding five. In order to determine the average tax rate referred to in this paragraph, the results, expressed in percent, obtained by dividing the tax determined in each year by the taxable income of the same year, of the previous years in which the tax has been paid, shall be added and the result shall be divided by the same number of years considered, without exceeding five. The tax resulting in accordance with this paragraph will be added to the tax corresponding to the fiscal year in question and will be paid jointly with the latter.

For the purposes of this Chapter, interest will be considered to be the yield of voluntary contributions deposited in the voluntary contributions sub-account of the individual account opened under the terms of the Law of the Retirement Savings Systems or in the individual account of the retirement savings system under the terms of the Law of the Institute of Security and Social Services of State Workers, as well as the yield of complementary contributions deposited in the complementary contributions account under the terms of the Law of the Retirement Savings Systems.

For the purposes of the preceding paragraph, the actual accrued interest will be determined by deducting the restated amount of the contribution from the income obtained from the withdrawal made. The contribution referred to in this paragraph will be restated for the period from the month in which such contribution was made until the month in which the withdrawal in question is made.

Article 134. Individuals must accrue to their other income the actual interest received in the fiscal year.

In the case of interest paid by companies that are not considered to be part of the financial system under the terms of this Law and that derive from securities that are not placed among the general investor public through authorized stock exchanges or widely traded markets, such interest will be accrued in the year in which it accrues.

Real interest is considered to be the amount by which the interest exceeds the adjustment for inflation. For these purposes, the adjustment for inflation will be determined by multiplying the average daily balance of the investment that generates the interest, by the factor obtained by subtracting the unit of the quotient resulting from dividing the National Consumer Price Index of the most recent month of the investment period, by the mentioned index corresponding to the first month of the period. When the calculation referred to in this paragraph is made for a period of less than one month or covers fractions of a month, the percentage increase of said index for said period or fraction of a month will be considered in proportion to the number of days for which the calculation is made.

The average balance of the investment will be the balance obtained by dividing the sum of the daily balances of the investment by the number of days of the investment, without considering unpaid accrued interest.

When the adjustment for inflation referred to in this provision is greater than the interest earned, the result will be considered as a loss. The loss may be reduced from the other income obtained in the year, except for those referred to in Chapters I and II of this Title. The part of the loss that could not be reduced in the year, may be applied in the following five years until it is exhausted, restated from the last month of the year in which it occurred and until the last month of the year in which it is applied or from the last time it was restated and until the last month of the year in which it is applied, as the case may be.

When accrued interest is reinvested, it shall be considered received, for the purposes of this Chapter, at the time it is reinvested or when it is at the disposal of the taxpayer, whichever occurs first.

Those who pay the interest referred to in Article 133 of this Law, are obliged to withhold and pay the tax by applying the rate established by the Congress of the Union for the fiscal year in question in the Federal Income Law on the amount of the principal that gives rise to the payment of the interest, as a provisional payment. In the case of the interest referred to in the second paragraph of Article 134 of the same, the withholding will be made at the rate of 20% of the nominal interest.

Individuals who only obtain accruable income from those mentioned in this Chapter, may choose to consider the withholding made under the terms of this article as a definitive payment, provided that such income corresponds to the fiscal year in question and does not exceed $100,000.00.

Article 136. Those who obtain the income referred to in this Chapter, in addition to the obligations established in other Articles of this Law, shall have the following obligations:

I. Apply for registration in the Federal Taxpayers Registry.

II. File an annual tax return in accordance with the terms of this Law.

III. Keep, in accordance with the provisions of the Federal Fiscal Code, the documentation related to income, withholdings and payment of this tax.

The provisions of this article will not be applicable to taxpayers who have chosen not to accrue interest to their other income, under the terms of the second paragraph of article 135 of this Law.

Those who pay the interest referred to in this Chapter must provide the Tax Administration Service with the information referred to in Article 55 of this Law, even if they are not credit institutions.

CHAPTER VII

OF INCOME FROM PRIZES

Revenues derived from the celebration of lotteries, raffles, draws, games with bets and contests of all kinds, legally authorized, are considered as income from the obtaining of prizes.

When the person who grants the prize pays on behalf of the taxpayer the tax corresponding as withholding, the amount of the tax paid on behalf of the taxpayer shall be considered as income included in this Chapter.

The refund corresponding to the ticket that allowed participation in the lotteries will not be considered as a prize.

The tax on lottery, raffle, sweepstakes and contest prizes, organized in national territory, will be calculated by applying the rate of 1% on the value of the prize corresponding to each ticket or whole ticket, without any deduction, provided that the federal entities do not levy a local tax on the income referred to in this paragraph, or the established levy does not exceed 6%. The tax rate referred to in this article will be 21%, in those states that apply a local tax on the income referred to in this paragraph, at a rate that exceeds 6%.

The tax on the prizes of games with bets, organized in national territory, will be calculated by applying 1% on the total value of the amount to be distributed among all the winning tickets.

The tax resulting in accordance with this article, will be withheld by the persons making the payments and will be considered as a definitive payment, when the person receiving the income declares it being obligated to do so under the terms of the second paragraph of article 90 of this Law. The withholding referred to in this paragraph will not be made when the income is received by the taxpayers indicated in Title II of this Law or by the legal entities referred to in Article 86 of this Law.

Individuals who do not file the return referred to in the second paragraph of Article 90 of this Law, may not consider the withholding made under the terms of this Article as a final payment and must accrue to their other income the amount of the income obtained under the terms of this Chapter. In this case, the person who obtains the income may credit against the tax determined in the annual return, the withholding of the federal tax that would have been made by the person who paid the prize under the terms of this provision.

Article 139. Those who deliver the prizes referred to in this Chapter, in addition to making the withholdings of this tax, shall have the following obligations:

I. Provide, to the persons to whom payments are made for the concepts referred to in this Chapter, a tax voucher stating the amount of the transaction and the tax withheld that was paid.

II. Provide proof of income and tax voucher for the prizes for which it is not obliged to pay the tax under the terms of this Law.

III. Keep, in accordance with the provisions of the Federal Fiscal Code, the documentation related to the certificates, tax receipts and withholdings of this tax.

CHAPTER VIII

OF INCOME FROM DIVIDENDS AND, IN GENERAL, FROM EARNINGS DISTRIBUTED BY LEGAL ENTITIES

Article 140. Individuals must accumulate to their other income, the income received from dividends or profits. Such individuals may credit, against the tax determined in their annual return, the income tax paid by the company that distributed the dividends or profits, provided that the person making the crediting referred to in this paragraph considers as accruable income, in addition to the dividend or profit received, the amount of income tax paid by such company corresponding to the dividend or profit received and also has the tax receipt and tax voucher referred to in Section XI of Article 76 of this Law. For these purposes, the tax paid by the company will be determined by applying the rate of Article 9 of this Law to the result of multiplying the dividend or profit received by the factor of 1.4286.

Notwithstanding the provisions of the preceding paragraph, individuals will be subject to an additional 10% tax on dividends or profits distributed by corporations resident in Mexico. The latter will be obliged to withhold the tax when distributing such dividends or profits, and will pay it together with the provisional payment of the corresponding period. The payment made pursuant to this paragraph will be final.

In the cases referred to in section III of this article, the tax withheld by the legal entity shall be paid no later than the date on which the tax return for the corresponding fiscal year is filed or should have been filed.

It is understood that the income is received by the owner of the security and, in the case of shares, by the person who appears as the owner of the shares.

For the purposes of this article, the following are also considered distributed dividends or profits:

I. The interest referred to in Articles 85 and 123 of the General Law of Commercial Companies and the profit participations paid in favor of bondholders or others, by commercial companies resident in Mexico or by national credit companies.

II. Loans to partners or shareholders, with the exception of those that meet the following requirements:

a) That are a normal consequence of the operations of the legal entity.

b) That it is agreed for a term of less than one year.

c) That the agreed interest rate is equal to or higher than the rate established by the Federal Income Law for the extension of tax credits.

d) That these agreed conditions are effectively fulfilled.

III. Expenses that are not deductible in accordance with this Law and benefit the shareholders of legal entities.

IV. Omissions of income or purchases not made and improperly recorded.

V. The taxable income determined, even presumptively, by the tax authorities.

VI. The modification to the taxable income derived from the determination of taxable income and deductions authorized in transactions between related parties, made by such authorities.

CHAPTER IX

OF THE OTHER INCOME OBTAINED BY INDIVIDUALS

Article 141. Individuals who obtain income other than that indicated in the preceding chapters, shall consider it to be received in the amount by which at the time of obtaining it they increase their net worth, except in the case of the income referred to in Articles 143, section IV and 177 of this Law, in which case it shall be considered to be received in the fiscal year in which the corporations, entities, trusts, joint ventures, investment funds or any other legal entity, whose income is subject to preferential tax regimes, would accrue it if they were subject to Title II of this Law.

Article 142. It is understood that, among others, the following are income under the terms of this Chapter:

I. The amount of debts forgiven by the creditor or paid by another person.

II. Exchange gain and interest from credits other than those indicated in Chapter VI of Title IV of this Law.

III. The benefits obtained from the granting of bonds or guarantees, when they are not provided by legally authorized institutions.

IV. Those from all kinds of investments made in companies resident abroad without a permanent establishment in the country, when they are not dividends or profits referred to in section V of this article.

V. Dividends or profits distributed by companies resident abroad. In the case of capital reduction or liquidation of foreign resident companies, the income will be determined by subtracting from the amount of the reimbursement per share, the proven acquisition cost of the share restated for the period from the month of acquisition until the month in which the reimbursement is paid. In these cases, Article 5 of this Law will be applicable.

Individuals who receive dividends or profits referred to in this section, in addition to accruing them for purposes of determining the payment of the income tax to which they are obligated under this Title, must additionally pay the income tax caused by multiplying the 10% rate to the amount to which they are entitled of the dividend or profit effectively distributed by the resident abroad, without including the amount of the withholding tax, if any, that may have been paid. The payment of this tax will be definitive and must be paid no later than the 17th day of the month following the month in which the dividends or profits were received.

VI. Those derived from acts or contracts by means of which, without transferring the respective rights, the exploitation of concessions, permits, authorizations or contracts granted by the Federation, the federal entities and the municipalities, or the rights protected by the applications in process, is allowed.

VII. Those arising from any act or contract entered into with the surface owner for the exploitation of the subsoil.

VIII. The proceeds from the participation in the products obtained from the subsoil by a person other than the concessionaire, operator or surface owner.

IX. Moratory interest, indemnities for damages and income derived from penal or conventional clauses.

X. The proportional part corresponding to the taxpayer of the distributable remainder determined by the corporations referred to in Title III of this Law, provided that the tax referred to in the last paragraph of Article 79 of the same Law has not been paid.

XI. Those received by persons other than the author for royalties.

XII. The amounts accruable under the terms of Section II of Article 185 of this Law.

XIII. The amounts corresponding to the taxpayer in his capacity as co-owner or trustee of a real estate property used for lodging, granted in administration to a third party so that it may be used for lodging persons other than the taxpayer.

XIV. Those derived from derivative financial transactions and financial transactions referred to in articles 16-A of the Federal Fiscal Code and 21 of this Law. For these purposes, the provisions of Article 146 of this Law shall apply.

XV. The estimated income under the terms of Section III of Article 91 of this Law and those determined, including presumptively by the tax authorities, in the cases in which it is applicable according to the tax laws.

XVI. The amounts paid by insurance companies to the insured or their beneficiaries, which are not considered as interest or indemnities referred to in Section XXI of Article 93 and Article 133 of this Law, regardless of the name by which they are designated, provided that the premium has been paid by the employer, as well as those corresponding to the excess determined in accordance with the second paragraph of Section XXI of Article 93 of this Law. In this case, the insurance companies must make a withholding at the rate of 20% on the amount of the amounts paid, without any deduction, and issue a tax receipt stating the amount of the transaction, as well as the tax withheld that was paid.

Amended paragraph DOF 18-11-2015

When individuals are not required to file an annual tax return, the withholding made will be considered as a final payment. When such persons choose to file a tax return for the year, they will accumulate the amounts referred to in the preceding paragraph to their other income, in which case they may credit against the tax payable the amount of the withholding made under the terms of the preceding paragraph.

XVII. Those from royalties referred to in Article 15-B of the Federal Fiscal Code.

XVIII. Income from personal retirement plans or from the subaccount of voluntary contributions referred to in Section V of Article 151 of this Law, when they are received without the taxpayer being in the cases of disability or inability to perform paid work, in accordance with the social security laws, or without having reached the age of 65 years old, for these purposes, the total amount of the contributions made to such personal retirement plan or to the subaccount of voluntary contributions deducted in accordance with article 151, section V of this Law, restated, as well as the actual interest accrued during all the years of the investment, restated, will be considered as income. In order to determine the tax on this income, the following will apply:

a) The income will be divided by the number of years elapsed between the date of opening of the personal retirement plan and the date on which the income is obtained, without in any case exceeding five years.

b) The result obtained in accordance with the preceding section shall be the part of the income that shall be added to the other taxable income of the taxpayer in the year in question and the tax corresponding to the taxable income shall be calculated in accordance with the terms of this Title.

c) For the part of the income that is not accrued in accordance with the preceding paragraph, the tax rate that corresponds to the fiscal year in question will be applied to the total taxable income of the taxpayer and the resulting tax will be added to the tax for said fiscal year. The tax rate referred to in this paragraph will be calculated by dividing the tax determined in such year by the taxable income of the same year. This result shall be expressed as a percentage.

Subsection amended DOF 12-11-2021

When more than five fiscal years have elapsed from the date of opening the personal retirement plan or the voluntary contributions subaccount and the date on which the income is obtained, the taxpayer must pay the tax on the income by applying the average tax rate that corresponded to it in the five fiscal years immediately preceding the one in which the calculation is made. To determine the average tax rate referred to in this paragraph, the results expressed in percent obtained by dividing the tax determined in each year in which this tax has been paid by the taxable income of the same year, of the five previous years, will be added and the result will be divided by five. The tax resulting in accordance with this paragraph will be added to the tax corresponding to the fiscal year in question and will be paid jointly with the latter.

Article 143. In the case of exchange gain and interest referred to in this Chapter, the following rules shall apply:

I. Any collection obtained by the creditor shall be understood to be applied in the first instance to overdue interest, except in cases of judicial adjudication for the payment of debts, in which case it shall proceed as follows:

a) If the creditor receives goods from the debtor, the tax will be paid on the total overdue interest, provided that its value is sufficient to cover the principal and the aforementioned interest.

b) If the assets only cover the principal amount owed, interest tax is not payable when the creditor declares that he does not reserve any rights against the debtor for unpaid interest.

c) If the award is made to a third party, the amount resulting from subtracting the principal owed from the amounts received by the creditor, provided that the creditor does not reserve rights against the debtor, shall be considered overdue interest.

For the purposes of this section, the tax authorities may take as the value of the goods the appraisal that they order to be made or the value that served as the basis for the first auction.

II. The total or partial forgiveness of the principal or interest owed, when the creditor does not reserve rights against the debtor, gives rise to the payment of the tax by the debtor on the forgiven principal and interest.

III. When they come from credits or loans granted to residents in Mexico, they will be cumulative when they are collected in cash, goods or services.

IV. When they come from deposits made abroad, or from credits or loans granted to residents abroad, they will be accrued as they accrue.

V. In the case of credits, debts or transactions denominated in investment units, both the interest and the adjustment made to the principal for being denominated in such units shall be cumulative.

The interest received under the terms of this article, except those indicated in section IV of this article, will be cumulative under the terms of article 134 of this Law. When in terms of the aforementioned article the adjustment for inflation is greater than the interest earned, the result will be considered as a loss.

The loss referred to in the preceding paragraph, as well as the exchange loss obtained by the taxpayer, if any, may be deducted from the accrued interest received under the terms of this Chapter in the fiscal year in which it occurs or in the four fiscal years following the year in which the loss was incurred.

If the taxpayer does not reduce in a fiscal year the losses referred to in the preceding paragraph from other fiscal years, and could have done so in accordance with this article, it will lose the right to do so in subsequent fiscal years up to the amount by which it could have done so.

For the purposes of this Chapter, the amount of the exchange loss or the loss derived from the difference referred to in the third paragraph of this Article, which is not reduced in a fiscal year, shall be restated by multiplying it by the restatement factor corresponding to the period from the first month of the second half of the fiscal year in which it was obtained until the last month of the same fiscal year. The part of these losses of previous years already restated pending to be reduced against interest or exchange gain, shall be restated by multiplying it by the restatement factor corresponding to the period from the month of December of the year in which it was last restated and up to the month of December of the year immediately preceding the year in which it will be applied.

In the case of the interest referred to in section IV of this article, nominal interest will be accrued and the provisions of article 44 of this Law will apply; for the purposes of calculating the inflation adjustment referred to in said provision, debts will not be considered.

Article 144. Taxpayers who obtain income of those indicated in Article 143 of this Law, shall make two half-yearly provisional payments on account of the annual tax, except for those included in Section IV of the aforementioned Article. Said payments will be made in July of the same fiscal year and January of the following year, applying to the accruable income obtained in the semester, the rate determined taking as a base the rate of Article 96 of this Law, adding the amounts corresponding to the columns related to the lower limit, upper limit and fixed fee, which in the terms of said article result for each of the months included in the semester for which the payment is made, being able to credit, if applicable, against the tax payable, the withholdings made in the period in question. The tax authorities will perform the arithmetic operations provided for in this paragraph and will publish the corresponding rate in the Official Gazette of the Federation.

When the income referred to in this article is obtained from payments made by the persons referred to in Titles II and III of this Law, such persons must withhold as provisional payment the amount resulting from applying to the amount of interest and exchange gain accruable, the maximum rate to be applied on the excess of the lower limit established by the rate contained in Article 152 of this Law.

The persons making the withholding under the terms of this article must provide the taxpayers with proof of the withholding. Said withholdings must be paid, if applicable, together with those indicated in Article 96 of the Law.

Article 145. Taxpayers who obtain sporadically income of those indicated in this Chapter, except for those referred to in Articles 143 and 177 of this Law, shall cover as provisional payment on account of the annual tax, the amount resulting from applying the rate of 20% on the income received, without any deduction whatsoever. The provisional payment shall be made by means of a declaration to be filed with the authorized offices within 15 days following the receipt of the income.

Taxpayers who periodically obtain income of those indicated in this Chapter, except for those referred to in Articles 143 and 177 of this Law, will make monthly provisional payments on account of the annual tax, no later than the 17th day of the month immediately following the month to which the payment corresponds, by means of a declaration that they will file with the authorized offices. The provisional payment shall be determined by applying the rate of Article 96 of this Law to the income obtained in the month, without any deduction; the amounts withheld may be credited against such payment under the terms of the following paragraph.

When the income referred to in this Chapter, except those referred to in Article 143 of this Law, is obtained from payments made by the legal entities referred to in Title II of this Law, such entities must withhold as provisional payment the amount resulting from applying the rate of 20% on the amount thereof, without any deduction, and must provide the taxpayers and tax receipt showing the transaction, as well as the tax withheld; Such withholdings must be paid, as the case may be, together with those indicated in Article 96 of the Law.

In the case of the income referred to in Section X of Article 142 of this Law, corporations will withhold, as a provisional payment, the amount resulting from applying the maximum rate to be applied to the excess of the lower limit established in the rate contained in Article 152 of this Law on the amount of the distributable remainder, which they will pay together with the tax return referred to in Article 96 of this Law or, as the case may be, on the dates established for the same, and will provide the taxpayers with the tax voucher stating the amount of the transaction, as well as the tax withheld.

In the case of the income referred to in Section XII of Article 142 of this Law, the persons making the payments must withhold as provisional payment the amount resulting from applying to the accumulated amount the maximum rate to be applied to the excess of the lower limit established in the rate contained in Article 152 of this Law.

Taxpayers may request a reduction in the amount of the provisional payment referred to in the preceding paragraph, provided that they comply with the requirements established by the Tax Administration Service through general rules.

The persons who make the withholdings referred to in the third, fourth and fifth paragraphs of this Article, as well as the credit institutions before which the personal savings accounts referred to in Article 185 of this Law are constituted, must file a declaration before the authorized offices, no later than February 15 of each year, providing the corresponding information of the persons to whom they have made withholdings in the previous calendar year, and in the case of the credit institutions, they must clarify the amount corresponding to the withdrawal made from the aforementioned accounts.

When the persons making the payments referred to in Section XI of Article 142 of this Law also pay the taxpayer income referred to in Chapter I of this Title, the income referred to in Section XI will be considered as salaries for the purposes of this Title.

In the case of the income referred to in Section XIII of Article 142 of this Law, the persons administering the real property in question must withhold for the payments made to the condominium owners or trustees, the amount resulting from applying to the amount thereof, the maximum rate to be applied to the excess of the lower limit established in the rate contained in Article 152 of this Law; such withholdings must be paid, if applicable, together with those indicated in Article 96 of this Law and shall be considered as a definitive payment.

The taxpayers referred to in the preceding paragraph may choose to accumulate the income referred to in said paragraph to the other income. In this case, they will accumulate the amount resulting from multiplying the amount of the income effectively obtained for this concept once the corresponding withholding has been made, by the factor 1.4286. Against the tax determined in the annual return, individuals may credit the amount resulting from applying to the accumulated income determined in accordance with this paragraph, the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law.

When the royalties referred to in Section XVII of Article 142 of this Law are obtained from payments made by the legal entities referred to in Title II of this Law, such legal entities must make the withholding by applying on the amount of the payment made, without any deduction, the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law, as a provisional payment. Said withholding must be paid, if applicable, together with those indicated in Article 96 of this Law. Whoever makes the payment must provide the taxpayers with a tax receipt stating the amount of the transaction, as well as the tax withheld.

In the case of the income referred to in Section XIV of Article 142 of this Law, the interest and the gain or loss, cumulative or deductible, in financial transactions derived from debt and capital, as well as in financial transactions, shall be determined in accordance with the provisions of Articles 20 and 21 of this Law, respectively.

Brokerage firms or credit institutions involved in the derivative financial transactions referred to in Article 16-A of the Federal Tax Code, or, in their absence, the persons who make the payments referred to in this article must withhold as provisional payment the amount obtained by applying the rate of 25% on the interest or the cumulative gain resulting from the transactions carried out during the month, reduced by the deductible losses, if any, of the other transactions carried out during the month by the individual with the same institution or person. These institutions or persons must provide the taxpayer with a tax receipt stating the amount of the transaction, as well as the tax withheld, and will pay the tax withheld monthly, no later than the 17th day of the month following the month in which the withholding was made, in accordance with Article 96 of this Law. The withholding referred to in this paragraph will not be required in the case of financial transactions derived from capital carried out in the recognized markets referred to in Sections I and II of Article 16-C of the Federal Fiscal Code.

For purposes of the payment and payment of the tax on profits obtained by individuals from financial transactions derived from capital related to shares placed in stock exchanges granted in accordance with the Securities Market Law, as well as those related to stock indexes that represent such shares, provided they are carried out in the recognized markets referred to in sections I and II of article 16-C of the Federal Fiscal Code, the provisions of article 129 of this Law shall apply, without the withholding referred to in the preceding paragraph.

When in the transactions in question the loss for individuals exceeds the profit or interest obtained by them in the same month, the difference may be deducted from the profit or interest in the following months remaining in the fiscal year, without updating, until it is exhausted, and provided that it has not been previously deducted.

For the purposes of this article, it is understood that the profit obtained is that which is realized at the time of maturity of the derivative financial transaction, regardless of the exercise of the rights established in the same transaction, or when a transaction contrary to the original contracted transaction is recorded so that the latter is cancelled. The loss generated will be that which corresponds to transactions that have expired or been cancelled under the terms described above.

Credit institutions, brokerage firms or persons involved in derivative financial transactions must make available to the tax authorities an annual report showing separately the profit or loss obtained, for each transaction, by each of the individual taxpayers, as well as the amount of the withholding made, the name, Federal Taxpayers Registry Code, Unique Population Registry Code of each of them.

The profits obtained by the taxpayer must be accumulated in their annual tax return, and may be reduced by the losses generated in such operations for the corresponding fiscal year and up to the amount of the profits. The tax withheld during the year may be credited against the tax payable by the taxpayer. The provisions of this paragraph will also be applicable with respect to the financial transactions referred to in Article 21 of this Law.

CHAPTER X

OF THE REQUIREMENTS FOR DEDUCTIONS

Article 147. The deductions authorized in this Title for individuals who obtain income from Chapters III, IV and V of this Title, must meet the following requirements:

I. That are strictly indispensable for obtaining the income for which the taxpayer is obligated to pay this tax.

II. That when this Law allows the deduction of investments, the procedure shall be in accordance with the terms of Article 149 of the same. In the case of financial leasing contracts, the provisions of Article 38 of this Law shall apply.

III. That they are subtracted only once, even when they are related to the obtaining of different incomes.

IV. To be covered with the tax receipt and that the payments whose consideration exceeds $2,000.00 are made through electronic transfer of funds from accounts opened in the name of the taxpayer in institutions that make up the financial system and the entities authorized for such purpose by Banco de México; nominative check from the taxpayer's account, credit, debit or service cards, or through the so-called electronic purses authorized by the Tax Administration Service.

Payments that under the terms of this section must be made by means of the taxpayer's nominative check, may also be made by means of transfers from accounts in credit institutions or brokerage houses of the taxpayer.

The tax authorities may waive the obligation to pay expenditures in the means established in the first paragraph of this section, when such expenditures are made in towns or rural areas without financial services.

Payments made by means of a nominative check must contain the Federal Taxpayers Registry Code of the person issuing it, as well as the expression "for payment on account of the beneficiary" on the front of the check.

V. That they are duly recorded in the accounting records.

VI. That the payments of premiums for insurance or bonds are made in accordance with the laws of the matter and correspond to concepts that this Law indicates as deductible or that other laws establish the obligation to contract them and provided that, in the case of insurance, during the term of the policy, no loans are granted by the insurer to any person, with guarantee of the insured amounts, of the premiums paid or of the mathematical reserves.

VII. That the obligations established in this Law regarding the withholding and payment of taxes payable by third parties are complied with or that, if applicable, a copy of the documents evidencing the payment of such taxes is obtained from such third parties. In the case of payments abroad, they can only be deducted provided that the taxpayer provides the information to which it is obligated under the terms of Article 76, Section VI of this Law.

Payments that are also income under the terms of Chapter I of Title IV of this Law, may be deducted provided that the payments for remuneration, the corresponding withholdings and the deductions of the local tax for salaries and in general for the rendering of an independent personal service, respectively, The obligations referred to in Article 99, Sections I, II and V of the same, as well as the provisions that, if applicable, regulate the subsidy for employment and the taxpayers comply with the obligation to register the workers in the Mexican Social Security Institute when they are obligated to do so, in the terms of the social security laws.

VIII. That when carrying out the corresponding transactions or no later than the last day of the fiscal year, the requirements established by this Law for each deduction in particular are met. In the case of the tax receipt referred to in the first paragraph of section IV of this article, this must be obtained no later than the day on which the taxpayer must file its tax return for the year and the date of issuance of the tax receipt must correspond to the year in which the deduction is made. In the case of the informative returns referred to in Articles 76 of this Law and 32, Sections V and VIII of the Value Added Tax Law, these must be filed within the terms established in the aforementioned Article 76 and the corresponding tax receipts must be available as of that date.

IX. That they have been effectively disbursed in the fiscal year in question. They are considered effectively disbursed when the payment has been made in cash, through transfers of accounts in credit institutions or brokerage firms, in services or in other goods that are not debt securities. In the case of payments by check, it will be considered effectively disbursed on the date on which the check has been cashed or when the taxpayers transfer the checks to a third party, except when such transfer is by proxy. Likewise, it is considered to be effectively disbursed when the taxpayer delivers credit instruments subscribed by a different person. It is also understood to be effectively disbursed when the creditor's interest is satisfied through any form of extinction of the obligations.

In the case of interest paid in the years prior to the year in which the exploitation of the leased property begins, such interest may be deducted as follows:

The interest paid for each month of the year corresponding to each of the unproductive years will be added, subtracting, if applicable, the annual adjustment for deductible inflation referred to in Article 44 of this Law. The amount obtained for each unproductive period will be restated with the corresponding restatement factor from the last month of the first half of the period in question until the last month of the first half of the period in which the asset or assets in question begin to produce income.

The restated interest for each of the years, calculated in accordance with the preceding paragraph, will be added and the result thus obtained will be divided by the number of non-productive years. The quotient obtained will be added to the interest payable in each of the productive years and the result thus obtained will be the amount of deductible interest in the year in question.

In the years following the first productive year, the quotient obtained in accordance with the preceding paragraph will be updated from the last month of the first half of the fiscal year in which income began to be earned until the last month of the first half of the fiscal year in which it is deducted. This procedure will be done until the total of such interest is amortized.

X. That the declared acquisition cost or the interest derived from credits received by the taxpayer, correspond to the market price. When they exceed the market price, the excess will not be deductible.

XI. That in the case of investments, no tax effects are given to their revaluation.

XII. That in the case of acquisition of imported goods, it is proven that the legal requirements for their definitive importation were complied with. The amount of such acquisition shall be considered to be that which has been declared at the time of importation.

XIII. That exchange losses arising from debts or credits in foreign currency are deducted as they accrue.

The amount of the annual inflation adjustment deductible under the terms of the preceding paragraph will be determined in accordance with the provisions of Article 44 of this Law.

XIV. That when the payments whose deduction is sought are made to taxpayers who pay value added tax, such tax is expressly and separately stated in the tax receipt.

XV. That in the case of payments made for salaries and in general for the rendering of a subordinated personal service to workers who are entitled to the employment subsidy, the amounts corresponding to such subsidy are actually delivered to their workers and the requirements referred to in the precepts that, as the case may be, regulate the employment subsidy are complied with, except when not obliged to do so under the terms of the aforementioned provisions.

Article 148. For the purposes of this Chapter, the following shall not be deductible:

The amounts derived from the employment subsidy paid by the taxpayer, in its capacity as withholder, to the persons who render subordinate personal services, as well as the accessories of the contributions, except for the surcharges that the taxpayer has effectively paid, including through compensation, will not be deductible either.

II. Investments in homes, in dining rooms which by their nature are not available to all employees of the company, in airplanes and boats, which do not have a concession or permit from the Federal Government to be commercially exploited, or payments for the use or temporary enjoyment of such assets.

III. In no case shall investments or payments for the temporary use or enjoyment of automobiles be deductible.

IV. Donations and representation expenses.

V. Penalties, indemnities for damages or conventional penalties. Compensations for damages and conventional penalties may be deducted when the Law imposes the obligation to pay them due to created risks, objective liability, fortuitous event, force majeure or acts of third parties, unless the damages or the cause that gave rise to the conventional penalty was caused by fault attributable to the taxpayer.

VI. Salaries, commissions and fees paid by whoever grants the temporary use or enjoyment of real estate in a calendar year, in the amount in which they exceed, as a whole, 10% of the annual income obtained by granting the temporary use or enjoyment of real estate.

VII. The interest paid by the taxpayer that corresponds to investments from which no accruable income is being derived for which this deduction can be made.

In the case of capital borrowed for the acquisition of investments or the incurrence of expenses or when the investments or expenses are made on credit, and such investments or expenses are not deductible for the purposes of this Law, the interest derived from the capital borrowed or from the credit operations will not be deductible either. If the investments or expenses are partially deductible, the interest will only be deductible in that proportion, including those determined in accordance with the provisions of Article 44 of this Law.

For the purposes of the provisions of this section, interest is considered to be the payment of taxes, duties or any other amounts paid on behalf of the person receiving the interest, or any other payment, in cash or in kind, made for any reason to the person receiving the interest, provided that such payment derives from the same contract that gave rise to the payment of interest.

VIII. The payments for concepts of value added tax or the special tax on production and services that the taxpayer had made and the one that would have been transferred to him. The provisions of this section shall not apply when the taxpayer is not entitled to the crediting of the aforementioned taxes that have been transferred or that have been paid in connection with the importation of goods or services, which correspond to expenses or investments deductible under the terms of this Law.

The value added tax or the special tax on production and services, transferred to the taxpayer or paid by the taxpayer in connection with the importation of goods or services, will not be deductible when the expenditure that gave rise to the transfer or payment is not deductible under the terms of this Law.

IX. Losses derived from the disposal, as well as due to acts of God or force majeure, of assets whose investment is not deductible in accordance with the provisions of this Law.

The loss derived from the sale of securities will also not be deductible, provided that they are securities that are placed among the general investor public, in accordance with the general rules issued by the Tax Administration Service for such purpose.

X. Expenses incurred in connection with investments that are not deductible under this Title.

XI. Losses obtained in derivative financial transactions and in the transactions referred to in Article 21 of this Law, when entered into with individuals or legal entities resident in Mexico or abroad, that are related parties under the terms of Article 90 of this Law, when the agreed terms do not correspond to those that would have been agreed with or between independent parties in comparable transactions.

Reformed fraction DOF 18-11-2015

XII. Consumption in bars or restaurants. Expenses in canteens that due to their nature are not available to all employees of the company and even when they are, they exceed an amount equivalent to one general minimum daily wage of the taxpayer's geographic area for each employee that uses them and for each day in which the service is rendered, plus the recovery fees paid by the employee for this concept, will not be deductible.

The limit established in this section does not include expenses related to the provision of dining services, such as the maintenance of laboratories or specialists that study the quality and suitability of the food served in the dining rooms referred to in the preceding paragraph.

XIII. Payments for customs services, other than customs brokers' fees and expenses incurred by such brokers or the legal entity constituted by such customs brokers under the terms of the Customs Law.

XIV. Payments of initial amounts for the right to acquire or sell goods, foreign currency, shares or other securities that are not listed in recognized markets, in accordance with the provisions of Article 16-C of the Federal Tax Code, and that have not been exercised, provided that they are related parties in the terms of Article 179 of this Law.

XV. The restitution made by the borrower for an amount equivalent to the patrimonial rights of the securities received on loan.

XVI. The amounts that have the character of participation in the taxpayer's profit or are conditioned to the obtainment thereof, whether they correspond to employees, members of the board of directors, bondholders or others.

The investments whose deduction is authorized by this Title, except those regulated by Chapter II Sections I or II thereof, may only be deducted through the annual application of the following percentages on the amount thereof and up to this limit:

I. 5% for constructions.

II. 10% for installation expenses.

III. 30% for electronic computing equipment, consisting of a machine or group of interconnected machines containing input, storage, computing, control and output units, using electronic circuits in the main elements to execute arithmetic or logical operations automatically by means of programmed instructions, The term "computer" refers to a group of interconnected machines containing input, storage, computing, control and output units, using electronic circuits in the main elements to execute arithmetic or logical operations automatically by means of programmed, internally stored or externally controlled instructions, as well as to the peripheral equipment of such computing equipment, such as optical disk drives, printers, optical readers, plotters, backup drives, bar code readers, digitizers, external storage units, as well as monitors and keyboards connected to a computing equipment.

IV. 10% for equipment and tangible personal property not included in the preceding fractions.

When the taxpayer disposes of the assets or when they cease to be useful to obtain the income, they will deduct, in the calendar year in which this occurs, the part not yet deducted. In the event that the goods cease to be useful to obtain the income, the taxpayer must file a notice before the tax authorities and maintain without deduction one peso in its records. The provisions of this paragraph are not applicable to the cases indicated in Article 31 of this Law.

The amount of the investment will be determined in accordance with the provisions of the second paragraph of Article 31 of this Law.

When the amount of the investment is higher than the market value of the assets or the appraisal ordered or performed by the tax authorities, the lower value will be taken for deduction purposes.

The deduction of the investments referred to in this article will be updated in accordance with the terms of the seventh paragraph of article 31 of this Law and applying the provisions of the first, fifth, sixth and eighth paragraphs of the same article.

When it is not possible to separate from the cost of the property the part corresponding to the buildings, 20% of the total cost of the land will be considered as the cost of the land.

CHAPTER XI

OF THE ANNUAL STATEMENT

Article 150. Individuals who obtain income in a calendar year, with the exception of exempted income and income for which definitive tax has been paid, are obliged to pay their annual tax by means of a return to be filed in the month of April of the following year, before the authorized offices.

Individuals may choose not to file the return referred to in the preceding paragraph if they only obtain accruable income in the year for the items indicated in Chapters I and VI of this Title, the amount of which does not exceed $400,000.00, provided that the income from real interest does not exceed $100,000.00 and the withholding referred to in the first paragraph of Article 135 of this Law has been applied to such income.

In the return referred to in the first paragraph of this article, taxpayers who in the fiscal year being declared have obtained total income, including those for which they are not obligated to pay this tax and for which the definitive tax was paid, in excess of $500,000.00 must declare all of their income, including those for which they are not obligated to pay this tax under the terms of sections XVII, XIX, paragraph a) and XXII of Article 93 of this Law and for which the definitive tax has been paid under the terms of Article 138 of the same.

Taxpayers who obtain income from the rendering of a subordinated personal service will be subject to the provisions of Article 98 of this Law.

Article 151. Individuals residing in the country who obtain income of those indicated in this Title, in order to calculate their annual tax, may make, in addition to the deductions authorized in each Chapter of this Law that correspond to them, the following personal deductions:

I. Payments for medical and dental fees and for professional services in psychology and nutrition rendered by persons with a professional degree legally issued and registered by the competent educational authorities, as well as hospital expenses, made by the taxpayer for himself, for his spouse or for the person with whom he lives in cohabitation and for his ascendants or descendants in a straight line, provided that such persons do not receive during the calendar year income equal to or greater than the amount resulting from calculating the general minimum wage of the taxpayer's geographic area raised per year, and are made by means of the taxpayer's nominative check, electronic fund transfers, from accounts opened in the taxpayer's name in institutions that make up the financial system and the entities authorized for such purpose by Banco de México or by means of credit, debit or service cards.

Amended paragraph DOF 30-11-2016

The tax authorities may waive the obligation to pay expenditures through the means established in the preceding paragraph, when such expenditures are made in towns or rural areas without financial services.

For purposes of the preceding paragraph, payments made for medical, dental or nursing fees, for analysis, clinical studies or prosthesis, hospital expenses, purchase or rental of equipment for the establishment or rehabilitation of the patient, derived from the disabilities referred to in Article 477 of the Federal Labor Law, will also be deductible, when there is the corresponding certificate or proof of disability issued by the public institutions of the National Health System, or those derived from a disability in terms of the provisions of the General Law for the Inclusion of Persons with Disabilities and there is the certificate of recognition and qualification of disability issued by the mentioned public institutions in accordance with the latter Law. The provisions of this paragraph shall not be subject to the limit established in the last paragraph of this article.

Paragraph added DOF 18-11-2015

In the case of temporary disability or partial permanent disability, or disability, the deduction referred to in the preceding paragraph will only be applicable when such disability or disability is equal to or greater than 50% of the normal capacity.

Paragraph added DOF 18-11-2015

For purposes of the deduction referred to in the second paragraph of this section, the corresponding digital tax receipt must contain the specification that the expenses covered therewith are directly related to the care of the disability or incapacity in question. Additionally, the Tax Administration Service, by means of general rules, may establish other requirements that the digital tax receipt by Internet must contain.

Paragraph added DOF 18-11-2015

II. Funeral expenses, to the extent that they do not exceed the general minimum wage of the taxpayer's geographic area raised per year, incurred for the persons mentioned in the preceding section.

III. The donations that are not onerous or remunerative, that meet the requirements set forth in this Law and in the general rules established for such purpose by the Tax Administration Service, and that are granted in the following cases:

a) To the Federation, federal entities or municipalities, to their decentralized agencies that pay taxes in accordance with Title III of this Law, as well as to international organizations of which Mexico is a full member, provided that the purposes for which they were created correspond to the activities for which authorization may be obtained to receive tax-deductible donations.

b) To the entities referred to in the sixth paragraph of Article 82 of this Law.

c) To the entities referred to in articles 79, section XIX and 82 of this Law.

d) To the legal entities referred to in sections VI, X, XI, XX and XXV of Article 79 of this Law and that comply with the requirements established in Article 82 of the same Law.

e) Associations and civil societies that grant scholarships and comply with the requirements of Article 83 of this Law.

f) Repealed.

Subsection repealed DOF 08-12-2020

In the case of donations granted to educational institutions, they will be deductible as long as they are public or privately owned institutions that are authorized or have official recognition of validity of studies under the terms of the General Education Law, they are destined to the acquisition of investment goods, scientific research or development of technology, as well as administrative expenses up to the amount, in the latter case, specified in the Regulations of this Law; they are donations that are not onerous or remunerative, in accordance with the general rules determined for such purpose by the Ministry of Public Education, and such institutions have not distributed any surplus to their partners or members in the last five years.

The total amount of the donations referred to in this section will be deductible up to an amount that does not exceed 7% of the taxable income that serves as the basis for calculating the income tax payable by the taxpayer in the fiscal year immediately prior to that in which the deduction is made, before applying the deductions referred to in this article. When donations are made in favor of the Federation, federal entities, municipalities, or their decentralized agencies, the deductible amount may not exceed 4% of the accumulated income referred to in this paragraph, without in any case the limit of the deduction in the case of these donations, and those made to different authorized donatarias, exceeding the 7% mentioned above.

When donations are made between related parties, the donee may not contract with the related party that made the donation, the rendering of services, the alienation, or the granting of the temporary use or enjoyment of goods. Otherwise, the donor must consider the amount of the deduction made for the corresponding donation as accumulated income for income tax purposes, restated from the date on which the deduction was applied and up to the time of its accrual.

IV. The actual interest actually paid during the year on mortgage loans for the acquisition of their homes contracted with the institutions that are part of the financial system, provided that the total amount of the loans granted for such property does not exceed seven hundred and fifty thousand investment units. For these purposes, the amount by which the interest effectively paid in the year exceeds the annual adjustment for inflation of the same year will be considered as real interest and will be determined by applying the provisions of the third paragraph of Article 134 of this Law, for the corresponding period.

The members of the financial system referred to in the preceding paragraph must issue a tax receipt stating the amount of actual interest paid by the taxpayer in the year in question, under the terms established in the rules issued by the Tax Administration Service for such purpose.

V. The complementary retirement contributions made directly to the complementary retirement contributions subaccount, under the terms of the Law of the Retirement Savings Systems or to the accounts of personal retirement plans, as well as the voluntary contributions made to the voluntary contributions subaccount, provided that in the latter case such contributions comply with the permanence requirements established for retirement plans in accordance with the second paragraph of this section. The amount of the deduction referred to in this section will be up to 10% of the taxpayer's accumulated income for the year, provided that such contributions do not exceed the equivalent of five general minimum wages of the taxpayer's geographic area raised per year.

For the purposes of the preceding paragraph, personal retirement plans are considered to be those accounts or investment channels, which are established for the sole purpose of receiving and managing resources intended exclusively to be used when the holder reaches the age of 65 or in cases of disability or inability of the holder to perform paid personal work in accordance with the social security laws, provided they are managed in individualized accounts by insurance institutions, credit institutions, brokerage firms, retirement fund administrators, investment fund share distribution companies or investment fund operating companies authorized to operate in the country, provided they obtain prior authorization from the Tax Administration Service and comply with the requirements and conditions to maintain their validity, under the terms established for such purpose by said decentralized body by means of general rules. In the event that the personal retirement plans are contracted on a collective basis, each of the individuals comprising such plans must be identified, in addition to complying with the requirements established for such purpose by the Tax Administration Service by means of general rules. In these cases, each individual will be subject to the amount of the deduction referred to in the preceding paragraph.

Amended paragraph DOF 18-11-2015, 30-11-2016, 12-11-2021

When the resources invested in the subaccounts of complementary retirement contributions, in the subaccounts of voluntary contributions or in the personal retirement plans, as well as the yields they generate, are withdrawn before the requirements established in this section are met, the withdrawal will be considered accumulated income under the terms of Chapter IX of this Title.

In the event of the death of the holder of the personal retirement plan, the designated beneficiary or the heir will be obliged to accumulate the withdrawals made from the investment account or channels, as the case may be, to their other income for the year.

VI. Premiums for medical expense insurance, complementary or independent of the health services provided by public social security institutions, provided that the beneficiary is the taxpayer himself, his spouse or the person with whom he lives in cohabitation, or his ascendants or descendants, in a straight line.

VII. Expenses destined to school transportation for descendants in a straight line when this is mandatory in terms of the legal provisions of the area where the school is located or when such expense is included in the tuition for all students. For these purposes, the amount corresponding to school transportation must be separated in the voucher and must be made by check payable to the taxpayer, electronic fund transfers, from accounts opened in the name of the taxpayer in institutions that make up the financial system and the entities authorized for such purpose by Banco de México or by credit, debit or service card.

VIII. Payments made for local income tax on salaries and in general for the rendering of a subordinated personal service, provided that the rate of such tax does not exceed 5%.

In order to determine the taxpayer's geographic area, the place where the taxpayer's home is located as of December 31 of the year in question will be used. Persons who at the aforementioned date have their domicile outside the national territory, will use the geographic area corresponding to the Federal District.

In order for the deductions referred to in Sections I and II above to apply, it must be proven by means of tax receipts that the corresponding amounts were effectively paid in the calendar year in question to institutions or individuals resident in Mexico. If the taxpayer recovers part of such amounts, only the unrecovered difference will be deducted.

The requirements for deductions established in Chapter X of this Title are not applicable to the personal deductions referred to in this article.

The total amount of the deductions that taxpayers may make under the terms of this article may not exceed the lesser of five times the annual value of the Unidad de Medida y Actualizacion, or 15% of the total income of the taxpayer, including those for which the tax is not paid. The provisions of this paragraph shall not be applicable in the case of section V of this article.

Amended paragraph DOF 18-11-2015, 12-11-2021

Individuals shall calculate the tax for the year by adding, to the income obtained pursuant to Chapters I, III, IV, V, VI, VIII and IX of this Title, after making the deductions authorized in said Chapters, the taxable income determined pursuant to Section I of Chapter II of this Title; the result obtained shall be reduced, if applicable, by the deductions referred to in Article 151 of this Law. The following shall be applied to the amount obtained:

Amended paragraph DOF 12-11-2021

The provisions of this article shall not be applicable to income for which the tax is not required to be paid and for which definitive tax has already been paid.

The following credits may be made against the annual tax calculated under the terms of this article:

I. The amount of provisional payments made during the calendar year.

II. The creditable tax under the terms of articles 5, 140 and 145, penultimate paragraph, of this Law.

In cases in which the tax payable by the taxpayer is less than the amount credited under the terms of this article, only the tax actually paid or withheld may be refunded or offset. For the purposes of the compensation referred to in this paragraph, the balance in favor will be restated for the period from the month immediately prior to the month in which the return containing the balance in favor was filed and up to the month immediately prior to the month in which it is compensated.

When the accumulated observed inflation since the last month used in the calculation of the last update of the amounts established in national currency of the rates contained in this article and in article 96 of this Law exceeds 10%, such amounts will be updated for the period from the last month used in the calculation of the last update until the last month of the fiscal year in which the mentioned percentage is exceeded. For these purposes, the restatement factor resulting from dividing the National Consumer Price Index of the month immediately prior to the most recent month of the period by the National Consumer Price Index corresponding to the last month used in the calculation of the last restatement will be applied. Such restatement will be effective as of January 1 of the following fiscal year in which such increase occurred.

TITLE V

OF RESIDENTS ABROAD WITH INCOME DERIVED FROM A SOURCE OF WEALTH LOCATED IN MEXICAN TERRITORY

Residents abroad who obtain income in cash, goods, services or credit, even when they have been presumptively determined by the tax authorities, under the terms of articles 58-A of the Federal Tax Code, 11, 179 and 180 of this Law, from sources of wealth located in the national territory, when they do not have a permanent establishment in the country or when having one, the income is not attributable to it, are obligated to pay income tax in accordance with this Title. Payments made in connection with the acts or activities referred to in this Title, which benefit the resident abroad, including when they avoid a disbursement, are considered to be part of the income mentioned in this paragraph, and the same provisions will apply to such payments as to the income that originated them.

The taxpayers referred to in the preceding paragraph are required to determine the income, gains, profits and, if applicable, deductions derived from transactions with related parties, considering the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions.

Paragraph added DOF 12-11-2021

When foreign residents obtain the income referred to in the first paragraph of this article through a trust constituted in accordance with Mexican law, in which they are trustees or settlors, the trustee will determine the taxable amount of such income of each foreign resident under the terms of this Title and must withhold the tax that would have been withheld if they had obtained such income directly. In the case of trusts issuing securities placed among the general investing public, it will be the securities depositories who must withhold the tax on the income derived from such securities.

Amended paragraph DOF 12-11-2021

When the person making any of the payments referred to in this Title pays on behalf of the taxpayer the corresponding tax, the amount of such tax shall be considered as income included in this Title and the provisions corresponding to the type of income for which the tax was paid shall apply.

When the terms of this Title provide that the tax shall be paid by withholding, the withholder shall be obligated to pay an amount equivalent to the amount that should have been withheld on the due date or at the time the payment is made, whichever occurs first. In the case of consideration paid in foreign currency, the tax shall be paid by converting it to local currency at the time the consideration is due or paid. For the purposes of this Title, any other legal act by virtue of which the debtor extinguishes the obligation in question will have the same effect as payment.

The tax payable under the terms of this Title shall be considered definitive and shall be paid by means of a tax return to be filed with the authorized offices.

There is no obligation to pay the tax under the terms of this Title in the case of income from interest, capital gains, as well as from the granting of the temporary use or enjoyment of land or buildings attached to the ground located in Mexican territory, derived from investments made by pension and retirement funds, established under the terms of the legislation of the country in question, provided that such funds are the effective beneficiaries of such income and that the latter are exempt from income tax in that country.

For the purposes of this article, capital gains will be understood as income from the sale of shares whose value derives from more than 50% of land and buildings attached to the ground, located in the country, as well as income from the sale of such assets.

The provisions of the preceding paragraph shall apply to land and buildings attached to the ground, provided that such property has been granted in temporary use or enjoyment by the aforementioned pension and retirement funds for a period of not less than four years prior to their disposal.

When pension and retirement funds participate as shareholders in legal entities whose total income derives at least 90% exclusively from the sale or granting of the use or temporary enjoyment of land and buildings attached to the ground, located in the country, such legal entities will be exempt, in the proportion of the value of the shares whose value derives more than 50% from the ownership of land and buildings attached to the ground, located in the country, and from the alienation of shares whose value comes from more than 50% of land and constructions adhered to the ground, located in the country, such entities will be exempt, in the proportion of the shareholding or participation of such funds in the entity, provided that the conditions set forth in the preceding paragraphs are met. The provisions of this paragraph will also be applicable when such funds participate as partners in a joint venture.

For purposes of calculating the 90% referred to in the preceding paragraph, corporations whose shareholders are foreign pension and retirement funds that comply with the requirements established in this article may exclude from total income the annual cumulative inflation adjustment and the foreign exchange gain derived exclusively from debts contracted for the acquisition or to obtain income from the granting of the temporary use or enjoyment of land or buildings attached to the ground located in Mexico.

The exemption provided in the sixth paragraph of this article will not be applicable when the consideration agreed upon for the granting of the use or enjoyment of real estate is determined based on the lessee's income.

Notwithstanding the provisions of this article, foreign pension or retirement funds and the legal entities in which they participate as shareholders will be obligated to pay income tax in terms of this Law, when they obtain income from the sale or acquisition of land and buildings attached to the ground that they have registered as inventory.

Article 154. In the case of income from salaries and in general for the rendering of a subordinate personal service, the source of wealth shall be considered to be in the national territory when the service is rendered in the country.

The tax will be determined by applying the following rates to the income obtained:

I. The first $125,900.00 obtained in the calendar year in question shall be exempt.

II. The rate of 15% shall be applied to income received in the calendar year in question that exceeds the amount indicated in the preceding section and that does not exceed $1,000,000.00.

III. The rate of 30% shall be applied to income received in the calendar year in question that exceeds $1,000,000.00.

The person making the payments must also withhold the tax if he/she is a resident in the country or a resident abroad with a permanent establishment in Mexico to which the service is related. In all other cases, the taxpayer will pay the corresponding tax by means of a declaration to be filed with the authorized offices within fifteen days after the income is obtained.

In the case of Section VII of Article 94 of this Law, it will be considered that the income is obtained in the calendar year in which the option to purchase the shares or securities representing the ownership of assets has been exercised.

When the income in question is received for periods of twelve months under the terms of the seventh paragraph of this article and such periods do not coincide with the calendar year, the rates set forth in the preceding sections shall be applied based on the twelve-month period instead of the calendar year.

For the purposes of the provisions of this article and article 156 of this Law, taxpayers may guarantee the payment of the income tax that may be incurred in connection with the performance of their activities in Mexican territory, by means of a deposit in the accounts referred to in section I of article 141 of the Federal Fiscal Code.

Income from salaries and in general for the rendering of subordinated personal services paid by residents abroad, individuals or corporations that do not have a permanent establishment in the country or, if they do, the service is not related to such establishment, are exempt from paying the tax referred to in this article, provided that the stay of the service provider in Mexican territory is less than 183 calendar days, consecutive or not, in a period of twelve months.

The provisions of the preceding paragraph shall not apply when the person paying for the service has an establishment in Mexican territory with which said service is related, even if it does not constitute a permanent establishment under the terms of Articles 3, 168 and 170 of this Law, as well as when the provider of the service to said establishment receives complementary payments from residents abroad, in consideration of services rendered for which he has obtained income subject to withholding in accordance with the third paragraph of this Article.

The taxpayer who is obligated to pay the tax under the terms of this article, will be obligated to continue paying it, as long as he/she does not demonstrate that he/she has remained for more than 183 consecutive days outside the national territory.

Article 155. In the case of income from retirements, pensions, retirement assets, as well as lifetime pensions or other forms of retirement, including those coming from the retirement insurance subaccount or the retirement, severance at advanced age and old age subaccount provided for in the Social Security Law, those coming from the individual account of the retirement savings system provided for in the Law of the Institute of Security and Social Services of State Workers, and the income derived from the benefit provided for in the Universal Pension Law, the source of wealth will be considered to be in Mexican territory when the payments are made by residents in the country or permanent establishments in Mexican territory or when the contributions are derived from a subordinated personal service that has been rendered in Mexican territory.

The tax will be determined by applying the following rates to the income obtained:

I. The first $125,900.00 obtained in the calendar year in question shall be exempt.

II. The rate of 15% shall be applied on the income received in the calendar year in question that exceeds the amount indicated in the preceding section and that does not exceed $1,000,000.00.

III. The rate of 30% shall be applied on income received in the calendar year in question that exceeds $1,000,000.00.

The person making the payments referred to in this article must withhold the tax if he/she is a resident in the country or a resident abroad with a permanent establishment in Mexico. In all other cases, the taxpayer will pay the corresponding tax by means of a declaration that will be filed before the authorized offices within fifteen days following the day in which the income is obtained.

Article 156. In the case of income from fees and in general for the rendering of an independent personal service, the source of wealth will be considered to be in Mexican territory when the service is rendered in the country. It is presumed that the service is rendered entirely in Mexico when it is proven that part of the service is rendered in national territory, unless the taxpayer proves the part of the service that was rendered abroad, in which case, the tax will be calculated on the part of the consideration that corresponds to the proportion in which the service was rendered in Mexico.

It is also presumed, in the absence of proof to the contrary, that the service is rendered in national territory when the payments for such service are made by a resident in national territory or a resident abroad with a permanent establishment in the country to a resident abroad who is its related party under the terms of Article 179 of this Law.

The tax will be determined by applying the rate of 25% on the total income obtained, without any deduction, and the person making the payments must withhold the tax if he/she is a resident in the country or a resident abroad with a permanent establishment in Mexico with which the service is related. In all other cases, the taxpayer will pay the corresponding tax by means of a tax return to be filed with the authorized offices within fifteen days following the day in which the income is obtained.

Taxpayers who receive the income mentioned in this provision shall be obliged to issue a tax receipt.

Income for fees and in general for the rendering of independent personal services paid by foreign residents, individuals or legal entities that do not have a permanent establishment in the country or that have one but the service is not related to such establishment, are exempt from the payment of the tax referred to in this article, provided that the stay of the service provider in Mexican territory is less than 183 calendar days, consecutive or not, in a period of twelve months.

The taxpayer who is obligated to pay the tax under the terms of this article, will be obligated to continue paying it as long as he/she does not demonstrate that he/she has remained for more than 183 consecutive days outside the national territory.

In the case of remuneration of any kind received by members of boards of directors, supervisory, advisory or any other type of boards, as well as fees paid to directors, statutory auditors and general managers, the source of wealth will be considered to be in Mexican territory when such remuneration is paid in the country or abroad by companies resident in Mexico.

The tax will be determined by applying the rate of 25% on the total income obtained, without any deduction, and the withholding must be made by the companies making the payments.

Article 158. In income from granting the temporary use or enjoyment of real property, the source of wealth shall be considered to be in national territory when such property is located in the country.

The considerations obtained by a resident abroad for granting the right of use or enjoyment and other rights agreed upon over a real estate property located in the country will also be considered as income referred to in the preceding paragraph, even when such considerations are derived from the sale or assignment of the aforementioned rights.

For purposes of the preceding paragraphs, the tax will be determined by applying the rate of 25% on the income obtained, without any deduction, and the withholding must be made by the persons making the payments. In the event that the person making the payments is a resident abroad, the tax shall be paid by means of a tax return filed with the tax authorities within fifteen days following the receipt of the income.

Taxpayers who obtain income as indicated in the first and second paragraphs of this article will be obliged to issue a tax receipt for the consideration received. When such income is received through trust operations, the trust institution will be the one to issue the tax receipt and make the withholding referred to in the preceding paragraph.

In income from granting the temporary use or enjoyment of personal property, the source of wealth will be considered to be in Mexican territory when the personal property used for agricultural, livestock and fishing activities is used in the country. It is presumed, unless there is evidence to the contrary, that the personal property is destined to these activities and is used in the country, when the person who uses or enjoys the property is a resident in Mexico or a resident abroad with a permanent establishment in Mexican territory. In the case that the personal property is destined to activities other than the above, when the material delivery of the personal property is made in the country.

Amended paragraph DOF 09-12-2019

For the purposes of the preceding paragraph, the tax will be determined by applying the rate of 25% on the income obtained, without any deduction, and the withholding must be made by the persons making the payments.

Amended paragraph DOF 09-12-2019

The provisions of the two preceding paragraphs are not applicable to the personal property referred to in Article 166 of this Law.

Amended paragraph DOF 09-12-2019

In income derived from charter contracts, unless they correspond to the leasing of commercial, industrial or scientific equipment, the source of wealth will be considered to be in national territory, when the chartered vessels carry out cabotage navigation in national territory. In this case, the tax will be determined by applying the rate of 10% on the income obtained, without any deduction, and the person making the payments must make the withholding.

Amended paragraph DOF 09-12-2019

In the case of income corresponding to residents abroad derived from a timeshare tourist service contract, it will be considered that the source of wealth is located in national territory when one or more of the real estate properties that are totally or partially used for such service are located in the country.

For the purposes of this article, timeshare tourist service contracts are considered to be those that are in at least one of the following situations:

I. To grant the use or enjoyment or the right to occupy or enjoy on a temporary or definitive basis, one or several real estate properties or part thereof that are intended for tourism, vacation, recreational, sporting or any other purpose, including, if applicable, other accessory rights.

II. To render lodging or other similar services in one or several real estate properties or part thereof, which are intended for tourism, vacation, recreational, sports or any other purpose, including, if applicable, other accessory rights, during a specific period of time at previously established, determined or determinable intervals.

III. To alienate memberships or similar titles, whatever the name by which they are designated, that allow the use, enjoyment, enjoyment or lodging of one or several real estate properties or part thereof, which are destined for tourist, vacation, recreational, sporting or any other purpose.

IV. To grant one or several real estate properties, located in national territory, in administration to a third party, in order to use it totally or partially to lodge, shelter or give lodging in any form, to persons other than the taxpayer, as well as other accessory rights, if applicable, during a specific period at previously established, determined or determinable intervals.

The real property or properties referred to in this article may be a certain unit considered individually or a variable unit within a given class.

The tax will be determined by applying the rate of 25% on the total income obtained by the effective beneficiary resident abroad, without any deduction, and the borrower must withhold the tax if he/she is a resident in the country or a resident abroad with a permanent establishment in the country; otherwise, the taxpayer will pay the corresponding tax by means of a declaration to be filed with the authorized offices within fifteen days after obtaining the income. Taxpayers who have a representative in the country who meets the requirements established in Article 174 of this Law, may opt to apply on the profit obtained, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law, provided that said representative has the audited financial statements, or those contained in the informative declaration on their tax situation available to the tax authorities.

The income obtained or the profit obtained referred to in the preceding paragraph will be obtained by multiplying the quotient resulting from dividing the value of the real estate of the taxpayer and its related parties located in Mexico by the value of all the real estate of the taxpayer and its related parties, subject to such provision, by the worldwide income obtained or by the worldwide profit determined, before payment of income tax, of the resident abroad, as the case may be, obtained from the provision of the timeshare tourist service.

For the purposes of this article, the value of the real estate referred to in the preceding paragraph will be that contained in the audited financial statements or those contained in the informative declaration on the tax situation of the taxpayer and its related parties, at the close of the immediately preceding fiscal year.

The income tax referred to in this article shall be paid by the taxpayer by means of a tax return to be filed at the authorized offices within fifteen days following the receipt of the income.

When the person making the payments referred to in this article is a resident abroad, the taxpayer shall pay the tax by means of a declaration to be filed at the authorized offices within 15 days following the receipt of the income.

In income from the alienation of real property, the source of wealth shall be considered to be located in the national territory when such property is located in the country.

The tax will be determined by applying the rate of 25% on the total income obtained, without any deduction, and the acquirer must withhold the tax if he is a resident in the country or a resident abroad with a permanent establishment in the country; otherwise, the taxpayer will pay the corresponding tax by means of a declaration to be filed with the authorized offices within the fifteen days following the date the income was obtained.

Taxpayers that have representatives in the country that meet the requirements established in Article 174 of this Law, and provided that the alienation is recorded in a public deed or in the case of non-amortizable real estate participation certificates, may opt to apply the maximum rate to be applied to the gain obtained on the excess of the lower limit established in the rate contained in Article 152 of this Law; For these purposes, the gain will be determined under the terms of Chapter IV of Title IV of this Law, without deducting the losses referred to in the last paragraph of Article 121 of this Law. When the alienation is recorded in a public deed, the representative must communicate to the notary that executes the deed, the deductions to which the represented party is entitled. In the case of non-amortizable real estate participation certificates, the representative will calculate the resulting tax and will pay it by means of a declaration at the authorized office corresponding to his domicile within fifteen days after obtaining the income. Notaries, judges, brokers and other notaries, who by legal disposition have notarial functions, will calculate the tax under their responsibility, will record it in the deed and will pay it by means of a declaration in the authorized offices corresponding to their domicile, within fifteen days following the date on which the deed is signed. In the cases referred to in this paragraph, a tax return shall be filed for all disposals even when there is no tax to be paid. Said notaries, within fifteen days following the date on which the deed or minutes are signed, must present before the authorized offices, the information established by the Federal Tax Code regarding the transactions carried out in the immediately preceding fiscal year.

In the case of transfers that are recorded in a public deed, a representative in the country shall not be required to exercise the option referred to in the preceding paragraph.

When the tax authorities perform an appraisal and the appraisal exceeds by more than 10% of the consideration agreed for the sale, the total of the difference will be considered income of the acquirer resident abroad, and the tax will be determined by applying the rate of 25% on the total of the difference, without any deduction, and must be paid by the transferor if he is a resident in the country or a resident abroad with a permanent establishment in the country; Otherwise, the taxpayer will pay the corresponding tax by means of a declaration to be filed before the authorized offices within fifteen days following the notification made by the tax authorities. Those who pay the tax in this case, will substitute the taxpayer in the obligation to pay the tax.

Amended paragraph DOF 12-11-2021

In the case of gratuitous acquisitions, the tax will be determined by applying the rate of 25% on the total appraised value of the property, without any deduction; such appraisal must be performed by a person authorized by the tax authorities. Income received as donations referred to in Article 93, Section XXIII, paragraph a) of this Law is exempt from payment of such tax.

When in the alienations that are recorded in a public deed it is agreed that the payment will be made in installments in a term greater than 18 months, the tax that is caused may be paid to the extent that the consideration is due and in the proportion that corresponds to each one, as long as the tax interest is guaranteed. The tax will be payable on the 15th day of the month following the month in which each payment is due.

In the case of the sale of shares or securities that represent the ownership of property, the source of wealth will be considered to be located in Mexican territory when the person who issued them is a resident of Mexico or when more than 50% of the book value of such shares or securities comes directly or indirectly from real estate located in Mexico.

The disposal of shares or securities that represent the ownership of assets will be treated as the disposal of the participations in the joint venture. For these purposes, it will be considered that the source of wealth is located in Mexican territory when, through the joint venture in question, business activities are carried out totally or partially in Mexico.

Income derived from the constitution of the usufruct or use of shares or securities referred to in the first paragraph of this article, or from the transfer of usufructuary rights relating to such shares or securities, shall be treated as the disposal of shares. Income derived from legal acts in which the right to receive the income from the shares or securities is partially or totally transferred shall also be considered as income included in this paragraph. In these cases, taxpayers who obtain income provided for in this paragraph may not opt to calculate the tax on the gain, under the terms of this article.

The tax will be determined by applying the rate of 25% on the total amount of the transaction, without any deduction.

The withholding must be made by the acquirer if he/she is a resident in the country or a resident abroad with a permanent establishment in Mexico. Otherwise, the taxpayer will pay the corresponding tax by means of a declaration to be filed with the authorized offices within fifteen days after the income is obtained.

Taxpayers that have a representative in the country that meets the requirements established in article 174 of this Law and are residents abroad whose income is not subject to a preferential tax regime in accordance with this Law or are not residents in a country in which a territorial taxation system is in force, may choose to apply on the profit obtained, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in article 152 of this Law; For these purposes, the profit will be determined in accordance with the provisions of Chapter IV of Title IV of this Law, without deducting the losses referred to in the last paragraph of Article 121 of this Law. In this case, the representative will calculate the resulting tax and will pay it by means of a declaration in the authorized office that corresponds to his domicile within fifteen days after obtaining the income.

Taxpayers exercising the option referred to in the preceding paragraphs must submit a report prepared by a public accountant registered with the tax authorities, under the terms set forth in the Regulations of this Law and the general rules issued for such purpose by the Tax Administration Service, indicating that the calculation of the tax was made in accordance with the tax provisions. Likewise, a copy of the designation of the legal representative must be attached as an annex to the report.

Amended paragraph DOF 12-11-2021

For the purposes of the preceding paragraph, in the case of transactions between related parties, the public accountant must report in the report the book value of the shares being sold and attach supporting documentation showing that the sale price of the shares sold corresponds to the price that would have been used by independent parties in comparable transactions.

Amended paragraph DOF 12-11-2021

When the public accountant does not comply with the provisions of this article, he/she will be subject to the penalties set forth in the Federal Fiscal Code.

In the case of income from the sale of shares issued by Mexican companies through the stock exchanges or derivatives markets recognized under the terms of the Securities Market Law, and provided that such shares are those that are placed among the general investor public in accordance with such general rules, or shares issued by foreign companies listed on such stock exchanges or derivatives markets, or securities representing such shares or stock indexes that are sold on such stock exchanges or derivatives markets, including disposals made through financial transactions derived from capital referred to in Article 16-A of the Federal Tax Code, referring to shares placed in concessioned stock exchanges or in derivative markets recognized under the terms of said Law or stock indexes representing said shares, the tax will be paid through withholding by the stock market intermediary, applying the rate of 10% on the gain derived from the sale of said shares or securities. For these purposes, the determination of the gain from the sale of shares or securities will be made for each transaction, using the calculation procedure established in the third and fourth paragraphs of Article 129 of this Law, as applicable, without deducting the losses referred to in the ninth paragraph of said Article.

For purposes of the payment of the tax referred to in the preceding paragraph, the stock market intermediary will withhold and remit the corresponding tax to the authorized offices no later than the 17th day of the month immediately following the month in which the corresponding sale takes place. The Tax Administration Service, through general rules, may determine the cases in which such withholding will not apply. The withholding or payment of the tax that is made will be considered as a definitive payment of the tax on the gain derived from such sale. The taxpayer will not be obligated to pay the tax on the alienation when the taxpayer is a resident of a country with which a treaty to avoid double taxation is in force. For these purposes, the taxpayer must deliver to the intermediary a written statement under oath stating that he is a resident for purposes of the treaty and must provide his registration number or tax identification number issued by the competent tax authority. In the event that the resident abroad does not provide this information, the intermediary must withhold the corresponding withholding in terms of the preceding paragraph.

Amended paragraph DOF 12-11-2021

The provisions of the tenth and eleventh paragraphs shall not be applicable to the cases provided for in the last paragraph of Article 129 of this Law. In such cases, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law shall be applied on the profit obtained, which shall be determined in accordance with the provisions of Chapter IV of Title IV of this Law, without deducting the losses referred to in the last paragraph of Article 121 of this Law.

Amended paragraph DOF 18-11-2015

In the case of the alienation of shares issued by variable income investment funds, the tax will be paid through withholding to be made by the distributor of investment fund shares, applying the rate of 10% on the gain from such alienation. The determination of the gain from the sale of shares issued by variable income investment funds will be made in accordance with the provisions of Article 88 of this Law, without deducting the losses referred to in the sixth paragraph of said article. The withholding or payment of the tax that is made will have the character of a definitive payment of the tax on the gain derived from such sale. In the case of variable income investment funds referred to in Article 80 of this Law, the provisions of Article 166 of this Law will apply.

Amended paragraph DOF 18-11-2015

In the case of acquisition by foreign residents of shares or securities representing the ownership of assets referred to in the first paragraph of this article, the tax authorities may appraise the transaction in question and if the appraisal exceeds by more than 10% of the consideration agreed for the sale, the total of the difference will be considered income of the acquirer, in which case its cost for the acquisition of assets will be increased by the total of the aforementioned difference. The tax will be determined by applying, on the total of the difference without any deduction, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law, and the taxpayer must pay it by means of a declaration to be filed before the authorized offices within fifteen days following the notification made by the tax authorities, with the corresponding update and surcharges. The provisions of this paragraph shall be applicable regardless of the residence of the transferor.

In acquisitions made free of charge, the tax will be determined by applying the rate of 25% on the total appraised value of the shares or partnership interests, without any deduction; such appraisal must be performed by a person authorized by the tax authorities. Income received as donations referred to in Article 93, Section XXIII, paragraph a) of this Law are exempt from the payment of such tax.

In the case of securities that are placed among the general investor public in accordance with the general rules issued for such purpose by the Tax Administration Service when they are sold outside the stock exchange, the tax authorities will consider the stock exchange quotation of the last event on the day of the sale, instead of the appraisal value.

In the case of restructurings of companies belonging to a group, the tax authorities may authorize the deferral of the payment of the tax derived from the gain on the disposal of shares within such group. In this case, the payment of the deferred tax will be made within 15 days following the date on which a subsequent disposal takes place in which the shares referred to in the corresponding authorization are outside the group, restated from the date on which the tax was incurred until it is paid. The value of disposal of the shares to be considered to determine the gain will be that which would have been used between independent parties in comparable transactions, or taking into account the value that the tax authorities appraise by means of an appraisal. For purposes of the provisions of this paragraph, it will also be understood that the shares are outside the group when the issuing company and the company acquiring the shares cease to consolidate their financial statements in accordance with the provisions that regulate the taxpayer in accounting and financial matters, or that it is obliged to apply.

Amended paragraph DOF 12-11-2021

The authorizations referred to in this article will only be granted prior to the restructuring, and provided that the consideration derived from the transfer only consists of the exchange of shares issued by the company acquiring the shares being transferred, and that the transferor or acquirer is not subject to a preferential tax regime or resides in a country with which Mexico does not have a comprehensive tax information exchange agreement in force. If the transferor or the acquirer resides in a country with which Mexico does not have a comprehensive tax information exchange agreement in force, the authorization referred to in this paragraph may be obtained, provided that the taxpayer submits a written document stating that it has authorized the foreign tax authorities to provide the Mexican authorities with information on the transaction for tax purposes. The authorization issued in accordance with the provisions of this paragraph will be without effect when the aforementioned information is not effectively exchanged, as the case may be, requested to the country in question, or when the tax authority in the exercise of its powers of verification detects that the restructuring or, as the case may be, the relevant transactions related to such restructuring, or, as the case may be, the relevant transactions related to such restructuring, are being carried out by the Mexican tax authorities, the relevant transactions related to such restructuring, carried out within the five immediately preceding years together with those carried out within the five immediately following the granting of the authorization in question, lacked a business reason, or that the exchange of shares generated income subject to a preferential tax regime. The authorizations referred to in this paragraph may be conditioned to compliance with the requirements established for such purpose in the Regulations of this Law and in the resolutions issued by the tax authorities.

Amended paragraph DOF 12-11-2021

When within five years after the restructuring is carried out a relevant transaction takes place, the company acquiring the shares or the legal representative appointed for such purpose must submit the information referred to in Article 31-A, first paragraph, paragraph d) of the Federal Tax Code, in the terms established in such provision.

Paragraph added DOF 12-11-2021

For the purposes of this article, relevant transactions shall be understood as those indicated in article 24, penultimate paragraph of this Law.

Paragraph added DOF 12-11-2021

In the case of the aforementioned restructurings, the taxpayer must appoint a legal representative under the terms of this Title and submit to the tax authorities a report prepared by a public accountant registered with such authorities, under the terms set forth in the Regulations of this Law and the general rules issued by the Tax Administration Service for such purpose, in which it is indicated that the calculation of the tax was made in accordance with the tax provisions, the business segments and line of business of the issuing company and the acquiring company and certifies that said companies consolidate their financial statements in accordance with the provisions that regulate them in accounting and financial matters, or that they are obliged to apply. Likewise, the taxpayer must comply with the requirements established in the Regulations of this Law.

Amended paragraph DOF 12-11-2021

For the purposes of the preceding paragraphs, a group is considered to be a group of companies whose voting shares representing capital stock are owned directly or indirectly at least 51% by the same legal entity.

The authorized taxpayer must submit to the competent authority the documentation evidencing that the shares subject to the authorization have not left the group of companies. Such information must be submitted within the first 15 days of March of each year, subsequent to the date on which the sale took place, during all the years in which such shares remain within such group. It will be presumed that the shares left the group if the taxpayer does not comply in time with the provisions of this article.

When in accordance with treaties entered into by Mexico to avoid double taxation, the gain obtained from the sale of shares as a result of a reorganization, restructuring, merger, spin-off or similar operation cannot be taxed, such benefit will be granted by means of a refund in cases in which the taxpayer resident abroad does not comply with the requirements established in the Regulations of this Law.

Financing entities residing abroad in which the Federal Government, through the Ministry of Finance and Public Credit or Banco de México, participates in their capital stock, may pay the income tax payable on the sale of shares or securities referred to in this article, based on the gain determined under the terms of the sixth paragraph of this article, provided that the provisions of this provision are complied with.

In the case of transactions of exchange of public debt for capital, carried out by residents abroad other than the original creditor, the source of wealth corresponding to the income obtained in the transaction will be considered to be located in Mexican territory, when the person in charge of the credit in question is a resident of Mexico.

The tax will be determined by applying the rate of 25% on the total amount of the transaction, without any deduction. The withholding of the corresponding tax will be made by the Mexican resident acquiring or paying the credit.

Taxpayers who have a representative in the country who meets the requirements established in Article 174 of this Law, may opt to apply the 40% rate on the profit obtained, which will be determined by deducting the acquisition cost of the credit or security in question from the income received. In this case, the representative will calculate the resulting tax and will pay it by means of a declaration in the authorized office corresponding to his domicile within fifteen days after obtaining the income. In the case of credits denominated in foreign currency, the gain referred to in this paragraph will be determined considering the income received and the acquisition cost in the foreign currency in question, and the respective conversion will be made at the exchange rate of the day on which the sale took place.

The option provided for in the preceding paragraph may only be exercised when the income of the transferor of the securities is not subject to a preferential tax regime or does not reside in a country where a territorial taxation system is in force.

In the case of financial transactions derived from capital referred to in Article 16-A of the Federal Tax Code, the source of wealth is considered to be in Mexican territory when one of the parties entering into such transactions is a resident in Mexico or a resident abroad with a permanent establishment in the country and they refer to shares or securities of those mentioned in Article 161 of this Law.

For purposes of the preceding paragraph, the tax will be determined by applying the rate of 25% on the profit received by the resident abroad from the financial transaction in question, calculated in accordance with the terms of Article 20 of this Law. The withholding or payment of this tax, as the case may be, must be made by the resident in the country or by the resident abroad with a permanent establishment in the country, except in cases in which the transaction is made through a bank or brokerage firm resident in the country, in which case the bank or brokerage firm must make the corresponding withholding.

For purposes of withholding, payment and payment of the tax on profits from financial transactions derived from capital related to shares placed in stock exchanges granted in accordance with the Securities Market Law, as well as those related to stock indexes representing such shares, provided they are carried out in the recognized markets referred to in sections I and II of article 16-C of the Federal Fiscal Code, the provisions of the tenth and eleventh paragraphs of article 161 of this Law shall apply.

Amended paragraph DOF 18-11-2015

The taxpayers referred to in the first two paragraphs of this article, whose income is not subject to a preferential tax regime and who have a representative in the country that meets the requirements established in article 174 of this Law, may opt to apply the maximum rate to be applied on the excess of the lower limit established by the rate contained in article 152 of this Law, on the profit obtained under the terms of Article 20 of this Law, resulting from the operations carried out during the month, reduced by the deductible losses, if any, of the other operations carried out during the month by the resident abroad with the same institution or person, in accordance with the provisions of Article 146 of this Law. In this case, the representative will calculate the resulting tax and will pay it by means of a declaration at the authorized office corresponding to his domicile no later than the 17th day of the month following the month in which the withholding was made.

The resident abroad may apply the provisions of the preceding paragraph, even if he does not have a legal representative in the country, if his counterpart in the transaction is a resident in Mexico, provided that the latter pays the corresponding tax and obtains the information necessary to determine the tax base. In order to apply the provisions of this paragraph, the Mexican resident must express in writing to the tax authorities its decision to voluntarily assume joint and several liability for the payment of the tax incurred.

When the financial transaction derived from capital is settled in kind with the delivery by the resident abroad of the shares or securities to which such transaction refers, the provisions of Article 161 of this Law will apply to the alienation of shares or securities involved in such delivery. For the purposes of calculating the tax established in said article, the income of the resident abroad will be considered to be the price received in the liquidation, plus or minus the initial amounts received or paid for the execution of said transaction, or for the subsequent acquisition of the rights or obligations contained therein, restated for the period elapsed between the month in which they were received or paid and the month in which the transaction is liquidated. In this case, the source of wealth of the income obtained from the alienation is considered to be in Mexican territory, even when the financial transaction derived therefrom has been entered into with another resident abroad.

When the settlement of a financial transaction derived from capital stipulated to be settled in kind does not occur, residents abroad will be taxed on the amounts they have received for entering into such transactions, the tax will be calculated by applying the rate of 25% or the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law, as applicable in accordance with the provisions of this Law. The resident in Mexico or abroad with a permanent establishment in the country, with whom the transaction has been entered into, must withhold the tax. For the calculation of this tax, the referred amounts will be restated for the period elapsed from the month in which they are received until the month in which the transaction expires. The resident in Mexico or abroad with a permanent establishment in Mexico must pay such tax no later than the 17th day of the calendar month immediately following the month in which the transaction is due.

When a foreign resident acquires outside the stock exchanges concessioned under the terms of the Securities Market Law or the recognized markets referred to in section I of article 16-C of the Federal Fiscal Code, securities containing rights or obligations of financial operations derived from capital that are of those placed among the general investor public in accordance with the general rules issued for such purpose by the Tax Administration Service, at a price 10% or more lower than the average of the opening and closing quotations of the day in which they are acquired, the difference will be considered as income for the foreign resident acquiring such securities.

For the purposes of this Title, in the case of financial transactions derived from debt referred to in Article 16-A of the Federal Tax Code, as well as the financial transactions referred to in Article 21 of this Law, the gain determined in accordance with the following paragraphs is considered interest. In this case, the source of wealth is considered to be in Mexican territory when one of the parties entering into such transactions is a resident in Mexico or a resident abroad with a permanent establishment in the country and the transaction is attributable to such permanent establishment. The source of wealth is considered to be in Mexican territory when financial transactions derived from debt between residents abroad are settled with the delivery of the ownership of debt securities issued by Mexican residents.

For purposes of the preceding paragraph, the tax will be calculated by applying to the gain resulting from the financial transaction derived from the debt in question, calculated under the terms of Article 20 of this Law, the corresponding rate in terms of Article 166 of this Law. In the event that the transaction is settled in kind, the withholding rate of 10% will be applicable. In the case of financial transactions referred to in Article 21 of this Law, the tax will be calculated on the income received in the same terms established in said article applying the corresponding rate in terms of this Title. The tax referred to in this paragraph shall be paid by means of withholding to be made by the person making the payments.

For the purposes of this article, a financial transaction derived from debt is also considered to be settled in cash when payment is made in foreign currency.

The provisions of the tenth paragraph of this article shall be applicable to the gain derived from the disposal of the rights consigned in such transactions, or to the initial amount received for entering into the transaction when the aforementioned rights are not exercised.

In the case of financial transactions derived from debt, payable in cash, the tax will be calculated by applying to the gain obtained in such transactions, without any update, the rate that corresponds in accordance with the tenth paragraph of this article to the beneficial owner of the transaction.

In order to determine the interest in favor of the resident abroad and its respective tax, in the case of financial transactions derived from debt in which differences are periodically paid in cash during its term, the differences paid by the resident abroad to the resident in the country may be deducted from the amounts collected by the resident abroad.

The tax referred to in this article will not be paid in the case of financial transactions derived from debt that are referenced to the Equilibrium Interbank Interest Rate or to debt securities issued by the Federal Government or by Banco de México or any other determined by the Tax Administration Service through general rules, placed in Mexico among the general investor public, or that in addition to being referenced to such rate or securities, are referenced to another interest rate, or to other underlying securities that in turn are referenced to the Equilibrium Interbank Interest Rate or to any of the aforementioned securities, or to this rate or securities and other interest rates, provided that they are traded on a stock exchange or recognized markets, under the terms of sections I and II of article 16-C of the Federal Fiscal Code and that the beneficial owners are residents abroad.

In the event that it is not possible to identify the beneficial owner resident abroad of the profits from the derivative financial transactions referred to in the preceding paragraph, the liquidating partners will not be obligated to make the corresponding withholding and will not have the joint and several liability referred to in Article 26 of the Federal Tax Code.

In the case of permanent establishments in the country of residents abroad, when the payments for the items indicated in this article are made through the head office of the company or another establishment of the company abroad, the withholding shall be made within fifteen days from the date on which the payment is made abroad or the amount thereof is deducted by the permanent establishment, whichever occurs first.

In the case of income from dividends or profits, and in general for profits distributed by legal entities, the source of wealth will be considered to be in the national territory, when the person distributing them resides in the country.

Dividends or profits distributed by corporations are considered dividends or profits:

I. The income referred to in Article 140 of this Law. In these cases, the legal entity making the payments will be subject to the provisions of Article 10 of the same Law.

The tax referred to in this section shall be paid together with the provisional payment of the corresponding month.

In the case of a reduction of capital of legal entities, the calculation of the profit distributed per share determined in accordance with Article 78 of this Law, will be made by decreasing from such profit the balances of the net tax profit accounts. Such balances will be determined by dividing the balances of the referred accounts held by the legal entity at the time of the reduction, by the total number of shares of the same person at the date of the reimbursement, including those corresponding to the reinvestment or capitalization of profits or any other concept that integrates the stockholders' equity of the same.

In the case of distributed profits determined in accordance with the terms of Article 78 of this Law, the corresponding tax will be calculated and paid in accordance with the terms of the aforementioned article.

The legal entities that distribute the dividends or profits referred to in this section must withhold the tax obtained by applying the 10% rate on such dividends or profits, and provide the persons to whom they make the payments referred to in this paragraph with a statement indicating the amount of the dividend or profit distributed and the tax withheld. The tax paid will be considered definitive.

II. Profits in cash or in goods sent by the permanent establishments of legal entities resident abroad to the head office of the company or to another permanent establishment of the latter abroad, which do not come from the balance of the net tax profit account or from the capital remittance account of the resident abroad, respectively. In this case, the permanent establishment must pay as tax payable the amount resulting from applying the rate set forth in the first paragraph of Article 9 of this Law. For these purposes, the dividends or profits distributed will be added to the income tax payable under the terms of this article. To determine the income tax to be added to the dividends or profits distributed, the amount of such profits or remittances will be multiplied by the factor of 1.4286 and the rate set forth in Article 9 of the aforementioned Law will be applied to the result.

For the purposes of the preceding paragraph, the net tax profit account of the foreign resident will be added to the net tax profit for each year determined in accordance with the provisions of Article 77 of this Law, as well as the dividends or profits received from legal entities resident in Mexico for shares that are part of the assets of the permanent establishment, and will be reduced by the amount of the profits sent by the permanent establishment to its head office or to another of its establishments abroad in cash or in goods, as well as by the distributed profits referred to in Section III of this Article, when in both cases they come from the balance of said account. For the purposes of this paragraph, dividends or profits in shares or those reinvested in the subscription and capital increase of the same person that distributes them, within 30 calendar days following their distribution, are not included. In the determination of the net tax profit account of the foreign resident, the provisions of Article 77 of this Law will be applicable, with the exception of the first paragraph.

The capital remittances account referred to in this article shall be increased by the capital remittances received from the head office of the corporation or from any of its establishments abroad and decreased by the amount of the capital remittances reimbursed to such establishments in cash or in goods. The balance of this account as of the last day of each fiscal year will be restated for the period from the month in which the last restatement was made to the last month of the fiscal year in question. When remittances are reimbursed or sent after the updating provided for in this paragraph, the balance of the account held on the date of the reimbursement or receipt shall be updated for the period from the month in which the last update was made up to the month in which the reimbursement or receipt is made.

III. The permanent establishments that make reimbursements to their main office or to any of their permanent establishments abroad, will consider such reimbursement as distributed profit, including those derived from the termination of their activities, under the terms provided for in Article 78 of this Law. For these purposes, the value of the remittances contributed by the head office or any of its permanent establishments abroad, in the proportion that it represents in the total value of the remittance account of the permanent establishment, will be considered as a share, and the capital contribution account will be considered as the capital remittance account provided for in this article.

Permanent establishments must determine and pay the tax corresponding to the result obtained in accordance with the provisions of this section, applying the rate of the first paragraph of Article 9 of this Law, to the amount resulting from multiplying such result by the factor of 1.4286. There will be no obligation to pay this tax when the profit comes from the balance of the net tax profit account of the foreign resident referred to in the preceding section. The tax resulting under the terms of this section must be paid together with the tax, if any, resulting in accordance with the preceding section.

IV. In the case of dividends and in general for profits distributed by the permanent establishments referred to in sections II and III of this article, an additional rate of 10% will be applied to the profits or reimbursements. The permanent establishments must pay the tax resulting under the terms of this section together with the tax, if any, resulting in accordance with section III of this article, and it will be considered a definitive payment.

For the purposes of sections II and III of this article, the last thing that the permanent establishment sends abroad is considered to be capital reimbursements.

In the case of income obtained by a resident abroad through a legal entity referred to in Title III of this Law, the source of wealth will be considered to be in Mexican territory when the legal entity is a resident of Mexico.

The tax will be determined by applying, on the distributable remainder, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law. The tax must be paid by the legal entity on behalf of the resident abroad, together with the return indicated in Article 96 of this Law or, if applicable, on the dates established for the same. The aforementioned legal entity must provide the taxpayers with proof of the payment made.

In the case of interest income, the source of wealth will be considered to be in the national territory when the capital is placed or invested in the country, or when the interest is paid by a resident in the country or a resident abroad with a permanent establishment in the country.

Interest, by whatever name it may be called, is considered to be the yield of credits of any kind, with or without mortgage guarantee and with or without the right to participate in the profits; yields on public debt, bonds or debentures, including premiums and prizes assimilated to yields on such securities, premiums paid on securities lending, discounts for the placement of securities, bonds or debentures, commissions or payments made in connection with the opening or guaranteeing of credits, payments made to a third party in connection with the opening or guaranteeing of credits, even when these are contingent, payments made to a third party in connection with the acceptance of a guarantee, the granting of a guarantee or liability of any kind, of the gain derived from the sale of securities placed among the general investing public referred to in Article 8 of this Law, as well as the gain on the sale of shares of the investment funds in debt instruments referred to in the Investment Funds Law and of the variable income investment funds referred to in Article 80 of this Law, of the adjustments to the acts by which income referred to in this article is derived that are made through the application of indexes, factors or in any other way, including the adjustments made to the principal due to the fact that the credits or operations are denominated in investment units. Interest is considered to be the gain derived from the sale by a resident abroad of loans to a resident in Mexico or a resident abroad with a permanent establishment in the country, when they are acquired by a resident in Mexico or a resident abroad with a permanent establishment in the country.

Amended paragraph DOF 18-11-2015

The gain from the sale of shares of the investment funds in debt instruments and of the equity investment funds referred to in the preceding paragraph will be calculated by deducting from the income obtained from the sale, the original amount of the investment. For these purposes, the original amount of the investment will be considered to be the amount paid to the investment fund, per share, for the acquisition of the shares being disposed of, restated from the date on which the shares were acquired until the date on which they are disposed of.

Amended paragraph DOF 18-11-2015

The tax will be calculated by applying to the gain obtained in accordance with the preceding paragraph the withholding rate that corresponds in accordance with this article to the beneficial owner of such gain. The investment funds that make payments for the sale of shares are obliged to withhold and pay the corresponding tax in accordance with the provisions of this article. The equity investment funds referred to in this article must provide, both to the Tax Administration Service and to the taxpayer, the information related to the part of the gain that corresponds to the shares sold in the stock exchange concessioned under the terms of the Securities Market Law.

Amended paragraph DOF 18-11-2015, 12-11-2021

Interest is considered to be the credit income obtained by a foreign resident from the acquisition of a credit right of any kind, present, future or contingent. For the purposes of this paragraph, the source of wealth is considered to be in Mexican territory when the credit right is sold by a resident in Mexico or a resident abroad with a permanent establishment in the country. Such income will be determined by deducting from the nominal value of the aforementioned credit right, plus its yields and accessories that have not been subject to withholding, the price agreed upon in the sale.

In the case of the gain derived from the alienation of credits owed by a resident in Mexico or a resident abroad with a permanent establishment in the country, made by a resident abroad to a resident in Mexico or a resident abroad with a permanent establishment in the country, the tax will be calculated by applying to the difference between the amount obtained by the resident abroad from the alienation of the credit and the amount received for such credit by the original debtor thereof, the withholding rate that corresponds in accordance with this article to the effective beneficiary of such gain.

The tax will be paid through withholding to be made by the person making the payments and will be calculated by applying to the interest obtained by the taxpayer, without any deduction, the rate mentioned below in each case:

I. 10% in the following cases:

a) To interest paid to the following persons, provided that they provide the Tax Administration Service with the information requested by the latter through general rules on financing granted to residents in the country.

1. Financing entities belonging to foreign states, provided that they are the effective beneficiaries of the interest.

Foreign banks, including investment banks, provided that they are the beneficial owners of the interest.

Foreign banks will be treated as foreign banks, provided that they comply with the percentages of placement and fund raising established in the general rules issued for such purpose by the Tax Administration Service and are the effective beneficiaries of the interest.

Entities that place or invest in the country capital derived from debt securities issued and placed abroad among the general investor public in accordance with the general rules issued for such purpose by the Tax Administration Service.

b) Interest paid to foreign residents from debt securities placed through banks or brokerage firms in a country with which Mexico does not have a treaty in force to avoid double taxation, provided that the documents containing the corresponding financing transaction have submitted the notification referred to in the second paragraph of Article 7 of the Securities Market Law to the National Banking and Securities Commission, in accordance with the provisions of said Law.

c) To the acquisition of a credit right of any kind, present, future or contingent. In this case, it must be collected by the transferor resident in Mexico or resident abroad with a permanent establishment in the country, in the name and on behalf of the resident abroad and must be paid within 15 days following the transfer of the credit rights.

II. 4.9% in the following cases:

a) Interest paid to residents abroad from debt securities placed among the general investing public referred to in Article 8 of this Law, as well as the gain from the sale thereof, those received from certificates, acceptances, debt securities, loans or other credits from credit institutions, multiple purpose financial companies that for the purposes of this Law are part of the financial system or auxiliary credit organizations, as well as those placed through banks or brokerage firms in a country with which Mexico has in force a treaty to avoid double taxation, as long as the documents in which the corresponding financing operation is recorded have presented the notification indicated in the second paragraph of article 7 of the Securities Market Law, before the National Banking and Securities Commission, in accordance with the provisions of said Law and comply with the information requirements established in the general rules issued by the Tax Administration Service for such purpose. In the event that the aforementioned requirements are not complied with, the applicable rate will be 10%.

Section amended DOF 18-11-2015

b) Interest paid to financing entities resident abroad in which the Federal Government, through the Ministry of Finance and Public Credit, or the Central Bank, participates in their capital stock, provided that they are the effective beneficiaries thereof and comply with the provisions of the general rules issued for such purpose by the Tax Administration Service.

III. 15%, to interest paid to reinsurance companies.

IV. 21%, to interest in the following cases:

a) Those paid by credit institutions to residents abroad, other than those indicated in the preceding sections of this article.

b) Those paid to foreign suppliers for the sale of machinery and equipment that are part of the fixed assets of the acquirer.

c) Those paid to residents abroad to finance the acquisition of the goods referred to in the preceding paragraph and, in general, for the qualification and endorsement or commercialization, provided that any of these circumstances is stated in the contract.

When the interest referred to in this section is paid by credit institutions to the parties mentioned in section I of this article, the rate referred to in the latter section shall be applied.

V. To the interests other than those indicated in the preceding fractions, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in article 152 of this Law shall be applied.

The persons who must make payments for the concepts indicated in this article are obliged to make the corresponding withholding.

When the interest derives from bearer securities, only the withholder will have tax obligations, and the resident abroad will be released from any liability other than that of accepting the withholding.

The tax referred to in the preceding paragraphs will not be payable when the interest is paid by foreign establishments of domestic credit institutions referred to in Article 48 of this Law.

The rates set forth in Sections I and II of this article shall not be applicable if the beneficial owners, either directly or indirectly, individually or jointly with related persons, receive more than 5% of the interest and are:

Shareholders of more than 10% of the debtor's voting shares, directly or indirectly, individually or jointly with related persons, or

Entities that more than 20% of their shares are owned by the debtor, directly or indirectly, individually or jointly with related parties.

Amended paragraph with numerals DOF 12-11-2021

In the cases indicated in paragraphs 1 and 2 above, the applicable rate will be the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law. For these purposes, related persons are considered when one of them has an interest in the business of the other, there are common interests between both, or a third person has an interest in the business or assets of both.

For the purposes of the provisions of this article, the withholding of the tax on interest obtained from debt securities placed among the general investing public referred to in article 8 of this Law, as well as those received from certificates, acceptances, debt securities, loans or other credits in charge of credit institutions, multiple purpose financial companies or auxiliary credit organizations, will be made by the securities depositories of such securities, at the time of transferring them to the acquirer in case of alienation, or at the time the interest is payable in other cases. In the case of transactions free of payment, the intermediary who receives from the acquirer the resources of the transaction to deliver them to the transferor of the securities shall be obliged to make the withholding. In these cases, the issuer of such securities shall be released from withholding.

Amended paragraph DOF 18-11-2015

In cases where a securities depository only receives orders for the transfer of securities and is not provided with the resources to withhold the tax, the securities depository may be released from the obligation to withhold the tax, provided that it provides the intermediary or securities depository receiving the securities with the necessary information at the time the transfer is made. In this case, the intermediary or securities depository receiving the securities shall calculate and withhold the tax at the time it becomes due. The information referred to in this paragraph will be determined by means of general rules issued by the Tax Administration Service.

When the sale of the securities referred to in this article is carried out without the intervention of an intermediary, the resident abroad who sells such securities must designate the securities depositary to transfer the securities for the payment of the corresponding tax, in the name and on behalf of the transferor. Such payment must be made no later than the 17th day of the month immediately following the date on which the transfer takes place. For these purposes, the resident abroad must provide the securities depositary with the necessary resources for the payment of such tax. In this case, the securities depositary will be jointly and severally liable for the corresponding tax. In the event that such securities depositary must also transfer the securities to another intermediary or securities depositary, it will provide them with the price of the transfer of the securities at the time the transfer is made, who will be subject to the provisions of the preceding paragraph.

When in this article reference is made to an intermediary, it shall be understood as such the credit institutions and brokerage firms of the country that intervene in the acquisition of securities referred to in this article.

In the case of interest on financial leasing, the source of wealth will be considered to be in Mexican territory when the goods are used in the country or when the payments made abroad are deducted, totally or partially, by a permanent establishment in the country, even when the payment is made through any establishment abroad. In the absence of proof to the contrary, it is presumed that the goods are used in the country, when the person who uses or enjoys the goods is a resident in the country or a resident abroad with a permanent establishment in the country. It is also considered that there is a source of wealth in the country when the person making the payment is a resident in Mexico or a resident abroad with a permanent establishment in the country.

For purposes of the preceding paragraph, the tax will be calculated by applying the rate of 15% to the amount agreed upon as interest in the respective contract, and the withholding must be made by the persons making the payments.

In the case of permanent establishments in the country of residents abroad, when the payments for the items indicated in this article are made through the head office of the company or another establishment of the company abroad, the withholding shall be made within fifteen days following the date on which the payment is made abroad or the amount thereof is deducted by the permanent establishment, whichever occurs first.

The following interests are exempt from income tax:

a. Those derived from credits granted to the Federal Government or Banco de México and those derived from bonds issued, acquired and paid abroad.

b. Those derived from credits with a term of three or more years, granted or guaranteed by financing entities resident abroad engaged in promoting exports through the granting of loans or guarantees under preferential conditions.

c. Those derived from credits granted or guaranteed under preferential conditions by financing entities resident abroad to institutions authorized to receive deductible donations under the terms of this Law, provided that the latter use them for the development of assistance or charitable activities.

d. Those derived from credits granted to the Federal Government or Banco de México and those derived from credit securities issued by the Federal Government or Banco de México, placed in Mexico among the general investing public, provided that the beneficial owners are residents abroad.

In the event that it is not possible to identify the beneficial owner resident abroad of the interest derived from the credits or securities referred to in the preceding paragraph, the financial intermediaries will not be obligated to make the corresponding withholding nor will they have the joint and several liability referred to in Article 26 of the Federal Fiscal Code.

The Tax Administration Service may issue the general rules necessary for the due and correct application of this article.

Paragraph added DOF 12-11-2021

In the case of income from royalties, technical assistance or advertising, the source of wealth will be considered to be in Mexican territory when the goods or rights for which the royalties or technical assistance are paid are used in Mexico, or when the royalties, technical assistance or advertising are paid by a resident in Mexican territory or by a resident abroad with a permanent establishment in the country.

The tax will be calculated by applying to the income obtained by the taxpayer, without any deduction, the rate mentioned in each case:

I. Royalties for the temporary use or enjoyment of railroad cars; containers, trailers or semi-trailers that are imported temporarily for up to one month under the terms of the Customs Law; as well as vessels that have a concession or permit from the Federal Government to be commercially exploited, provided that such goods are used directly by the lessee in the transportation of passengers or
goods 5%

Reformed fraction DOF 09-12-2019

II. Royalties other than those included in section I, as well as fortechnicalassistance
25%.

III. Royalties for the use or temporary enjoyment of aircraft that have a concession or permit from the Federal Government to be operated commercially, provided that such property is used directly by the lessee in the transportation of passengers or
goods 1%

Fraction added DOF 09-12-2019

In the case of royalties for the use or temporary enjoyment of patents or certificates of invention or improvement, trademarks and trade names, as well as for advertising, the rate applicable to the income obtained by the taxpayer for such concepts will be the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law.

When the contracts involve a patent or certificate of invention or improvement and other related concepts referred to in section II of this precept, the tax will be calculated by applying the rate corresponding to the portion of the payment made for each of the concepts. In the event that it is not possible to distinguish the proportional part of each payment that corresponds to each concept, the tax will be calculated by applying the rate established in section II of this article.

For the purposes of this article, it will be understood that the temporary use or enjoyment is also granted when the goods or rights referred to in Article 15-B of the Federal Tax Code are disposed of, provided that such disposal is conditioned to the productivity, use or subsequent disposition of the same goods or rights. In this case, the rates referred to in this article will be applied on the income obtained, without any deduction, based on the good or right in question.

For the purposes of this article, the use or concession of use of a copyright, of an artistic, scientific or literary work, among other concepts, implies the retransmission of visual lisr, sounds or both, or the right to allow the public access to such lisr or sounds, when in both cases they are transmitted by satellite, cable, optical fiber or other similar means and that the content that is retransmitted is protected by copyright.

The persons who must make payments for the concepts indicated in this article are obliged to make the corresponding withholding.

Article 168. In income from construction services of work, installation, maintenance or assembly in real estate, or inspection or supervision activities related thereto, the source of wealth shall be considered to be in national territory when it is carried out in the country.

The tax will be determined by applying the rate of 25% on the income obtained, without any deduction, and the person making the payments must make the withholding.

Taxpayers that have a representative in the country that meets the requirements established in Article 174 of this Law, may choose to apply the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law, on the amount resulting from reducing the income obtained, the deductions authorized in Title II of this Law, that directly affect such income, regardless of the place where they were made. In this case, the representative will calculate the resulting tax and will pay it by means of a declaration to be filed before the authorized offices corresponding to the place where the work is carried out, within the month following the month in which the work is completed.

In the case of income from prizes, it shall be considered that the source of wealth is in the national territory when the lottery, raffle, drawing or game with bets and contests of any kind is held in the country. Unless there is evidence to the contrary, it will be understood that the lottery, raffle, drawing or game with bets and contests of any kind is held in the country when the prize is paid in the country.

The tax on lottery, raffle, sweepstakes and contest prizes will be calculated by applying the rate of 1% on the value of the prize corresponding to each ticket or whole ticket, without any deduction, provided that the states do not levy a local tax on the income referred to in this paragraph, or the established tax does not exceed 6%. The tax rate referred to in this article will be 21%, in those states that apply a local tax on the income referred to in this paragraph, at a rate that exceeds 6%.

The tax on the prizes of games with bets will be calculated by applying 1% on the total value of the amount to be distributed among all the winning tickets.

The refund corresponding to the ticket that allowed participation in lotteries is not considered as a prize.

The tax will be paid through withholding when the person making the payment is a resident in national territory or a resident abroad with a permanent establishment located in the country, or it will be paid through a declaration at the authorized office within fifteen days after obtaining the income, when the person paying the prize is a resident abroad.

In the case of income obtained by individuals or legal entities, in the exercise of their artistic or sports activities, or from the performance or presentation of public shows, the source of wealth will be considered to be in the national territory when such activity or presentation is carried out in the country.

Services rendered by a resident abroad in connection with the presentation of public performances are considered to include those intended to promote such presentation, including activities performed in national territory as a result of the reputation of the resident abroad as an artist or athlete.

Included in this article is the income obtained by residents abroad who provide services, grant the temporary use or enjoyment of goods or alienate goods, which are related to the presentation of the public, artistic or sports shows referred to in this article. It is presumed, unless there is evidence to the contrary, that the artists, sportsmen or persons who present the public spectacle, have direct or indirect participation in the benefits obtained by the service provider who grants the temporary use or alienates such goods.

The tax will be determined by applying the rate of 25% on the total income obtained without any deduction, and the withholding must be made by the person making the payments, provided that such person is a resident in the country or abroad with a permanent establishment in the country. In all other cases, those who obtain the income for the concepts referred to in this article will calculate the tax and will pay it by means of a declaration that will be filed before the authorized offices corresponding to the place where the show or sporting event was presented, on the following day in which the income was obtained.

Taxpayers that have representatives in the country that meet the requirements established in Article 174 of this Law, may opt to apply the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law, on the amount resulting from reducing the income obtained by the deductions authorized in Title II or Chapter II, Sections I or II of Title IV of this Law, as applicable, that directly affect such income, regardless of the place where they were made. In this case, the representative will calculate the resulting tax and will pay it by means of a declaration to be filed before the authorized offices corresponding to the place where the public, artistic or sports show takes place, within the month following the month in which the show is concluded. This option may only be exercised when the tax interest guarantee is granted for an amount equivalent to the amount corresponding to the tax determined in accordance with the fourth paragraph of this article, no later than the day following the day on which the income was obtained. In the latter case, the withholder shall be released from making the withholding referred to in the preceding paragraph.

Taxpayers receiving income under the terms of this article shall not be subject to the provisions of articles 154 and 156 of this Law for such income.

Article 171. In the case of income taxed under this Title, received by persons, entities that are considered legal entities for tax purposes in their place of residence or that are considered transparent in the same or any other legal entity created or incorporated under foreign law, whose income is subject to a preferential tax regime, will be subject to a withholding at the rate of 40% on such income, without any deduction, instead of the provisions of the other provisions of this Title. The tax referred to in this paragraph will be paid through withholding when the person making the payment is a resident in Mexico or a resident abroad with a permanent establishment in the country.

The provisions of the preceding paragraph will not be applicable to income from dividends and profits distributed by legal entities or interest paid to foreign banks and interest paid to residents abroad, derived from the placement of securities referred to in Article 8 of this Law, as well as the securities placed abroad, provided for in article 166 of the same Law, in which case they will be subject to the provisions of articles 10, 77 and 166 sections I and II and last paragraph of this last precept, as applicable, provided that the requirements set forth in said provisions are complied with.

Amended paragraph DOF 18-11-2015

In the case of brokerage income subject to preferential tax regimes obtained by residents abroad, the source of wealth is considered to be in Mexican territory when the person making the payment is a resident of Mexico or is a permanent establishment of a resident abroad. Payments for commissions, brokerage, agency, distribution, consignment or estimation and, in general, income from the management of other people's interests are considered to be income from mediations.

For purposes of the preceding paragraph, the tax will be calculated by applying the rate of 40% on the income obtained, without any deduction, and the person making the payments must make the withholding. Such withholding must be paid by means of a declaration to be filed within fifteen days following the date of the transaction before the offices authorized by the tax authorities.

Taxable income, in addition to those indicated in this Title, shall be considered as taxable income:

I. The amount of debts forgiven by the creditor or paid by another person. In this case, the source of wealth is considered to be in Mexican territory when the creditor that forgives the debt is a resident in the country or a resident abroad with a permanent establishment in Mexico.

II. Those obtained by granting the right to participate in a business, investment or any payment to celebrate or participate in legal acts of any nature. In this case, the source of wealth is considered to be in Mexican territory when the business, investment or legal act is carried out in the country, provided that it is not a contribution to the capital stock of a legal entity.

III. Those derived from indemnifications for damages and income derived from penalty clauses or conventional penalties. In this case, the source of wealth is considered to be in Mexican territory when the person making the payment of the income referred to in this section is a resident in Mexico or a resident abroad with a permanent establishment in the country.

When a judgment or arbitration award orders to make compensation payments, without distinguishing whether such payment corresponds to damages or losses, the person making the payments must withhold income tax calculated on the basis of the total compensation paid to the foreign resident. In this case, the resident abroad may request a refund of the tax withheld in excess, in the case of compensation for damages, provided that he proves which part of the payment corresponds to compensation for damages and which part to compensation for losses.

Reformed fraction DOF 12-11-2021

IV. Those derived from the alienation of the commercial credit. It will be considered that the source of wealth is in the national territory when the commercial credit is attributable to a person resident in the country or to a resident abroad with a permanent establishment located in the country.

For the purposes of this section, it will be considered that there is a source of wealth in Mexican territory when the resident abroad disposes of assets used by a resident in Mexico or by a resident abroad with a permanent establishment in Mexico, provided that the consideration derived from the disposal exceeds the market price of such assets. The difference between the market price of the assets at the date of transfer of ownership and the total amount of the agreed consideration, when the latter is higher, will be presumed to be income derived from the sale of the commercial credit, unless there is evidence to the contrary. The tax authorities may perform an appraisal to determine the market price of the assets owned by the foreign resident and in the event that such appraisal is less than 10% of the market price considered by the taxpayer to determine the tax, the difference will be considered income for the purposes of this article.

The provisions of this section shall not apply to the gain on the disposal of shares.

The tax referred to in this Article shall be calculated by applying to the income, without any deduction, the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law. In the case of Section I above, the tax shall be calculated on the total amount of the debt forgiven, and the creditor who forgives the debt shall make the payment, by means of a declaration to be filed with the authorized offices on the day following the day on which such forgiveness is made.

In the case of the income referred to in section II of this article, the tax will be calculated on the gross amount of the agreed consideration, and in the case of the income referred to in section III of this article, it will be determined on the gross amount of the indemnities or payments derived from penalty or conventional clauses.

In the case of the income referred to in section IV of this article, the tax will be calculated on the gross amount of the agreed consideration. In the case provided for in the second paragraph of the aforementioned section, the tax will be calculated on the difference between the total amount of the agreed consideration and the value of the assets on the date on which the property is transferred, according to the appraisal made by a person authorized by the tax authorities, as the case may be.

With respect to the income mentioned in sections II, III and IV of this article, the tax will be paid through withholding by the person making the payment if he/she is a resident in the country or a resident abroad with a permanent establishment in Mexico. Otherwise, the taxpayer will pay the corresponding tax by means of a declaration that will be filed before the authorized offices within fifteen days following the receipt of the income.

In the case of income from premiums paid or ceded to reinsurance companies, the source of wealth shall be deemed to be in the national territory when such premiums paid or ceded are paid by a resident in the country or by a resident abroad with a permanent establishment in the country.

The tax will be calculated by applying to the gross amount paid to the foreign resident, without any deduction, the rate of 2%. The tax will be paid through withholding by the person making the payments.

Article 174. The representative referred to in this title must be a resident in the country or a resident abroad with a permanent establishment in Mexico, keep at the disposal of the tax authorities, the supporting documentation related to the payment of the tax on behalf of the taxpayer, for five years from the day following the day on which the tax return was filed, voluntarily assume joint and several liability, which shall not exceed the taxes payable by the resident abroad and have sufficient assets to respond as joint and several obligor, in accordance with the general rules issued by the Tax Administration Service for such purpose.

Amended paragraph DOF 12-11-2021

When the purchaser or the borrower of the work assumes joint and several liability, the representative will cease to be jointly and severally liable; in this case the jointly and severally liable party will have the availability of the documents referred to in this article, when the tax authorities exercise their powers of verification.

Individuals who are taxpayers of the tax referred to in this Title and who, during the calendar year, acquire residence in the country, will consider the tax paid during such year as definitive and will calculate the tax on the income received or payable as of the date on which they acquired residence, in accordance with the terms of Title IV of this Law.

Taxpayers that obtain income of those mentioned in Article 168 of this Law, when due to their activities they establish a permanent establishment in the country, shall file a tax return within three months following the date on which they establish a permanent establishment in the country, calculating the tax in accordance with the terms of Titles II or IV of this Law, as the case may be, and shall make provisional payments as of the following fiscal year to the one in which they establish a permanent establishment in the country.

I. If when they did not constitute a permanent establishment the tax was paid by withholding 25% of the income obtained, they will apply said rate to the accumulated income corresponding to each provisional payment.

II. If when they did not constitute a permanent establishment, they chose to apply the rate established in the first paragraph of Article 9 of this Law, to the amount resulting from deducting from the income obtained the deductions authorized by Title II of this Law, they will determine their provisional payments in accordance with the provisions of Articles 14 or 106 of this Law, as the case may be.

In the case of legal entities, they will begin their tax year on the date on which, due to their activities, they establish a permanent establishment in the country.

For the purposes of this Title, the following shall be considered as income:

I. Salaries and in general for the rendering of a subordinate personal service, those indicated in Article 94 of this Law, except for remuneration to members of boards of directors, supervisory, advisory or any other type, as well as fees to administrators, statutory auditors and general managers.

II. Fees and, in general, for the rendering of a professional service, those indicated in Article 100 of this Law.

III. To grant the temporary use or enjoyment of real estate, those referred to in Article 114 of this Law.

IV. Disposal of property, those derived from the acts mentioned in Article 14 of the Federal Fiscal Code, including in the case of expropriation.

V. Prizes derived from lotteries, raffles, drawings or games with bets and contests of any kind, those mentioned in Article 137 of this Law.

VI. Business activities, income derived from the activities referred to in Article 16 of the Federal Fiscal Code. The income referred to in articles 153 to 173 of this Law is not considered to be included.

VII. Interest, as provided for in Articles 163 and 166 of this Law, which are considered to be credit yields of any nature.

The provisions of sections II, III and V of this article are also applicable to legal entities.

TITLE VI

OF CONTROLLED FOREIGN ENTITIES SUBJECT TO PREFERENTIAL TAX REGIMES, OF MULTINATIONAL COMPANIES AND OF TRANSACTIONS BETWEEN RELATED PARTIES

Title Title title amended DOF 09-12-2019, 12-11-2021

CHAPTER I

OF CONTROLLED FOREIGN ENTITIES SUBJECT TO PREFERENTIAL TAX REGIMES

Title of the Chapter amended DOF 09-12-2019

Residents in Mexico and residents abroad with a permanent establishment in Mexico are required to pay the tax in accordance with the provisions of this Chapter, on income subject to preferential tax regimes that they obtain through foreign entities in which they participate, directly or indirectly, in the proportion that corresponds to them due to their participation in them.

The income referred to in this Chapter is the income generated in cash, goods, services or credit by foreign entities and that which has been presumptively determined by the tax authorities, even if such income has not been distributed by them to the taxpayers of this Chapter.

For purposes of this Law, income subject to preferential tax regimes will be considered to be income that is not taxed abroad or is taxed at an income tax rate lower than 75% of the income tax that would be incurred and paid in Mexico, under the terms of Titles II or IV of this Law, as applicable. The tax on dividends referred to in the second paragraph of Article 140, or in the second paragraph of Section V of Article 142 of this Law, will not be considered when determining the income subject to preferential tax regimes. Neither will the annual adjustment for inflation be considered, nor the exchange gains or losses derived from the fluctuation of the foreign currency with respect to the domestic currency.

Amended paragraph DOF 12-11-2021

Income will be considered to be subject to a preferential tax regime when the income tax actually incurred and paid in the country or jurisdiction in question is lower than the tax incurred in Mexico under the terms of this article due to the application of a legal, regulatory or administrative provision, a resolution, authorization, refund, crediting or any other procedure.

In order to determine whether the income is subject to preferential tax regimes under the terms of the preceding paragraphs, the profit or loss generated by all the operations carried out in the calendar year by each foreign entity will be considered. If there is an interest in two or more foreign entities resident in the same country or jurisdiction, and these entities consolidate for tax purposes in their country of residence, the determination may be made on a consolidated basis under the terms of the general rules issued for such purpose by the Tax Administration Service. For purposes of other Chapters of this Law, the aforementioned determination will be made for each transaction.

In order to make the determination indicated in the preceding paragraphs, all income taxes paid by the foreign entity will be considered, regardless of whether such taxes are paid in a country or jurisdiction other than that of its residence or at different levels of government. A tax is not considered to have been paid, among others, when it was paid through the crediting of income taxes or tax incentives.

If income generated by a foreign entity in a calendar year is subject to a preferential tax regime and such income is distributed to another foreign entity, the determination to be made in accordance with the preceding paragraphs may consider the amount of tax paid by the second entity corresponding to such income. The provisions of this paragraph will only be applicable if the distribution is made in the same calendar year in which the income was generated or within the six months following the end of such year, and in this same period such tax has been paid.

Instead of comparing the tax paid by the foreign entity against the tax that would be caused and paid in Mexico in accordance with the preceding paragraphs, the taxpayer may compare the statutory income tax rate of the country or jurisdiction of its tax residence, with the rate established in Article 9 of this Law or the maximum rate to be applied on the excess of the lower limit established by the tariff contained in Article 152 of this Law, as applicable. In these cases, income will not be considered subject to preferential tax regimes when such profits are taxed at a rate equal to or greater than 75% of the rates mentioned above, provided that all of its income is taxable, except for dividends received between entities that are residents of the same country or jurisdiction, and that its deductions are or have been actually disbursed, provided that they are accrued or deducted, respectively, at the same times indicated in Titles II or IV of this Law, as the case may be. The provisions of this paragraph will only be applicable if the foreign entity is not subject to any tax credit or benefit in its country or jurisdiction of residence that reduces its taxable income or tax payable that would not be granted in Mexico, and when such country or jurisdiction has a comprehensive information exchange agreement with Mexico. The provisions of this paragraph do not apply when the foreign entity is subject to different statutory rates in its country or jurisdiction of residence. For these purposes, it is presumed, unless there is evidence to the contrary, that the elements set forth in this paragraph are not met.

The provisions of this article shall not be applicable to the income obtained by the taxpayer through a foreign fiscally transparent entity or foreign legal entity in which it has a direct participation, regardless of whether the income of the latter is subject to a preferential tax regime. This article will also not be applicable to the income obtained by the taxpayer through a foreign fiscally transparent entity or foreign legal entity, regardless of whether such income is subject to a preferential tax regime, when its indirect participation in such entity or legal entity is constituted by a structure that integrates exclusively one or several foreign fiscally transparent entities or foreign legal entities. The above is applicable to the income obtained by the taxpayer through each of these entities or legal entities that make up such structure. The cases indicated in this paragraph will be subject to the provisions of Article 4-B of this Law.

The provisions of this article shall apply to the income obtained by a foreign entity through foreign fiscally transparent entities or foreign legal entities in proportion to its participation. When the income generated through the foreign fiscally transparent foreign entities or foreign legal entities has not been accrued by the first foreign entity, the same shall be considered to determine whether the income of the latter is subject to a preferential tax regime. When the foreign transparent entity or foreign legal entity pays income tax on such income, it will be considered for purposes of this determination in the proportion that corresponds to the first foreign entity.

The provisions of this Chapter shall only be applicable when the taxpayer exercises effective control over the foreign entity in question. For these purposes, it will be understood that effective control exists when any of the following events occur:

I. When the taxpayer's average daily participation in the foreign entity allows it to have more than 50% of the total voting rights in the entity, confers it the right of veto in the entity's decisions or its favorable vote is required to make such decisions, or such participation corresponds to more than 50% of the total value of the shares issued by the entity.

II. When by reason of any agreement or security other than those indicated in the preceding section, the taxpayer is entitled to more than 50% of the assets or profits of the foreign entity in the event of any type of capital reduction or liquidation, at any time during the calendar year.

III.In the event that the percentages indicated in the previous fractions are not met, when the sum of both means that the taxpayer has more than 50% of the referred rights.

IV. When the taxpayer and the foreign entity consolidate their financial statements based on the accounting standards applicable to them.

V. When considering the facts and circumstances, or any type of agreement or security, the taxpayer has the right, directly or indirectly, to unilaterally determine the resolutions of the meetings or management decisions of the foreign entity, even through an intermediary.

The provisions of the preceding paragraph will be applicable when the taxpayer has a direct or indirect participation in the entity in question. However, effective control will also be considered to exist for the purposes of sections I, II and III above, when the taxpayer has a direct or indirect participation in the entity in question:

A. Has the right, directly or indirectly, pursuant to Section I to exercise effective control of each of the intermediate foreign entities that separate it from the foreign entity in question;

B. Has the right, directly or indirectly, over more than 50% of the assets or profits of each of the intermediate entities that separate it from the foreign entity in question in the event of any type of capital reduction or liquidation, by reason of any agreement or security other than those indicated in the preceding paragraph; or

C.In the event that the percentages indicated in the previous sections are not met, when the sum of both means that the taxpayer has more than 50% of the referred rights.

For purposes of determining whether effective control exists in accordance with the preceding paragraphs, all rights held by the taxpayer and its related parties and related persons will be considered, regardless of their tax residence or place of incorporation. In the case of related parties and related persons that are residents in Mexico or permanent establishments in Mexican territory of residents abroad, they are obligated to comply with the provisions of this chapter, regardless of the fact that they themselves do not comply with the requirement of having effective control over the foreign entity in question. In the event that the rights are under the control of a legal entity, they are considered to belong to the taxpayer or to a foreign entity in proportion to its participation therein.

It will be considered that there is a relationship between persons if one of them holds positions of management or responsibility in a company of the other, if they are legally recognized as associated in business or if they are the spouse or the person with whom they live in cohabitation or are blood relatives in ascending or descending straight line, collateral or by affinity, up to the fourth degree.

It is presumed, in the absence of evidence to the contrary, that the taxpayer has effective control of the foreign entities that generate income subject to preferential tax regimes.

Income obtained through foreign entities that carry out business activities will not be considered as income subject to the provisions of this Chapter, unless their passive income represents more than 20% of their total income. The provisions of this paragraph will not be applicable when more than 50% of the income of the foreign entity has a source of wealth in Mexican territory or has represented a deduction in Mexico, directly or indirectly.

For the purposes of this Chapter, the following are considered passive income: interest; dividends; royalties; gains on the disposal of shares, securities or intangible assets; gains from derivative financial transactions when the underlying refers to debts or shares; commissions and mediations, as well as income from the sale of assets that are not physically located in the country or jurisdiction where the entity resides or is located and income from services rendered outside such country or jurisdiction, or to persons not residing in such country or jurisdiction, as well as income derived from the sale of real estate, income derived from the granting of the temporary use or enjoyment of assets, as well as income received free of charge.

The tax authorities may authorize the taxpayers of this Chapter not to apply the provisions of this Chapter to passive income generated by foreign entities that are authorized to act as financing entities by the authorities of the country in which they reside, when such income is used to comply with the requirements established for granting loans contracted with persons, figures or entities that are not considered related parties under the terms of Article 179 of this Law and do not generate an authorized deduction for a resident in Mexico.

The authorization referred to in the preceding paragraph shall be subject to the conditions established in the general rules issued by the Tax Administration Service.

When shares are disposed of within the same group, derived from an international restructuring, including mergers and spin-offs, that generate income included in this Chapter, taxpayers may not apply the provisions of this Chapter to such income, provided that the following requirements and documentation are met:

1. File a notice with the tax authorities prior to the restructuring, including the group's organization chart, with the shareholding and a detailed description of all the steps to be taken in the restructuring.

That the restructuring is supported by valid business and economic reasons and motives, without the main motivation of the restructuring being to obtain a tax benefit, to the detriment of the Federal Treasury. The taxpayer must explain in detail the motives and reasons why such restructuring was carried out in the notice referred to in the preceding paragraph.

Submit to the tax authorities, within 30 days after the restructuring is completed, the documents evidencing the completion of the acts included in the restructuring.

That the shares that are part of the restructuring are not disposed of to a person, entity or legal entity that does not belong to such group, within two years after the date on which the restructuring was completed.

For purposes of this Chapter, a group is defined as a group of companies whose voting shares representing capital stock are owned directly or indirectly at least 51% by the same legal entity. The provisions of the preceding paragraph will not be applicable with respect to income generated from the sale of shares that have been issued by a resident in Mexico or when more than 50% of their book value comes directly or indirectly from real estate located in Mexico.

When a foreign entity or foreign entities that consolidate for tax purposes in the same country or jurisdiction are subject to a preferential tax regime due to a difference in the time of accrual of income, deduction of expenses or payment of tax, they may request authorization from the tax authorities for the purpose of not applying the provisions of this Chapter. This authorization may only be granted if such temporary difference does not exceed a period of four years counted as of the tax year in question and if the additional requirements issued for such purpose by the Tax Administration Service by means of general rules are complied with.

Article amended DOF 09-12-2019

For the purposes of this Chapter, the income referred to in Article 176 of this Law will be taxable for the taxpayer in the fiscal year in which it is generated in the proportion of its direct or indirect participation in the foreign entity that receives it, even if it does not distribute it to the taxpayer. Taxpayers must calculate the income tax by applying the corresponding tax rate to the taxable income of the foreign entity.

The tax result of the foreign entity will be determined in accordance with Title II of this Law, without including the annual adjustment for inflation, nor the exchange gain or loss derived from the fluctuation of the foreign currency with respect to the domestic currency. The tax result for the year will be determined in the foreign currency in which the foreign entity must keep its accounting records and must be converted into Mexican pesos at the exchange rate of the last business day of the year-end. The Tax Administration Service may issue general rules for the application of this paragraph.

Amended paragraph DOF 12-11-2021

In the event that a tax loss results, it may only be deducted from the tax profits of subsequent years of the same foreign entity that generated the loss, in accordance with the terms of Article 57 of this Law.

After determining the tax result of the foreign entity, the taxpayer must calculate the same in proportion to its direct or indirect participation in the foreign entity. In order to determine such proportion, the following shall be considered:

I. In the case of having effective control in accordance with section I or section A of Article 176 of this Law, the taxpayer's average direct or indirect daily participation in the foreign entity in the fiscal year in question shall be considered.

II.In case of having effective control in accordance with section II or section B of Article 176 of this Law, the direct or indirect participation that the taxpayer has over the assets and profits of the foreign entity, in case of any type of capital reduction or liquidation, will be considered. In case this percentage has varied during the calendar year, the highest of them will be considered.

III. In case of having effective control in accordance with sections I or II, or sections A or B of article 176 of this Law, or any combination thereof, the taxpayer must add the participations referred to in sections I and II of this article, even if any of them does not generate effective control in accordance with said article.

IV. In case of having effective control in accordance with section III or section C of Article 176 of this Law, the direct or indirect participation that corresponds to the taxpayer in accordance with sections I and II of this Article will be considered.

V.In the event of effective control in accordance with Section IV of Article 176 of this Law, the direct or indirect controlling interest shall be considered in accordance with the applicable accounting standards.

VI.In case of having effective control in accordance with section V of Article 176 of this Law, the average direct or indirect participation per day of the taxpayer over the foreign entity in the fiscal year in question, and the percentage that the taxpayer has over the assets and profits of the foreign entity in case of any type of capital reduction or liquidation by reason of an agreement or security other than shares, will be considered.

If the taxpayer is in more than one of the situations set forth in the preceding paragraph, the highest of them must be considered as the proportion of its direct or indirect participation.

Taxpayers who choose to make the consolidated determination referred to in the fifth paragraph of Article 176 of this Law, may calculate the tax on a consolidated basis for the income considered for such determination.

Taxpayers must have at the disposal of the tax authorities the accounting records of the foreign entities referred to in Article 176 of this Law and file within the corresponding term the informative return referred to in Article 178 of this Law. In case of noncompliance, the total income of the foreign entity will be accrued, without any deduction, in the proportion that corresponds to them for their direct or indirect participation in it.

In the case of taxpayers subject to Title II of this Law, the tax will be determined by applying the rate provided in Article 9 of this Law to the tax result referred to in this Article. In the case of taxpayers subject to Title IV of this Law, the tax will be determined by applying the maximum rate to be applied on the excess of the lower limit established in the rate contained in Article 152 of this Law.

The taxable income referred to in this article will be determined each calendar year and will not be accumulated with the taxpayer's other income, including for the purposes of articles 14, 106, 144 and 145 of this Law, as applicable. The tax resulting from such income shall be paid together with the annual tax return.

Income taxes paid by foreign entities on income subject to preferential tax regimes, in Mexico and abroad, may be credited against the income tax incurred in accordance with this Chapter under the same terms as Article 5 of this Law. The amount of the creditable tax will be determined in the same proportion that the tax result is determined in terms of the fourth paragraph of this Article. The provisions of this paragraph do not include the tax paid by other foreign entities or legal entities, unless the income of the latter has been included as income of the foreign entity in question for purposes of the determination indicated in Article 176 of this Law and for the calculation of the tax result in accordance with this Article.

Additionally, the income tax paid by a foreign entity by virtue of the application of foreign tax provisions similar to those contained in this Chapter will be creditable, provided that the taxpayer has a direct or indirect shareholding interest in the entity making the payment. The provisions of this paragraph shall be subject to the provisions of Article 5 of this Law.

The taxpayer must keep an account for each of the foreign entities in which it participates that generate the income referred to in Article 176 of this Law. This account will be added with the tax profit or the tax result of each fiscal year of the foreign entity that corresponds to the taxpayer for its participation in it that has already paid the tax referred to in this article, subtracting from the amount of the same, the creditable tax in accordance with the preceding paragraph, and will be decreased with the income, dividends or profits that the foreign entity distributes to the taxpayer. In the event that the foreign entity subject to a preferential tax regime in question pays the tax indicated in this Chapter in the name and on behalf of the taxpayer, the tax effectively paid by the latter must also be deducted from this account, without this generating an accruable income to the taxpayer. When the balance of this account is less than the amount of dividends or profits distributed to the taxpayer, the tax must be paid for the difference by applying the rate provided in Article 9 of this Law, or the maximum rate to be applied on the excess of the lower limit established in the tariff contained in Article 152 of this Law, as applicable.

The balance of the account provided for in the preceding paragraph, as of the last day of each year, not including the tax profit or the tax result of the year itself, will be restated for the period from the month in which the last restatement was made until the last month of the year in question. When the taxpayer receives profits or dividends after the restatement provided for in this paragraph, the balance of the account as of the date of the distribution will be restated for the period from the month in which the last restatement was made until the month in which the income, dividends or profits are distributed.

Dividends or profits received by corporations resident in Mexico, reduced by the income tax paid on them under the terms of this article, will be added to the net taxable income account referred to in article 77 of this Law of such persons.

Notwithstanding the preceding paragraphs, when individual taxpayers obtain dividends or profits from the foreign entities contemplated in this Chapter, they must pay the additional tax referred to in Article 142, Section V, second paragraph of this Law.

When the taxpayer disposes of shares of the foreign entity or its participation therein, the gain will be determined under the terms of the third paragraph of Article 22 of this Law. The taxpayer may choose to apply the provisions of Article 22 of the same Law, as if they were shares issued by legal entities resident in Mexico.

In the case of income derived from the liquidation or reduction of the capital of the foreign entities referred to in this article, the taxpayer must determine the taxable income under the terms of article 78 of this Law. For these purposes, the taxpayer will maintain a capital contribution account which will be added with the capital contributions and net premiums for share subscription made by each shareholder and will be reduced with the capital reductions made to each shareholder.

The balance of the account referred to in the preceding paragraph as of the closing date of each year will be restated for the period from the month in which the last restatement was made until the closing month of the year in question. When contributions or capital reductions are made after the restatement provided for in this paragraph, the balance of the account held at that date will be restated for the period from the month in which the last restatement was made until the month in which the contribution or reimbursement is paid, as the case may be.

The restated contribution capital per share will be determined by dividing the balance of the contribution capital account of each shareholder, as referred to in this article, by the total number of shares held by each shareholder of the corporation as of the date of reimbursement, including those corresponding to the reinvestment or capitalization of profits or any other item comprising the stockholders' equity of the corporation.

The accounting of the taxpayers related to the income referred to in this Chapter must meet the requirements established in paragraph a) of section XVII of Article 76 of this Law and must be available to the tax authorities. For the purposes of this Chapter, it is considered that the taxpayer has at the disposal of the tax authorities the accounting of the foreign entities referred to in the first paragraph of Article 176 of this Law, when it must provide it to said authority when exercising its verification powers.

For the purposes of this Law, the tax authorities may, as a result of the exercise of the verification powers granted to them by law, determine the simulation of legal acts exclusively for tax purposes, which must be duly founded and motivated within the verification procedure and its existence must be declared in the same act of determination of its tax situation referred to in Article 50 of the Federal Tax Code, provided that they are transactions between related parties in terms of Article 179 of this Law.

In legal acts in which there is simulation, the taxable event taxed will be the one actually carried out by the parties.

The resolution in which the authority determines the simulation shall include the following:

a) Identify the simulated act and the act actually executed.

b) To quantify the tax benefit obtained by virtue of the simulation.

c) Indicate the elements by which the existence of such simulation was determined, including the intention of the parties to simulate the act.

For purposes of proving the simulation, the authority may rely, among others, on presumptions.

In cases where simulation is determined in the terms of the four preceding paragraphs, the taxpayer will not be required to file the return referred to in Article 178 of this Law.

Article amended DOF 09-12-2019

The taxpayers of this Title, in addition to the obligations established in other articles of this Law, must file in the month of February of each year, before the authorized offices, an informative declaration on the income they have generated or generated in the immediately preceding fiscal year subject to preferential tax regimes, or in companies or entities whose income is subject to such regimes, corresponding to the immediately preceding fiscal year, accompanying the account statements for deposits, investments, savings or any other, or if applicable, the documentation established by general rules established by the Tax Administration Service. For the purposes of this article, both deposits and withdrawals are considered as income subject to preferential tax regimes. The declaration referred to in this article will be used only for tax purposes.

Notwithstanding the provisions of this Chapter, taxpayers that generate income of any kind from any of the territories indicated in the transitory provisions of this Law, as well as those that carry out operations through foreign tax transparent entities and foreign legal entities referred to in Article 4-B of the same, must file the informative declaration foreseen in the preceding paragraph, without this fact alone being considered as generating income subject to preferential tax regimes, unless they are located in any of the cases foreseen in article 176 of this Law, or when they do not comply with the filing of the informative declaration referred to in this paragraph.

Amended paragraph DOF 09-12-2019

The owner and co-owners of the income referred to in the first paragraph of this article will be the ones who must file the aforementioned declaration and the financial institutions will only be relieved from filing the same, provided that they keep a copy of the declaration filed in due time and form by the owner and co-owners of the income subject to a preferential tax regime.

It is considered that the taxpayer omitted to file the return referred to in this article, when it does not contain the information related to the totality of the income that the taxpayer has generated or generates subject to preferential tax regimes corresponding to the immediately preceding fiscal year.

CHAPTER II

OF MULTINATIONAL COMPANIES AND RELATED-PARTY TRANSACTIONS

Title of the Chapter amended DOF 12-11-2021

The taxpayers of Titles II and IV of this Law that enter into transactions with related parties are obligated, for purposes of this Law, to determine their accumulated income and authorized deductions, considering for those transactions the prices, amounts of consideration or profit margins that they would have used or obtained with or between independent parties in comparable transactions.

Amended paragraph DOF 12-11-2021

Otherwise, the tax authorities may determine the taxpayers' taxable income and authorized deductions by determining the price, amount of the consideration or profit margin in transactions between related parties, considering for such transactions the prices, amounts of consideration or profit margins that independent parties would have used or obtained in comparable transactions, whether with corporations, residents in the country or abroad, individuals and permanent establishments in the country of residents abroad, as well as in the case of activities carried out through trusts.

Amended paragraph DOF 12-11-2021

For the purposes of this Law, it is understood that the operations or companies are comparable when there are no differences between them that significantly affect the price or amount of the consideration or the profit margin referred to in the methods established in Article 180 of this Law, and when differences exist, these are eliminated by means of reasonable adjustments. To determine such differences, the relevant elements required will be taken into account, according to the method used, considering, among others, the following:

Amended paragraph DOF 12-11-2021

I. The characteristics of the operations, including:

a) In the case of financing operations, elements such as the principal amount, term, guarantees, solvency of the debtor and interest rate.

b) In the case of provision of services, elements such as the nature of the service, and whether or not the service involves technical expertise or knowledge.

c) In the case of use, enjoyment or disposal of tangible assets, elements such as the physical characteristics, quality and availability of the asset.

d) In the event that the exploitation is granted or an intangible asset is transferred, elements such as whether it is a patent, trademark, trade name or technology transfer, the duration and degree of protection.

e) In the case of disposal of shares, elements such as the restated stockholders' equity of the issuer, the present value of projected earnings or cash flows or the stock market price of the last event on the date of disposal of the issuer will be considered.

II. The functions or activities, including the assets used and risks assumed in the operations, of each of the parties involved in the operation.

III. The contractual terms.

IV. The economic circumstances.

V. Business strategies, including those related to market penetration, permanence and expansion.

Only when the business cycles or commercial acceptance of a taxpayer's product cover more than one fiscal year, information from comparable operations corresponding to two or more prior or subsequent fiscal years may be considered.

Amended paragraph DOF 12-11-2021

Two or more persons are considered related parties when one participates directly or indirectly in the management, control or capital of the other, or when a person or group of persons participates directly or indirectly in the management, control or capital of such persons. In the case of joint ventures, their members are considered related parties, as well as the persons who, in accordance with this paragraph, are considered related parties of such member.

Related parties of a permanent establishment are considered to be the parent company or other permanent establishments of the same, as well as the persons mentioned in the preceding paragraph and their permanent establishments.

Unless there is evidence to the contrary, it is presumed that transactions between Mexican residents and companies or entities subject to preferential tax regimes are between related parties in which the prices and amounts of consideration are not agreed upon in accordance with those that would have been used by independent parties in comparable transactions.

For the interpretation of the provisions of this Chapter, the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, approved by the Council of the Organization for Economic Cooperation and Development in 1995, or those that replace them, shall be applicable to the extent that they are consistent with the provisions of this Law and the treaties entered into by Mexico.

For the purposes of the provisions of Article 179 of this Law, taxpayers shall apply the following methods:

I. Comparable uncontrolled price method, which consists of considering the price or amount of consideration that would have been agreed with or between independent parties in comparable transactions.

II. Resale price method, which consists of determining the acquisition price of a good, the rendering of a service or the consideration for any other transaction between related parties, by multiplying the resale price, or the price of the rendering of the service or the transaction in question by the result of subtracting from the unit, the gross profit percentage that would have been agreed with or between independent parties in comparable transactions. For the purposes of this section, the gross profit percentage shall be calculated by dividing the gross profit by the net sales.

III. Added cost method, which consists of determining the sales price of a good, the rendering of a service or the consideration for any other transaction, between related parties, by multiplying the cost of the good, service or transaction in question by the result of adding to the unit the percent of gross profit that would have been agreed with or between independent parties in comparable transactions. For the purposes of this section, the gross profit percent shall be calculated by dividing the gross profit by the cost of sales.

IV. Profit sharing method, which consists of allocating the operating profit obtained by related parties, in the proportion that would have been allocated with or between independent parties, as follows:

a) The global operating profit will be determined by adding the operating profit obtained by each of the related parties involved in the operation.

b) The overall operating profit will be allocated to each of the related parties considering elements such as assets, costs and expenses of each of the related parties, with respect to the transactions between such related parties.

V. Residual method of profit sharing, which consists of allocating the operating profit obtained by related parties, in the proportion that would have been allocated with or between independent parties as follows:

a) The global operating profit will be determined by adding the operating profit obtained by each of the related parties involved in the operation.

b) The overall operating income will be allocated as follows:

The minimum profit corresponding to each of the related parties, if any, shall be determined by applying any of the methods referred to in sections I, II, III, IV and VI of this article, without taking into account the use of significant intangibles.

The residual profit will be determined, which will be obtained by decreasing the minimum profit referred to in paragraph 1 above, from the overall operating profit. This residual profit shall be distributed among the related parties involved in the transaction taking into account, among other elements, the significant intangibles used by each of them, in the proportion in which it would have been distributed with or among independent parties in comparable transactions.

VI. Transactional operating profit margin method, which consists of determining in transactions between related parties, the operating profit that would have been obtained by comparable companies or independent parties in comparable transactions, based on profitability factors that take into account variables such as assets, sales, costs, expenses or cash flows.

From the application of any of the methods indicated in this article, a range of prices, amounts of consideration or profit margins may be obtained, when there are two or more comparable transactions. These ranges will be adjusted by applying the interquartile method established in the Regulations of this Law, the method agreed upon within the framework of a friendly procedure indicated in the treaties to avoid double taxation to which Mexico is a party or the method authorized in accordance with the general rules issued for such purpose by the Tax Administration Service. If the price, amount of the consideration or profit margin of the taxpayer is within these ranges, such prices, amounts or margins will be considered as agreed or used between independent parties. If the taxpayer is outside the adjusted range, the price or amount of consideration used by independent parties will be considered to be the median of such range.

Amended paragraph DOF 12-11-2021

Taxpayers must first apply the method provided for in Section I of this Article, and may only use the methods indicated in Sections II, III, IV, V and VI of this Article, when the method provided for in Section I is not appropriate to determine that the transactions carried out are at market prices in accordance with the Transfer Pricing Guides for Multinational Enterprises and Tax Administrations referred to in the last paragraph of Article 179 of this Law.

For purposes of the application of the methods set forth in sections II, III and VI of this article, it will be considered that the methodology is complied with, provided that it is demonstrated that the cost and sales price are at market prices. For these purposes, market prices will be understood as the prices and amounts of consideration used with or between independent parties in comparable transactions or when the taxpayer has been granted a favorable ruling under the terms of Article 34-A of the Federal Tax Code. It must be demonstrated that the method used is the most appropriate or the most reliable according to the information available, and preference must be given to the methods provided in sections II and III of this article.

For the purposes of this article and article 179 of this Law, income, costs, gross profit, net sales, expenses, operating profit, assets and liabilities will be determined based on financial reporting standards.

Article 181. A resident abroad will not be considered to have a permanent establishment in the country, derived from the relationships of a legal or economic nature that they maintain with companies that carry out maquila operations, that habitually process in the country, goods or merchandise maintained in the country by the resident abroad, using assets provided, directly or indirectly, by the resident abroad or any related company, provided that Mexico has entered into, with the country of residence of the resident abroad, a treaty to avoid double taxation and the requirements of the treaty are met, including the amicable agreements entered into pursuant to the treaty in the form in which they have been implemented by the parties to the treaty, in order for the resident abroad to be considered as not having a permanent establishment in the country. The provisions of this article will only be applicable as long as the companies that carry out maquila operations comply with the provisions of article 182 of this Law.

For the purposes of this article, a maquila operation is considered to be that which complies with the following conditions:

I. That the goods supplied by the resident abroad under a maquila contract under a Maquila Program authorized by the Ministry of Economy, which are subject to a transformation or repair process, are temporarily imported and returned abroad, including through virtual operations, carried out in accordance with the provisions of the Customs Law and the general rules issued for such purpose by the Tax Administration Service (Servicio de Administración Tributaria). For the purposes of the provisions of this section, the return abroad of shrinkage and waste is not required.

The goods referred to in this section may only be owned by a third party resident abroad when it has a commercial manufacturing relationship with the foreign resident company, which in turn has a maquila contract with the company that performs the maquila operation in Mexico, provided that such goods are supplied as a result of such commercial relationships.

For the purposes of this fraction, it is considered as transformation, the processes carried out with the goods consisting of: dilution in water or other substances; washing or cleaning, including the removal of rust, grease, paint or other coatings; the application of preservatives, including lubricants, protective encapsulation or paint for preservation; adjusting, filing or cutting; conditioning in doses; packing, repacking, wrapping or repackaging; testing; and marking, labeling or classification, as well as the development of a product, except in the case of trademarks, commercial notices and trade names.

II. That the totality of its income from its productive activity comes exclusively from its maquila operation.

III. That when the companies with a Program that carry out the transformation or repair processes referred to in section I of this article, incorporate in their productive processes national or foreign merchandise that is not temporarily imported, such merchandise must be exported or returned together with the merchandise that has been temporarily imported.

IV. That the transformation or repair processes referred to in section I of this article are carried out with machinery and equipment owned by the resident abroad with which the companies with the Program have entered into the maquila contract, provided that they have not been owned by the company that carries out the maquila operation or by another company resident in Mexico to which it is a related party.

The transformation and repair process may be complemented with machinery and equipment owned by a third party resident abroad that has a commercial manufacturing relationship with the foreign resident company that in turn has a maquila contract with the company that carries out the maquila operation in Mexico, provided that such goods are supplied as a result of such commercial relationship, or are owned by the company that carries out the maquila operation or with machinery and equipment leased to a non-related party. In no case may the aforementioned machinery or equipment have been owned by another company resident in Mexico of which the company performing the maquila operation is a related party.

The provisions of this section will be applicable provided that the foreign resident with whom the maquila agreement is entered into owns at least 30% of the machinery and equipment used in the maquila operation. The aforementioned percentage will be calculated in accordance with the general rules issued by the Tax Administration Service for such purpose.

The transformation or repair of merchandise whose sale is carried out in Mexican territory and is not covered by an export customs declaration shall not be considered a maquila operation; therefore, the provisions of Article 182 of this Law shall not be applicable.

For the purposes of Article 181 of this Law, it will be considered that the companies that carry out maquila operations comply with the provisions of Articles 179 and 180 of the Law and that the persons residing abroad for whom they act do not have a permanent establishment in the country, when the maquiladora companies determine their taxable income as the greater amount resulting from applying the following:

I. 6.9% on the total value of the assets used in the maquila operation during the fiscal year, including those owned by the person resident in the country, by residents abroad or by any of their related parties, even when they have been granted in temporary use or enjoyment to such maquiladora.

It is understood that the assets are used in the tolling operation when they are located in Mexican territory and are used in whole or in part in the tolling operation.

The assets referred to in this section may be considered only in the proportion in which they are used, provided they are authorized by the tax authorities.

a) A person resident in Mexico may exclude from the calculation referred to in this section the value of assets leased to it by related parties resident in Mexico or by non-related parties resident abroad, provided that the leased assets have not been owned by it or by its related parties resident abroad, except when the disposal of such assets has been agreed in accordance with articles 179 and 180 of this Law.

The value of the assets used in the maquila operation, owned by the person resident in the country, will be calculated in accordance with the procedure established by the Tax Administration Service through general rules.

The value of fixed assets and inventories owned by foreign residents, used in the transaction in question, will be calculated in accordance with the following:

The value of inventories of raw materials, semi-finished and finished products, by adding the monthly averages of such inventories for all the months of the year and dividing the total by the number of months in the year. The monthly average of inventories will be determined by adding such inventories at the beginning and at the end of the month and dividing the result by two. The inventories at the beginning and end of the month must be valued in accordance with the method that the resident person in the country has implemented based on the value of such inventories recorded in the accounting of the owner of the inventories at the time they were imported into Mexico. Such inventories will be valued in accordance with accounting principles generally accepted in the United States of America or the accounting principles generally accepted internationally when the owner of the goods resides in a country other than the United States of America. In the case of the value of semi-finished or finished products processed by the person residing in the country, the value will be calculated considering only the value of the raw material.

When the monthly averages referred to in the preceding paragraph are denominated in U.S. dollars, the person residing in the country must convert them into local currency, applying the exchange rate published in the Official Gazette of the Federation in effect on the last day of the corresponding month. In the event that Banco de México has not published such exchange rate, the last exchange rate published in the Official Gazette of the Federation prior to the closing date of the month will be applied. When the referred amounts are denominated in a foreign currency other than U.S. dollars, the aforementioned exchange rate must be multiplied by the equivalent in U.S. dollars of the currency in question, according to the table published by Banco de México in the month immediately following the month to which the import corresponds.

The value of fixed assets will be the amount pending deduction, calculated in accordance with the following:

i) The original amount of the investment will be considered to be the amount of the acquisition of such assets by the resident abroad.

ii) The amount pending deduction will be calculated by decreasing from the original amount of the investment, determined in accordance with the provisions of the preceding subsection, the amount resulting from applying to the latter amount the maximum authorized percentages provided in Articles 34, 35, 36, 37 and other applicable articles of this Law, as applicable to the asset in question, without in any case being able to apply the provisions of Article 51 of the Income Tax Law in force until 1998 or Article 220 of the aforementioned Law in force until December 31, 2013. For purposes of this subsection, the deduction must be considered for complete months, from the date on which they were acquired until the last month of the first half of the fiscal year for which the taxable income is determined. When the good in question has been acquired during said fiscal year, the deduction will be considered for complete months, from the date of acquisition of the good until the last month of the first half of the period in which the good has been destined to the operation in question in the referred fiscal year.

In the case of the first and last fiscal year in which the asset is used, the average value of the asset will be determined by dividing the aforementioned result by twelve and the quotient will be multiplied by the number of months in which the asset has been used in such fiscal years.

The amount pending deduction calculated in accordance with this item for assets denominated in U.S. dollars will be converted to Mexican pesos using the exchange rate published in the Official Gazette of the Federation in effect on the last day of the last month corresponding to the first half of the fiscal year in which the asset was used. In the event that Banco de México has not published such exchange rate, the last published exchange rate will be applied. The conversion to U.S. dollars referred to in this paragraph, of securities denominated in other foreign currencies, will be made using the equivalent in U.S. dollars of the latter currency in accordance with the table published monthly by Banco de México during the first week of the month immediately following the month to which it corresponds.

iii) In no case shall the amount pending deduction be less than 10% of the acquisition amount of the assets.

The person resident in the country may choose to include expenses and deferred charges in the value of the assets used in the maquila operation.

The persons resident in the country must have at the disposal of the tax authorities the corresponding documentation in which, as the case may be, the values set forth in paragraphs 1 and 2 of section I of this article are included. It will be considered that the obligation to have the aforementioned documentation at the disposal of the tax authorities is complied with when it is provided to said authorities, if applicable, within the terms indicated in the tax provisions.

II. 6.5% on the total amount of operating costs and expenses of the operation in question, incurred by the person resident in the country, determined in accordance with financial reporting standards, including those incurred by residents abroad , except for the following:

The value corresponding to the acquisition of merchandise, as well as raw materials, semi-finished or finished products, used in the maquila operation, carried out by residents abroad on their own account, shall not be included.

The deduction of investments of fixed assets, expenses and deferred charges owned by the maquiladora company, destined to the maquila operation, will be calculated applying the provisions of this Law.

The effects of inflation as determined by financial reporting standards should not be considered.

Financial expenses should not be considered .

Extraordinary or non-recurring operating expenses should not be considered in accordance with financial reporting standards. Extraordinary expenses are not considered to be those for which reserves and provisions have been created under the terms of the financial reporting standards and for which the maquiladora company has liquid funds expressly earmarked for their payment. When the taxpayers have not created the aforementioned reserves and provisions and for which the maquiladora company has liquid funds expressly for their payment, the payments made for the items for which the aforementioned reserves or provisions should have been created will not be considered as extraordinary expenses.

The items referred to in this item shall be considered at their historical value without inflation restatement, except for the provisions of item 2 of this section.

For the purposes of this section, only expenses incurred abroad by residents abroad for services directly related to the maquila operation should be considered, for disbursements made on behalf of the person resident in the country to cover own obligations incurred in national territory, or disbursements of expenses incurred by residents abroad for subordinate personal services rendered in the maquila operation, when the stay of the service provider in national territory is greater than 183 calendar days, consecutive or not, in the last twelve months, under the terms of article 154 of this Law.

For the purposes of the calculation referred to in the preceding paragraph, the amount of the expenses incurred by residents abroad for subordinated personal services related to the maquila operation, which are rendered or used in Mexican territory, must include the total salary paid in the tax year in question, including any of the benefits indicated in the general rules issued for such purpose by the Tax Administration Service, granted to the individual.

When the individual rendering the subordinated personal services is a resident abroad, instead of applying the provisions of the preceding paragraph, the expenses referred to in the aforementioned paragraph may be considered on a proportional basis. To obtain this proportion, the total amount of the salary received by the individual in the fiscal year in question will be multiplied by the quotient resulting from dividing the number of days that said individual has remained in Mexican territory by 365. The number of days that the individual remains in Mexican territory will be considered as those in which he/she has a physical presence in the country, as well as Saturdays and Sundays for every 5 working days of stay in Mexican territory, vacations when the individual in question has remained in the country for more than 183 days in a period of 12 months, short work interruptions, as well as sick leave.

Reform DOF 12-11-2021: Repealed the then fifth paragraph of the section.

Companies with a maquila program that apply the provisions of this article must file annually before the tax authorities, no later than June of the year in question, an informative declaration of their maquila operations in which it is reflected that the tax profit of the fiscal year represented, at least, the greater amount resulting from applying the provisions of sections I and II of this article, in terms of what is established by the Tax Administration Service by means of general rules. In the event that the tax return is not filed or does not reflect the provisions of this paragraph, the provisions of this article cannot be applied.

Amended paragraph DOF 12-11-2021

Persons resident in the country who have chosen to apply the provisions of this article shall be exempted from the obligation to file the information return referred to in section X of article 76 of this Law, only for the maquila operation.

The persons resident in the country that carry out, in addition to the maquila operation referred to in article 181 of the present Law, activities other than the latter, may benefit from the provisions of this article only for the maquila operation.

Reform DOF 12-11-2021: Repealed the then third paragraph of the article (previously reformed DOF 08-12-2020).

Residents abroad who directly or indirectly provide raw materials, machinery or equipment to carry out maquila activities through companies with a maquila program under the shelter program authorized by the Ministry of Economy will not be considered to have a permanent establishment in the country, provided that such residents abroad are not related parties of the company with a maquila program under the shelter program in question, nor of a related party of such company.

The provisions of this article shall be applicable provided that residents abroad, through the companies with a maquila program under the shelter modality with which they carry out maquila operations, comply, in addition to the obligations established in the tax and customs provisions, with the following:

I. Apply for registration in the Federal Taxpayers Registry without tax obligations.

II. To file provisional payment returns and annual returns, in accordance with the provisions of this Law and the rules issued by the Tax Administration Service for such purposes.

III. File annually with the tax authorities, no later than June of the following year, an informative declaration of its maquila operations in terms established by the Tax Administration Service by means of general rules.

IV. To file a notice before the Tax Administration Service when they cease to perform the activities under the terms referred to in this article, within the month following the occurrence of such event.

For the purposes of this article, the tax jurisdiction of the foreign resident must have in force a comprehensive information exchange agreement with Mexico, without prejudice to compliance with the requirements contained in the applicable international instrument.

In no case, foreign residents may alienate products manufactured in Mexico that are not covered by an export customs declaration, nor may they alienate to the company with a maquila program under the shelter modality, machinery, equipment, tools, molds and dies and other similar fixed assets and inventories, owned by them, their related parties resident abroad or foreign clients, neither before nor during the period in which the provisions of this article apply.

Article amended DOF 09-12-2019

Article 183-Bis. For the purposes of Article 183 of this Law, companies with a maquila program under the shelter modality must comply with the following:

I. Identify the operations and determine the taxable income corresponding to each of the foreign residents referred to in Article 183 of this Law, in accordance with the greater amount resulting from comparing the provisions of Article 182, Sections I and II of this Law, for each of the aforementioned foreign residents, for purposes of determining and paying the tax resulting from applying to such income the rate set forth in Article 9 of this Law.

Amended paragraph DOF 12-11-2021

For purposes of the preceding paragraph, the determination of taxable income will consider only the fixed assets and inventories of raw materials used in the maquila operation, as well as the costs and expenses attributable to the maquila operation in Mexico corresponding to each resident abroad.

II. Maintain at the disposal of the tax authorities the documentation that proves that the information of the companies of residents abroad is duly identified individually by each one of such companies in the accounting of the company with a maquila program under the shelter modality, during the term established in Article 30 of the Federal Tax Code.

Companies with a maquila program under the shelter modality will be jointly and severally liable for the calculation and payment of the tax determined on behalf of the resident abroad, in terms of article 26, section VIII of the Federal Tax Code.

The provisions of Articles 181 and 182 of this Law shall not apply to companies with a maquila program under the shelter modality that apply the provisions of Article 183 of this Law, except for the provisions of Section I of this Article.

When a company with a maquila program under the shelter modality fails to comply with any of the obligations set forth in the preceding sections, the Tax Administration Service will request such company to clarify, within a term not to exceed 30 calendar days, whatever it deems appropriate regarding the non-compliance.

In the event that the company with a maquila program under the shelter modality does not remedy the noncompliance within the term set forth in the preceding paragraph, said company will be suspended from the Importers' Registry referred to in Article 59, IV of the Customs Law and it will be considered that the resident abroad has a permanent establishment in Mexico, for which reason it must comply with all the tax obligations, in accordance with Article 76 of this Law, for the maquila operations that it carries out in the national territory once the suspension referred to in this paragraph takes place.

Article added DOF 09-12-2019

When in accordance with the provisions of an international tax treaty entered into by Mexico, the competent authorities of the country with which the treaty has been entered into make an adjustment to the prices or amounts of consideration of a taxpayer resident of that country and provided that such adjustment is accepted by the Mexican tax authorities, the related party resident in Mexico may file a supplementary return reflecting the corresponding adjustment. This supplementary return will not be computed within the limit established in Article 32 of the Federal Tax Code.

TITLE VII

OF TAX INCENTIVES

CHAPTER I

OF PERSONAL SAVINGS ACCOUNTS

Article 185. The taxpayers referred to in Title IV of this Law, who make deposits in special personal savings accounts, make premium payments on insurance contracts based on pension plans related to age, retirement or retirement, or acquire shares in investment funds that are identifiable under the terms indicated by the Tax Administration Service by means of general provisions, may subtract the amount of such deposits, payments or acquisitions from the amount to which the rate of Article 152 of this Law would apply if they had not made the aforementioned transactions corresponding to the fiscal year in which they were made, may subtract the amount of such deposits, payments or acquisitions, from the amount to which the rate of Article 152 of this Law would be applied if the aforementioned transactions had not been made, corresponding to the fiscal year in which they were made or to the immediately preceding fiscal year, when they are made before the respective return is filed, in accordance with the rules indicated below:

Amended paragraph DOF 18-11-2015, 12-11-2021

I. The amount of the deposits, payments or acquisitions referred to in this article may not exceed in the calendar year in question, the equivalent of $152,000.00, considering all items.

The shares of the investment funds referred to in this article shall remain in the custody of the investment fund to which they correspond, and may not be sold to third parties, reimbursed or repurchased by said fund, before a period of five years has elapsed from the date of their acquisition, except in the case of the death of the holder of the shares.

Amended paragraph DOF 18-11-2015

II. The amounts deposited in the personal accounts, paid for the insurance contracts, or invested in shares of the investment funds referred to in this article, as well as the interest, reserves, sums or any amount obtained from dividends, disposal of the shares of the investment funds, indemnifications or loans derived from those accounts, of the respective contracts or of the shares of the investment funds, must be considered as taxable income of the taxpayer in the tax return corresponding to the calendar year in which they are received or withdrawn from their special personal savings account, from the insurance contract in question or from the investment fund from which the shares have been acquired. In no case will the rate applicable to the amounts accruable under the terms of this section be higher than the tax rate that would have corresponded to the taxpayer in the year in which the deposits, premium payments or acquisition of the shares were made, had the taxpayer not received them.

Reformed fraction DOF 18-11-2015

In the event of the death of the holder of the special savings account, of the insured or of the purchaser of the shares referred to in this article, the designated beneficiary or heir shall be obliged to accumulate to his income, the withdrawals made from the account, contract or investment fund, as the case may be.

Amended paragraph DOF 18-11-2015

Persons married under the marital partnership regime may consider the special account or the investment in shares referred to in this article as belonging to both spouses in the proportion that corresponds to them, or to only one of them, in which case the deposits, investments and withdrawals will be considered to belong entirely to such persons. This option must be exercised for each account or investment at the time of its opening or realization and may not be varied.

Taxpayers who make premium payments for insurance contracts based on pension plans related to age, retirement or retirement and also insure the life of the contracting party, may not make the deduction referred to in the first paragraph of this article for the part of the premium that corresponds to the life insurance component. The insurance institution must itemize in the respective insurance contract the part of the premium that covers the life insurance. The amount paid by the insurance company to the designated beneficiaries or heirs as a consequence of the death of the insured shall be treated in accordance with the provisions of Article 93, Section XXI, first paragraph of this Law for the part corresponding to life insurance. Insurance companies that make payments to cover the premium corresponding to the life insurance component charged to the funds constituted to cover the pension, retirement or withdrawal of the insured, must withhold the resulting tax as a provisional payment under the terms of Article 145 of this Law.

The provisions of this article will be applicable provided that credit institutions, in the case of deposits in special personal savings accounts; insurance institutions, in the case of premium payments for insurance contracts based on pension plans related to age, retirement or retirement; as well as financial intermediaries, in the case of the acquisition of shares of investment funds, are registered in the Registry maintained by the Tax Administration Service, in accordance with the general rules issued for such purposes.

Paragraph added DOF 12-11-2021

CHAPTER II

OF EMPLOYERS WHO HIRE PEOPLE WITH DISABILITIES AND SENIOR CITIZENS

Article 186. A tax incentive is granted to taxpayers, individuals or legal entities of the income tax, who employ persons suffering from motor disability, who to overcome it require the permanent use of prosthesis, crutches or wheelchairs; mental; auditory or language, in eighty percent or more of the normal capacity or in the case of blind persons.

The tax incentive consists of being able to deduct from the taxpayer's taxable income for income tax purposes for the corresponding fiscal year, an amount equivalent to 25% of the salary effectively paid to the aforementioned persons. For these purposes, the total salary that serves as the basis for calculating, in the corresponding fiscal year, the income tax withholdings of the worker in question, in the terms of Article 96 of this Law, must be considered. The tax incentive referred to in this paragraph will be applicable provided that the taxpayers obtain the disability certificate issued by the Mexican Social Security Institute, with respect to the aforementioned workers.

A tax incentive is granted to those who hire senior citizens, consisting of deducting from their accruable income for income tax purposes for the corresponding fiscal year, the equivalent of 25% of the salary effectively paid to persons 65 years of age and older. For these purposes, the total salary that serves as the basis for calculating, in the corresponding fiscal year, the income tax withholdings of the worker in question, under the terms of Article 96 of this Law, must be considered.

Taxpayers applying the benefits provided for in this article must comply with the obligations contained in article 15 of the Social Security Law.

Article amended DOF 09-12-2019

CHAPTER III

OF TRUSTS DEDICATED TO THE ACQUISITION OR CONSTRUCTION OF REAL ESTATE

With the purpose of promoting real estate investment in the country, the tax treatment established in Article 188 of this Law will be given to trusts that are dedicated to the acquisition or construction of real estate that is destined for lease or to the acquisition of the right to receive income from the lease of such property, as well as to grant financing for such purposes, when the following requirements are met:

I. That the trust has been or is constituted in accordance with Mexican law and the trustee is a credit institution or brokerage house resident in Mexico authorized to act as such in Mexico.

Reformed fraction DOF 18-11-2015

II. That the primary purpose of the trust is the acquisition or construction of real estate to be leased or the acquisition of the right to receive income from the leasing of such property, as well as the granting of financing for such purposes with a mortgage guarantee of the leased property.

III. That at least 70% of the trust's equity is invested in the real estate, rights or credits referred to in the preceding section and the remainder is invested in securities held by the Federal Government registered in the National Securities Registry or in shares of investment funds in debt instruments.

Reformed fraction DOF 18-11-2015

IV. That the real estate to be constructed or acquired is intended for lease and is not disposed of before at least four years have elapsed as of the completion of its construction or acquisition, respectively. Real estate that is disposed of before the expiration of such term will not have the preferential tax treatment established in Article 188 of this Law.

V. That the trustee issues certificates of participation for the assets comprising the trust patrimony and that such certificates are placed in the country among the general investing public.

Reformed fraction DOF 09-12-2019

VI. That the trustee distributes among the holders of the certificates of participation at least once a year, no later than March 15, at least 95% of the taxable income of the immediately preceding fiscal year generated by the assets comprising the trust patrimony.

VII. That when the trustee stipulates in the leasing contracts or agreements that in order to determine the amount of the consideration, variable amounts or amounts referred to percentages are included, except in those cases in which the consideration is determined based on a fixed percentage of the lessee's sales, these concepts may not exceed 5% of the total amount of the trust's annual rental income.

VIII. That it is registered in the Registry of Trusts dedicated to the acquisition or construction of real estate, in accordance with the rules issued for such purpose by the Tax Administration Service.

IX. That the Trustee shall submit no later than February 15 of each year:

a) The identification information of the trustors.

b) The information and documentation of each of the operations through which the contribution to the trust of each of the properties was made, including the identification of the properties, as well as the amount and number of the certificates of participation delivered to the trustors. In the event that the properties contributed to the trust have been leased to such settlors, the respective contracts.

c) Report of each property contributed to the trust containing:

Date of contribution .

Value of the contribution .

3. Years elapsed between the date of construction and the date of contribution.

Address.

Use or destination .

6. Identification data of the investment portfolio to which the property is integrated, if applicable.

When the property is disposed of by the fiduciary institution, include in the report the date of disposal, value of disposal and gain or loss.

The information and documentation referred to in this section must be submitted in accordance with the general rules issued by the Tax Administration Service.

Fraction added DOF 09-12-2019

X. The Tax Administration Service may issue the general rules necessary for the due and correct application of this article.

Fraction added DOF 12-11-2021

Article 188. The trusts that comply with the requirements set forth in Article 187 of this Law, shall be subject to the following:

I. The trustee shall determine under the terms of Title II of this Law, the fiscal result of the fiscal year derived from the income generated by the assets, rights, credits or securities that integrate the trust patrimony.

II. The taxable income for the year will be divided by the number of participation certificates issued by the trustee for the trust to determine the amount of the taxable income corresponding to each of the referred certificates individually.

III. There will be no obligation to make the provisional income tax payments referred to in Article 14 of this Law.

IV. The trustee must withhold income tax from the holders of the certificates of participation on the taxable income distributed to them by applying the rate of Article 9 of this Law, on the distributed amount of such income, unless the holders who receive them are exempt from paying income tax on such income. The Tax Administration Service may issue the general rules necessary for the due and correct application of this article.

Amended paragraph DOF 12-11-2021

When the certificates of participation are placed among the general investor public, it will be the financial intermediary that has the certificates in deposit who must withhold the tax referred to in the preceding paragraph and the trustee will be relieved of the obligation to withhold such tax.

V. The holders of the certificates of participation who are residents in Mexico or residents abroad who have a permanent establishment in the country will accumulate the tax result distributed to them by the trustee or the financial intermediary from the assets, rights, credits or securities that make up the patrimony of the trust issuing such certificates, without deducting the tax withheld for them, and the profits they obtain from the sale of said certificates, unless they are exempt from paying tax on said profits, and they may credit the tax withheld for said result and profits against the income tax they pay in the fiscal year in which they are distributed or obtained.

Individuals resident in Mexico will consider that the distributed tax result corresponds to the income referred to in Section II of Article 114 of this Law.

The withholding made to the holders of participation certificates who are residents abroad will be considered as a definitive payment of the tax.

VI. The pension and retirement funds referred to in Article 153 of this Law that acquire the participation certificates may apply the exemption granted in said article to the income they receive from the assets, rights, credits and securities that make up the patrimony of the trust issuing the referred certificates and to the capital gain they obtain from the sale thereof.

VII. When any of the real property held in trust is disposed of before the minimum period referred to in Section IV of Article 187 of this Law has elapsed, the trustee shall pay, within fifteen days following the date of the disposition, the tax on the gain obtained on such disposition, This tax will be creditable to the holders to whom the trustee distributes such gain, provided that such gain is accruable to them, without withholding the tax on the distribution of such gain.

VIII. When the tax result of the fiscal year derived from the income generated by the trust assets is greater than the amount distributed to the holders of the participation certificates up to March 15 of the immediately following year, the trustee shall pay the tax for the difference, applying the rate of Article 9 of this Law to such difference, The tax paid will be creditable to the holders of such certificates who subsequently receive the income from such difference, provided that it is accruable to them, without withholding the tax on the distribution of such difference.

Holders of participation certificates will pay income tax on the gain obtained from the sale of such certificates, which is the result of subtracting the average cost per certificate of each of the certificates sold from the income received from the sale.

The average cost per participation certificate will be determined by including in its calculation all the certificates of the same issuing trust held by the transferor at the date of the disposal, even if not all of them are disposed of.

The calculation of the average cost per participation certificate will be made by dividing the proven acquisition cost of all the referred certificates of the same issuing trust held by the transferor at the date of the disposal, restated from the month of their acquisition until the month of the disposal, by the total number of such certificates owned by the transferor.

When the transferor does not dispose of all the certificates of participation of the same issuing trust held at the date of the disposal, the certificates that have not been disposed of will have as proven acquisition cost in the calculation of the average cost per certificate made in subsequent disposals under the terms of this section, the average cost per certificate of participation determined in accordance with the calculation made in the immediately preceding disposal and the date of acquisition as the date of this last disposal.

The acquirer of the certificates of participation must withhold from the transferor 10% of the gross income received therefrom, without any deduction, for income tax purposes, unless the transferor is a legal entity resident in Mexico or is exempt from paying the tax on the income received from the assets, rights, credits or securities comprising the assets of the trust issuing the certificates.

When the trustee delivers to the holders of the certificates of participation an amount greater than the taxable income for the year generated by the trust assets, the difference will be considered as a reimbursement of capital and will reduce the proven acquisition cost of such certificates held by the holders who receive it, updating the amount of such difference from the month in which it is delivered until the month in which the holder partially or totally disposes of the certificates held in the disposal immediately after the delivery made.

For the purposes of the preceding paragraph, the trustee shall keep an account in which it records the redemptions of capital and shall give the holders of the certificates of participation a certificate for the redemptions they receive, except in the case of certificates of participation placed among the general investing public.

X. When the participation certificates are placed among the general investor public and are sold through the recognized markets referred to in Sections I and II of Article 16-C of the Federal Tax Code, foreign residents who do not have a permanent establishment in Mexico and individuals residing in Mexico will be exempt from paying income tax on the gain obtained from the sale of such certificates made through those markets.

XI. Persons acting as trustors who contribute real property to the trust and receive certificates of participation for the total or partial value of such property, may defer the payment of the income tax due on the gain obtained on the sale of such property made in the contribution they make to the trust, The tax payable on each of the certificates of participation they receive for the same until the time they dispose of each of said certificates, updating the amount of the tax payable for each certificate disposed of for the period from the month of the contribution of the real estate to the trust until the month in which the certificates are disposed of.

For the purposes of the preceding paragraph, the tax will be calculated by applying the rate of Article 9 of this Law to the amount of the gain obtained in the sale of the real estate and must be paid within fifteen days following the sale of the corresponding certificates of participation.

The gain obtained from the alienation of the real estate assets made in the contribution of the trustors to the trust corresponding to each of the certificates of participation received for such assets will be determined in accordance with the terms of this Law, considering as the price of alienation of such assets the value given to them in the certificate of issuance of such certificates and dividing the resulting gain by the number of certificates of participation obtained by dividing such value by the face value of the individual certificate of participation.

The deferral of payment of the tax referred to in this section shall terminate when the trustee disposes of the real estate and the settlor who has contributed the real estate must pay it within fifteen days following the date on which the real estate is disposed of.

For taxpayers under Title II of this Law, the gain will be cumulative in the fiscal year in which the certificates are disposed of or the trust disposes of the trust property, updating the amount for the period from the month in which the property was contributed to the trust until the month in which the certificates or real estate were disposed of, and the tax paid in accordance with the provisions of this section will be considered as provisional payment of the tax for such fiscal year.

The settlors who receive certificates of participation for their contribution of real estate to the trust, will have as the proven acquisition cost of each one of such certificates the amount resulting from dividing the value given to such real estate in the certificate of issuance of such certificates by the number of certificates obtained from dividing such value by the nominal value of the individual certificate of participation and as the acquisition date the date on which they receive them for the aforementioned contribution. The gain derived from the sale of the certificates referred to in this paragraph will be determined under the terms of section VII of this same article.

XII. When the settlors contribute real estate to the trust that is immediately leased to such settlors by the trustee, they may defer the payment of the income tax due on the gain obtained on the sale of the property until the time the lease contract is terminated, provided it does not have a term of more than ten years, or the time the trustee disposes of the real estate contributed, whichever occurs first. Upon termination of the lease agreement or disposal of the real estate by the trustee, the tax will be paid on the gain resulting from applying the rate of Article 9 of this Law to the restated amount of such gain for the period elapsed from the month in which the property was contributed to the trust until the month in which the lease agreement is terminated or the property is disposed of by the trustee.

CHAPTER IV

OF FISCAL INCENTIVES FOR THE PRODUCTION AND DISTRIBUTION OF NATIONAL FILM AND THEATER PRODUCTIONS AND THEATRICAL PRODUCTIONS

A tax incentive is granted to income tax payers, consisting of applying a tax credit equivalent to the amount that, in the fiscal year in question, they contribute to investment projects in domestic film production or in the distribution of domestic motion pictures, against the income tax of the fiscal year and the provisional payments of the same fiscal year, caused in the fiscal year in which the credit is determined. This tax credit will not be cumulative for income tax purposes. In no case may the incentive exceed 10% of the income tax incurred in the fiscal year immediately preceding the year in which it is applied.

Amended paragraph DOF 09-12-2019

For the purposes of this article, investment projects in national cinematographic production shall be considered as investments in national territory, specifically destined to the realization of a cinematographic film through a process in which cinematographic creation and realization are combined, as well as the human, material and financial resources necessary for such purpose.

Likewise, investment projects for the distribution of national cinematographic films, the proposal of actions, activities and strategies aimed at distributing national cinematographic films with artistic merit, both in commercial and non-commercial circuits, as well as those that stimulate the formation of audiences and encourage the circulation of national cinematographic production, will also be considered.

For the application of the tax incentive referred to in this article, the following shall apply:

I.An Interinstitutional Committee will be created, which will be formed by a representative of the National Council for Culture and the Arts, one from the Mexican Film Institute, one from the Tax Administration Service and one from the Ministry of Finance and Public Credit, who will preside over the Interinstitutional Committee and will have the casting vote.

Reformed fraction DOF 09-12-2019

II. The total amount of the incentive to be distributed among the applicants for the benefit shall not exceed 650 million pesos for each fiscal year for investment projects in national cinematographic production and 50 million pesos for each fiscal year for investment projects in the distribution of national cinematographic films.

The amounts indicated in the preceding paragraph will be divided into equal amounts to be distributed in two periods during the fiscal year.

III.In the case of investment projects in national cinematographic production, the amount of the incentive will not exceed 20 million pesos per taxpayer and investment project.

In the case of investment projects for the distribution of national cinematographic films, the incentive will not exceed two million pesos for each taxpayer and investment project. In the event that two or more taxpayers distribute the same national cinematographic film, the Interinstitutional Committee may grant the same amount to only two of the taxpayers.

IV. The Interinstitutional Committee shall publish no later than the last day of February of each fiscal year, the amount of the incentive distributed during the previous fiscal year, as well as the benefited taxpayers and the investment projects in national cinematographic production and distribution of national cinematographic films for which they were deserving of this benefit.

V. Taxpayers must comply with the provisions of the general rules published by the Interinstitutional Committee for the granting of the incentive.

The tax incentive referred to in this article may not be applied jointly with other tax treatments that grant tax benefits or incentives.

Paragraph added DOF 09-12-2019

A tax incentive is granted to income tax payers, consisting of applying a tax credit equivalent to the amount that, in the fiscal year in question, they contribute to investment projects in national theatrical production; in the edition and publication of national literary works; visual arts; dance; music in the specific fields of orchestra conducting, instrumental and vocal performance of concert music, and jazz; against the income tax of the fiscal year and the provisional payments of the same fiscal year, caused in the fiscal year in which the credit is determined. This tax credit will not be cumulative for income tax purposes. In no case may the incentive exceed 10% of the income tax incurred in the fiscal year immediately preceding the year of its application.

Amended paragraph DOF 09-12-2019

When the credit referred to in the preceding paragraph is greater than the income tax incurred in the year in which the incentive is applied, taxpayers may apply the resulting difference against the income tax incurred in the following ten years until it is exhausted.

For the purposes of this article, investment projects in national theatrical production; visual arts; dance; music in the specific fields of orchestra conducting, instrumental and vocal performance of concert and jazz music will be considered as investments in national territory, specifically destined to the staging of dramatic works; visual arts; dance; music in the specific fields of orchestra conducting, instrumental and vocal performance of concert and jazz music; through a process in which the creation and realization are combined, as well as the human, material and financial resources necessary for such purpose. In the case of investment projects for the edition and publication of national literary works, only original works whose authors are Mexican and whose works have not been translated into another foreign language or republished in any other country will be considered; and they are not commissioned works in terms of the Federal Copyright Law.

Amended paragraph DOF 09-12-2019

For the application of the tax incentive referred to in this article, the following shall apply:

I.An Interinstitutional Committee will be created, which will be formed by a representative of the Ministry of Culture, one from the National Institute of Fine Arts and Literature, one from the Tax Administration Service and one from the Ministry of Finance and Public Credit, who will chair the Committee and will have the casting vote.

Reformed fraction DOF 09-12-2019

II. The total amount of the fiscal stimulus to be distributed among the applicants for the benefit shall not exceed 200 million pesos for each fiscal year nor 2 million pesos for each taxpayer and investment project in national theatrical production; visual arts, dance; music in the specific fields of orchestra conducting, instrumental and vocal performance of concert music and jazz.

The Committee may authorize an amount of up to 10 million pesos for projects referred to in the preceding paragraph, provided that they are projects that, due to their production characteristics, artistic and cultural richness, require an investment amount greater than 6 million pesos.

In the case of investment projects in the edition and publication of national literary works, the benefit may not exceed 500 thousand pesos per investment project or 2 million pesos per taxpayer.

Reformed fraction DOF 09-12-2019

III. The Interinstitutional Committee referred to in section I of this article shall publish no later than the last day of February of each fiscal year, the amount of the tax incentive distributed during the previous fiscal year, as well as the benefited taxpayers and the projects for which they were deserving of such benefit.

IV. Taxpayers must comply with the provisions of the general rules published by the Interinstitutional Committee referred to in section I of this article for the granting of the incentive.

The tax incentive referred to in this article may not be applied jointly with other tax treatments that grant tax benefits or incentives.

Article amended DOF 30-11-2016

CHAPTER V

OF TAXPAYERS ENGAGED IN THE CONSTRUCTION AND SALE OF REAL ESTATE DEVELOPMENTS

Taxpayers engaged in the construction and sale of real estate developments may elect to deduct the acquisition cost of the land in the year in which they acquire it, provided that they comply with the following:

I. That the land is destined for the construction of real estate developments, for its alienation.

II. That the corresponding taxable income comes from the realization of real estate developments at least eighty-five percent.

In the case of taxpayers that begin operations, they may exercise the option referred to in this article, provided that at least eighty-five percent of their taxable income for such year comes from real estate developments and they comply with the other requirements established in this article.

III. That at the time of the sale of the land, the total value of the sale of the land in question is considered taxable income, instead of the gain referred to in Article 18, Section IV of this Law.

When the land is disposed of in any of the fiscal years following that in which the deduction referred to in this article was made, an amount equivalent to 3% of the amount deducted pursuant to this article, in each of the fiscal years elapsing from the fiscal year in which the land was acquired until the fiscal year immediately preceding that in which the land is disposed of, will be considered additionally as accumulated income. For the purposes of this paragraph, the amount deducted pursuant to this article will be restated by multiplying it by the restatement factor corresponding to the period from the last month of the fiscal year in which the land was deducted until the last month of the fiscal year in which the 3% referred to in this paragraph is accrued.

IV. That the acquisition cost of the land is not included in the estimate of direct and indirect costs referred to in Article 30 of this Law.

V. That the public deed recording the acquisition of such land contains the information established in the Regulations of this Law.

Taxpayers who have not disposed of the land after the third fiscal year immediately following the one in which it was acquired, must consider as accumulated income, the acquisition cost of such land, restated for the period elapsed from the date of acquisition of the land until the last day of the month in which the income is accrued.

Taxpayers that apply the provisions of this article must do so with respect to all their land that is part of their current assets, for a minimum period of 5 years from the year in which they exercise the option referred to in this article.

CHAPTER VI

OF THE PROMOTION OF VENTURE CAPITAL INVESTMENT IN THE COUNTRY

In order to promote investment in venture capital in the country, the tax treatment established in Article 193 of this Law will be given to persons who invest in shares issued by Mexican companies resident in Mexico not listed in the stock exchange at the time of the investment, as well as in loans granted to these companies to finance them, through trusts in which the following requirements are met:

I. That the trust is constituted in accordance with Mexican law and the trustee is a credit institution or brokerage house resident in Mexico to act as such in the country.

Reformed fraction DOF 18-11-2015

II. That the primary purpose of the trust is to invest in the capital of Mexican companies resident in Mexico that are not listed on the stock exchange at the time of the investment and to participate in their board of directors to promote their development, as well as to grant them financing.

III. That at least 80% of the trust's equity is invested in the shares comprising the investment in the capital or in financing granted to the promoted companies referred to in section II above and the remainder is invested in securities held by the Federal Government registered in the National Securities Registry or in shares of investment funds in debt instruments.

Reformed fraction DOF 18-11-2015

IV. That the shares of the promoted companies that are acquired are not disposed of before a period of at least two years from the date of their acquisition has elapsed.

V. That at least 80% of the income received by the trust during the year is distributed no later than two months after the end of the year.

Reformed fraction DOF 18-11-2015

VI. That the requirements established by the Tax Administration Service through general rules are complied with.

The persons who invest in venture capital through the trusts referred to in Article 192 of this Law shall be subject to the following:

I. They shall be liable for the tax under the terms of Titles II, IV, or V of this Law, as applicable, for the income delivered to them by the trust institution from the shares and securities comprising the trust patrimony or derived from the sale thereof, as well as the income from the financing granted to the promoted companies.

II. The fiduciary institution shall keep an account for each type of income it receives from the shares and securities, as well as those derived from the sale thereof, and those derived from the financing granted to the promoted companies. In one account it will record the dividends it receives from the shares; in another it will record the interest it receives from the securities and the profits obtained from their sale; in another it will record the interest it receives from the financing granted to the promoted companies, and in yet another it will record the profits obtained from the sale of the shares.

Each of the accounts referred to in the preceding paragraph shall be increased by the income corresponding thereto received by the trustee institution and decreased by the income therefrom delivered to the trustees by the trustee institution.

III. The trustee institution must also keep an account for each of the persons participating as settlors and trustees in the trust, in which it records the contributions made by each of them individually to the trust.

The account of each person will be increased by the contributions made by him/her to the trust and will be decreased by the reimbursements of such contributions made by the fiduciary institution. The balance of each of these accounts as of December 31 of each year will be updated for the period from the month in which the last update was made until December of the year in question. When contributions or reimbursements of capital are made after the restatement provided for in this paragraph, the balance of the account as of that date will be restated for the period from the month in which the last restatement was made until the month in which the contribution or reimbursement is paid, as the case may be.

IV. When the trustees are individuals residing in the country or individuals residing abroad, the trust institution must withhold the appropriate tax for the type of income delivered to them under the terms of Title IV or V of this Law, respectively, or if applicable, in accordance with the provisions of the agreements to avoid double taxation entered into by Mexico with the countries in which the individuals residing abroad who receive the income reside. The persons who pay interest to the trust institution for the financing granted and the securities held by the trust, or who acquire shares of the promoted companies from it, will not withhold income tax on such income or acquisitions.

V. The fiduciary institution shall give evidence of the income delivered and, if applicable, of the tax withheld for them, as well as of the reimbursement of contributions, to the persons who receive them as trustees of the trust in question.

VI. When any of the trustees assigns the rights he has in the trust, he must determine his gain on the alienation of the assets comprising the trust involving such assignment, in accordance with the provisions expressly set forth in Section VI of Article 14 of the Federal Fiscal Code, considering as the proven acquisition cost thereof the amount resulting from adding to the balance in its individual contribution account as of the date of the alienation, the portion corresponding to it for such rights individually of the balances of the income accounts referred to in Section II of this Article and of the balance of the account referred to in the following paragraph, as of that same date. When the trustee does not assign the totality of the rights that he has in the trust, but only a part of them, his proven acquisition cost of the alienated assets will be the amount resulting from multiplying the amount referred to in this paragraph by the percentage resulting from dividing the percentage participation in the trust represented by the alienated rights by the percentage participation in the same represented by the totality of the rights that he has as of the date of the alienation.

For the purposes of the preceding paragraph, the trust institution must maintain an account in which it records the participation corresponding to the trust in the net tax profits of the promoted companies for the investment made in them, which are generated as of the date on which its shares in the trust are acquired and which form part of the balance of the net tax profit account of such companies.

When the rights to be assigned have been acquired from third parties, the proven acquisition cost thereof will only be increased or decreased, respectively, by the difference resulting between the balance at the date of disposal and the balance at the date of acquisition of the rights, restated to the date of disposal, of the income accounts referred to in section II of this article and of the account referred to in the preceding paragraph.

VII. When any of the requirements referred to in Sections IV and V of Article 192 of this Law are not complied with, the trustees shall pay the tax at the rate established in the first paragraph of Article 9 of this Law on the taxable income derived from the income received by the trust institution, under the terms of Article 13 of this Law, as of the year immediately following the year in which the noncompliance occurred.

CHAPTER VII

OF PRODUCTION COOPERATIVE SOCIETIES

Article 194. The production cooperative societies that are only constituted by individual members, in order to calculate the income tax that corresponds to them for the activities they carry out, instead of applying the provisions of Title II of this Law, they may apply the provisions of Section I of Chapter II of Title IV of the same, considering the following:

I. They shall calculate the tax for the fiscal year for each of their members, determining the part of the taxable income for the fiscal year that corresponds to each member for his participation in the cooperative society in question, applying the provisions of Article 109 of this Law.

The cooperative production companies referred to in this Chapter may defer the total tax referred to in this section until the fiscal year in which they distribute the corresponding taxable income to their members.

In those cases in which the aforementioned companies determine a profit and do not distribute it in the following two fiscal years from the date on which it was determined, the tax will be paid in accordance with the terms of this Chapter.

When the cooperative society in question distributes to its members profits from the taxable profit account, it will pay the deferred tax by applying the rate referred to in Article 152 of this Law to the amount of the profit distributed to the member in question.

For the purposes of the preceding paragraph, the first profits to be distributed shall be deemed to be the first profits generated.

The tax corresponding to each of its members under the terms of this section shall be paid by means of a tax return to be filed with the authorized offices no later than the 17th day of the month immediately following the month in which the taxable profits were paid; the member of the cooperative in question may credit the tax paid under the terms of this paragraph in its annual tax return for the corresponding fiscal year.

For the purposes of this Chapter, it will be considered that the cooperative production company distributes profits to its members when the taxable profit referred to in this section is invested in financial assets other than accounts receivable from customers or in resources necessary for the normal operation of the company in question.

For the purposes of this Chapter, production cooperatives that do not distribute income to their members may only invest such resources in assets that in turn generate more jobs or cooperative members.

II. Production cooperative societies shall keep a taxable profit account. This account shall be added to the taxable profit for the year and shall be reduced by the amount of the taxable profit paid.

The balance of the account provided for in this section, as of the last day of each year, not including the taxable income of such year, will be restated for the period from the month in which the last restatement was made until the last month of the year in question. When profits are distributed from this account after the restatement provided for in this paragraph, the balance of the account as of the date of the distribution will be restated for the period from the month in which the last restatement was made until the month in which such profits are distributed.

The balance of the taxable income account must be transferred to one or more other companies in the case of merger or spin-off. In the latter case, such balance shall be divided between the spin-off company and the spun-off companies, in the proportion in which the partition of the stockholders' equity of the statement of financial position approved by the extraordinary general meeting and which has served as the basis for the spin-off is made.

The taxable profit referred to in this section shall be that determined by the cooperative society in question, under the terms of Article 109 of this Law, corresponding to all the members of such society.

III . Provisional income tax payments will not be made on income obtained by the cooperative

IV . Income and advances granted by cooperative societies to their members will be considered as income assimilated to income for the rendering of a subordinated personal service and the provisions of Articles 94 and 96 of this Law will be applied.

Article 195. Production cooperative societies that opt to apply the provisions of this Chapter may not change their option in subsequent years, except when the requirements established in the Regulations of this Law are complied with. When taxpayers cease to pay the tax under the terms of this Chapter, in no case may they return to pay the tax under the terms of this Chapter.

CHAPTER VIII

OF THE INCOME ACCRUAL OPTION FOR LEGAL ENTITIES

Repealed

Chapter added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 196 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 197 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 198 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 199 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 200 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

Article 201 .

Article added DOF 30-11-2016. Repealed DOF 12-11-2021

CHAPTER IX

OF THE TAX INCENTIVE FOR RESEARCH AND TECHNOLOGY DEVELOPMENT

Chapter added DOF 30-11-2016

A tax incentive is granted to income taxpayers who carry out research and technological development projects, consisting of applying a tax credit equivalent to 30% of the expenses and investments made in the year in research or development of technology, against the income tax incurred in the year in which such credit is determined. The tax credit will not be cumulative for income tax purposes.

For the purposes of the preceding paragraph, the tax credit may only be applied on the incremental basis of the expenses and investments made in the corresponding fiscal year, with respect to the average of those made in the three preceding fiscal years.

When such tax credit is greater than the income tax payable in the fiscal year in which the incentive is applied, taxpayers may credit the resulting difference against the income tax payable in the following ten fiscal years until it is exhausted. In the event that the taxpayer does not apply the credit in the fiscal year in which it could have done so, it will lose the right to credit it in subsequent fiscal years and up to the amount in which it could have done so.

For the purposes of this article, expenses and investments in research and development of technology are considered to be those made in national territory, destined directly and exclusively to the execution of projects aimed at the development of products, materials or production processes, which represent a scientific or technological advance, in accordance with the general rules published by the Interinstitutional Committee.

For the application of the tax incentive referred to in this article, the following shall apply:

I. An Interinstitutional Committee will be created, which will be formed by a representative of the National Council of Science and Technology, one from the Ministry of Economy, one from the Tax Administration Service and one from the Ministry of Finance and Public Credit, who will preside over the Interinstitutional Committee and will have the casting vote. The Technical Secretariat of the Committee will be in charge of the National Council of Science and Technology.

Reformed fraction DOF 09-12-2019

II. The total amount of the incentive to be distributed among the applicants for the benefit shall not exceed 1,500 million pesos for each fiscal year or 50 million pesos per taxpayer.

III. The Interinstitutional Committee shall publish, no later than the last day of February of each fiscal year, the projects and amounts authorized during the previous fiscal year, as well as the benefited taxpayers.

IV. Taxpayers must comply with the provisions of the general rules published by the Inter-Institutional Committee for the granting of the incentive. These rules will also establish commitments for the development of prototypes and other equivalent deliverables, as well as the generation of patents that must be registered in Mexico.

The tax incentive referred to in this article may not be applied jointly with other tax treatments that grant tax benefits or incentives.

Reform DOF 09-12-2019: Repealed the then sixth paragraph of the article.

Article added DOF 30-11-2016

CHAPTER X

OF THE TAX INCENTIVE FOR HIGH-PERFORMANCE SPORTS

Chapter added DOF 30-11-2016

A tax incentive is granted to income tax payers, consisting of applying a tax credit equivalent to the amount that, in the fiscal year in question, they contribute to investment projects in infrastructure and highly specialized sports facilities, as well as to programs designed for the development, training and competition of high-performance Mexican athletes, against the income tax of the fiscal year and the provisional payments of the same fiscal year, caused in the fiscal year in which the credit is determined. This tax credit will not be cumulative for income tax purposes. In no case may the incentive exceed 10% of the income tax incurred in the fiscal year immediately preceding the year in which it is applied.

Amended paragraph DOF 09-12-2019

For the purposes of this article, investments in Mexican territory for the development of infrastructure and highly specialized sports facilities, which must not have a predominantly economic or profit-making purpose and must not be directly or indirectly related to the professional practice of sports, as well as the operating and maintenance expenses of such sports facilities, will be considered as investment projects. Likewise, programs designed for application in Mexican territory, aimed at the development, training and competition of high-performance Mexican athletes, will be considered as programs.

For the application of the tax incentive referred to in this article, the following shall apply:

I. An Interinstitutional Committee will be created, which will be formed by a representative of the National Commission of Physical Culture and Sports, one from the Mexican Olympic Committee, one from the Tax Administration Service and one from the Ministry of Finance and Public Credit, who will preside over the Interinstitutional Committee and will have the casting vote.

II. The total amount of the incentive to be distributed among the applicants for the benefit shall not exceed 400 million pesos for each fiscal year or 20 million pesos for each contributor, investment project or program.

The Committee may authorize an amount greater than the limit of 20 million pesos referred to in the preceding paragraph, in the case of projects or programs that due to their nature and importance within the field of high performance sports require investments in excess of such amount.

III. The Interinstitutional Committee shall publish no later than the last day of February of each fiscal year, the names of the benefited taxpayers, the amounts authorized during the previous fiscal year, as well as the investment projects and the corresponding programs.

IV. Taxpayers must comply with the provisions of the general rules published by the Interinstitutional Committee for the granting of the incentive.

The tax incentive referred to in this article may not be applied jointly with other tax treatments that grant tax benefits or incentives.

Reform DOF 09-12-2019: Repealed the then fifth paragraph of the article.

Article added DOF 30-11-2016

CHAPTER XI

OF POWER SUPPLY EQUIPMENT FOR ELECTRIC VEHICLES

Chapter added DOF 30-11-2016

A tax incentive is granted to income tax payers, consisting of applying a tax credit equivalent to 30% of the amount of the investments made in the fiscal year in question in power supply equipment for electric vehicles, provided that these are connected and fixed in public places, against the income tax payable in the fiscal year in which the credit is determined. The tax credit will not be cumulative for income tax purposes.

When such credit is greater than the income tax payable in the fiscal year in which the incentive is applied, taxpayers may credit the resulting difference against the income tax payable in the following ten fiscal years until it is exhausted. In the event that the taxpayer does not apply the credit in the fiscal year in which it could have done so, it will lose the right to credit it in subsequent fiscal years and up to the amount in which it could have done so.

Article added DOF 30-11-2016

Article 205. Foreign legal entities that manage private equity investments that invest in legal entities resident in Mexico, which are considered fiscally transparent in the country or jurisdiction of their incorporation, will enjoy such transparency for the purposes of this Law. The partners of such entities will be taxed in accordance with the Title of this Law that corresponds to them. The provisions of this article will be applicable only for the income they obtain from interest, dividends, capital gains or from the leasing of real estate. The provisions of the preceding paragraph shall be applicable provided that:

I. The administrator of such legal entity or its legal representative in the country, submits to the Tax Administration Service, a record of all the members of such legal entity in the previous fiscal year. If during the fiscal year there is a variation with respect to the members or members of such legal entity, this must be reported by the administrator or its legal representative, no later than February of the following calendar year. The referred registration must include the documentation that proves the tax residence of each one of the members of such figure, including the administrator. In case the member or member is an international organization or a pension and retirement fund, they may submit their headquarters agreement or constitutive agreement. In case of not having such documentation from any of the members, the legal entity will not enjoy fiscal transparency in the proportion of its participation.

II. That the legal entity has been incorporated in a country or jurisdiction with which Mexico has a comprehensive information exchange agreement.

III. That the members of such legal entity, including the administrator, reside in a country or jurisdiction with which Mexico has a comprehensive information exchange agreement. In the event that a member or member does not reside in a country or jurisdiction with which Mexico has a comprehensive information exchange agreement, the legal entity will not enjoy fiscal transparency in the proportion of its participation.

IV. That the members of such legal entity, including the administrator, are the effective beneficiaries of the income received by such legal entity. In the event that a member or member is not the effective beneficiary of such income, the legal entity will not enjoy fiscal transparency in the proportion of its participation.

V. That the income indicated in this Law, attributable to the members or members residing abroad, be accumulated by them. Otherwise, the legal entity will not enjoy fiscal transparency in proportion to the participation of the member or member whose income was not accrued.

VI. That the income obtained by the members or members residing in Mexico or permanent establishments of residents abroad, be accrued in accordance with Articles 4-B or 177 of this Law, even if the members or members had been exempt from tax with respect to such income. Otherwise, the legal entity will not enjoy tax transparency in the proportion of the participation of the member or member whose income was not accrued under Articles 4-B or 177 of this Law.

Article added DOF 09-12-2019

CHAPTER XII

SIMPLIFIED TRUST REGIME FOR LEGAL ENTITIES

Chapter added DOF 12-11-2021

Article 206. Entities residing in Mexico that are solely constituted by individuals, whose total income in the immediately preceding fiscal year does not exceed the amount of 35 million pesos or entities residing in Mexico that are solely constituted by individuals that initiate operations and that estimate that their total income will not exceed the referred amount, must comply with their income tax obligations in accordance with the regime established in this Chapter.

When the income obtained by the taxpayer in the period between the beginning of the fiscal year and the month in question exceeds the amount indicated in the first paragraph of this article, the taxpayer will no longer apply the provisions of this Chapter and will be taxed under the terms of Title II of this Law, as of the fiscal year following the one in which the aforementioned amount was exceeded.

They shall not be taxed under this Chapter:

I. Legal entities when one or more of their partners, shareholders or members participate in other commercial companies where they have control of the company or its administration, or when they are related parties under the terms of Article 90 of this Law.

For purposes of the preceding paragraph, control shall be understood as when one of the parties has effective control over the other party or its administration, to such an extent that it can decide the moment of distribution or distribution of the income, profits or dividends of the other party, either directly or through an intermediary.

II. Taxpayers that carry out activities through trusts or joint ventures.

III. Those who pay taxes pursuant to Chapters IV, VI, VII and VIII of Title II and those of Title III of this Law.

IV. Those who pay taxes in accordance with Chapter VII of Title VII of this Law.

V. Taxpayers who fail to pay taxes in accordance with the provisions of this Chapter.

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For the purposes of this Chapter, income shall be considered accruable at the time it is actually received.

Income is considered effectively received when it is received in cash, goods or services, even when it corresponds to advances, deposits or any other concept, regardless of the name by which it is designated. Likewise, the income is considered received when the taxpayer receives credit instruments issued by a person other than the person making the payment; in the case of checks, the income is considered received on the date the check is cashed or when the taxpayers transfer the checks to a third party, except when such transfer is by proxy. It will also be understood that the income is effectively received when the creditor's interest is satisfied through any form of extinction of the obligations.

In the case of forgiveness, remission or remission of debts or debts that are no longer paid due to the creditor's statute of limitations, the difference resulting from subtracting from the principal amount restated for inflation, the amount of the forgiveness, remission or remission, at the time of its liquidation or restructuring, will be considered accrued income, provided that the total liquidation is less than the restated principal amount and in the case of forgiveness, remission or remission granted by institutions of the financial system.

In the case of income derived from forgiveness, write-offs, remissions or debts that have been granted by persons other than institutions of the financial system or debts forgiven in accordance with the agreement entered into with recognized creditors subject to a bankruptcy proceeding, they will be considered effectively received on the date on which the forgiveness, write-off or remission is agreed upon or on which the statute of limitations expires.

In the case of sale of goods that are exported, income must be accrued when it is actually received. If the income is not received within the twelve months following the month in which the export takes place, the income must be accrued after such period has elapsed.

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Article 208. The taxpayers referred to in this Chapter may make the following deductions:

I. Refunds received or discounts or allowances made, provided that the corresponding income has been accrued.

II. Acquisitions of goods and raw materials.

III. Expenses net of discounts, rebates or refunds.

IV. Investments.

V. The interest paid derived from the activity, without any adjustment, as well as those generated by capital borrowed as long as such capital has been invested for the purposes of the activities of the legal entity and the corresponding tax voucher is obtained.

VI. Employer's contributions paid to the Mexican Social Security Institute.

VII. Contributions made for the creation or increase of reserves for personnel pension or retirement funds, complementary to those established by the Social Security Law, and seniority premiums established under the terms of this Law. The amount of the deduction referred to in this section shall be in accordance with the provisions of Article 25, Section X of this Law.

The taxpayers referred to in this Chapter shall consider non-deductible expenses and investments, under the terms of Article 28 of this Law.

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The taxpayers referred to in this Chapter will determine the deduction for investments in accordance with the provisions of Section II of Chapter II of Title II of this Law, applying the maximum percentages authorized in this Article instead of those indicated in Section II of Chapter II of Title II of this Law, provided that the total amount of the investments in the fiscal year has not exceeded three million pesos. When the amount of the investments in the fiscal year exceeds the indicated amount, the maximum percentages established in Section II, Chapter II, Chapter II, Title II of this Law must be applied. For these purposes, investments are considered to be those indicated in Article 32 of this Law.

The maximum authorized percentages referred to in this article shall be as follows:

A. For deferred expenses and charges, as well as for expenditures made in pre-operating periods, are as follows:

I. 5% for deferred charges.

II . 10% for expenditures made in pre-operating periods

III . 15% for royalties, for technical assistance, as well as for other deferred expenses, with the exception of those indicated in section IV of this article

IV.In the case of intangible assets that allow the exploitation of public property or the rendering of a public service under concession, the maximum percentage shall be calculated by dividing the unit by the number of years for which the concession was granted, the quotient thus obtained shall be multiplied by one hundred and the product shall be expressed as a percentage.

B. Fixed assets by type of asset are as follows:

I. In the case of constructions:

a) 20% for properties declared as archeological, artistic, historical or heritage monuments, in accordance with the Federal Law on Archeological, Artistic and Historical Monuments and Zones, which have a restoration certificate issued by the National Institute of Anthropology and History or the National Institute of Fine Arts.

b) 13% in other cases.

II. in the case of railroads:

a) 10% for train fuel supply pumps.

b) 10% for railroad tracks.

c) 10% for railroad cars, locomotives, railcars and railcars.

d) 20% for track leveling machinery, rail levelers, track grinders, motorized jacks for lifting the track, remover, inserting and drilling of sleepers.

e) 20% for communication, signaling and remote control equipment.

III. 25% for office furniture and equipment.

IV. 20% for vessels.

V. In the case of airplanes:

a) 25% for those dedicated to agricultural aerial fumigation.

b) 20% for others.

VI. 25% for automobiles, buses, cargo trucks, tractor-trailers, forklifts and trailers.

VII. 50% for desktop and laptop personal computers; servers; printers, optical readers, scanners, bar code scanners, digitizers, external storage units and computer network hubs.

VIII. 50% for dies, dies, molds, dies and tooling.

IX. 100% for livestock and vegetables.

X. In the case of telephone communications:

a) 10% for transmission towers and cables, except fiber optic cables.

b) 20% for radio systems, including transmission and handling equipment that uses the radio spectrum, such as digital or analog microwave radio transmission, microwave towers and waveguides.

c) 20% for equipment used in transmission, such as internal plant circuits that are not part of the switching and whose functions are focused on the trunks that reach the telephone exchange, including multiplexers, concentrators and routers.

d) 25% for telephone switchboard equipment used for switching calls using technology other than electromechanical.

e) 20% for others.

XI. In the case of satellite communications:

a) 20% for the satellite segment in space, including the main body of the satellite, the transponders, the antennas for the transmission and reception of digital and analog communications, and the monitoring equipment on the satellite.

b) 20% for satellite equipment on the ground, including antennas for the transmission and reception of digital and analog communications and satellite monitoring equipment.

XIII. 100% for machinery and equipment for the generation of energy from renewable sources or efficient electricity cogeneration systems.

XIV. 50% for conventional bicycles, bicycles and motorcycles powered by rechargeable electric batteries.

C. For machinery and equipment other than those mentioned above, the following percentages shall be applied, according to the activity in which they are used:

I. 20% in the generation, conduction, transformation and distribution of electricity; in the milling of grains; in the production of sugar and its derivatives; in the manufacture of edible oils; in maritime, river and lake transportation.

II. 10% in the production of metal obtained in the first process; in the manufacture of tobacco products and natural coal derivatives.

III. 13% in the manufacture of pulp, paper and similar products.

IV. 13% in the manufacture of motor vehicles and parts thereof; in the construction of railroads and ships; in the manufacture of metal products, machinery and professional and scientific instruments; in the manufacture of food and beverage products, except grains, sugar, edible oils and derivatives.

V. 20% in leather tanning and the manufacture of leather goods; in the manufacture of chemical, petrochemical and pharmacobiological products; in the manufacture of rubber and plastic products; in printing and graphic publishing.

VI. 20% in electric transportation; in fixed infrastructure for transportation, storage and processing of hydrocarbons.

VII. 25% in the manufacture, finishing, dyeing and printing of textile products and clothing.

VIII. 25% in the mining industry; in aircraft construction; and in land transportation of cargo and passengers.

IX. 25% in air transportation; in the transmission of communication services provided by telegraph, radio and television stations.

X. 33% in restaurants.

XI. 25% in the construction industry; in agriculture, livestock, forestry and fishing activities.

XII. 35% for those destined directly to the research of new products or development of technology in the country.

XIII. 50% in the manufacture, assembly and transformation of magnetic components for hard disks and electronic cards for the computer industry.

XIV. 20% in other activities not specified in this article.

The deduction percentages will be applied to the original amount of the investment, even if it has not been paid in full in the year in which the deduction is applicable.

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Article 210 . The deductions authorized in this Chapter, in addition to complying with the requirements established in other tax provisions, shall meet the following:

II. That are strictly indispensable for obtaining the income for which the taxpayer is obligated to pay this tax under the terms of this Chapter.

III. That when this Law allows the deduction of investments, the procedure is in accordance with the terms of Section II of Chapter II, Chapter II of Title II of this Law.

IV. To be subtracted only once.

VII. That in the case of investments no tax effects are given to their revaluation.

VIII. That when the corresponding transactions are carried out or no later than the last day of the fiscal year, the requirements established by this Law for each particular deduction are met. In the case of the tax receipts referred to in the first paragraph of Section III of Article 27 of this Law, these must be obtained no later than the day on which the taxpayer must file its provisional payment return and the date of issuance of such tax receipt must correspond to such payment period.

For the purposes of this article, the provisions of the applicable sections of article 27 of this Law shall apply.

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Article 211. The taxpayers referred to in this Chapter shall make monthly provisional payments on account of the tax for the year no later than the 17th day of the month immediately following the month to which the payment corresponds, by means of a declaration to be filed with the authorized offices. The provisional payment will be determined by subtracting from the total income effectively received referred to in Article 207 of this Law, obtained in the period from the beginning of the fiscal year and up to the last day of the month to which the payment corresponds, the authorized deductions effectively disbursed referred to in Article 208 of this Law, corresponding to the same period and the participation of the workers in the profits of the companies paid in the fiscal year, in the terms of Article 123 of the Political Constitution of the United Mexican States and, if applicable, the tax losses occurred in previous fiscal years that have not been reduced.

Provisional payments will be the amounts resulting from applying the rate established in Article 9 of this Law to the taxable income determined in accordance with the provisions of this Article, and provisional payments previously made for the same period may be credited against the tax payable. The withholding made to the taxpayer during the period may also be credited against such provisional payments, under the terms of Article 54 of this Law.

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The taxpayers referred to in this Chapter shall calculate the tax for the year to which they are liable under the terms of Article 9 of this Law.

The following credits may be made against the annual tax:

I. The amount of provisional payments made during the calendar year.

II. The creditable tax in terms of articles 5 and 10 of this law.

For the purposes of this chapter, for the participation of workers in the profits of companies, the taxable income referred to in articles 123, section IX, paragraph e) of the Political Constitution of the United Mexican States and 120 and 127, section III of the Federal Labor Law, will be the taxable income resulting in accordance with the provisions of article 9 of this Law.

The tax loss will be obtained when the income referred to in this chapter, obtained in the fiscal year, is less than the deductions authorized in the same. The employees' profit sharing paid in the year referred to in the preceding paragraph will be added to the result obtained. In this case, the provisions of Chapter V of Title II of this Law will apply.

When corporations taxed under the terms of this Chapter distribute dividends or profits to their partners, shareholders or members, they will be subject to the provisions of Article 140 of this Law.

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Article 213 . The legal entities referred to in this Chapter, in addition to the obligations established in other articles of this Law and in the other tax provisions, shall comply with the obligations set forth in Chapter IX of Title II of the Income Tax Law.

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Taxpayers who do not comply with the requirements to continue paying taxes under the terms of this Chapter, shall comply with the obligations set forth in Title II of this Law, as of the fiscal year immediately following the one in which this occurs.

For the purposes of the preceding paragraph, with respect to the provisional payments to be made in terms of Article 14 of this Law, corresponding to the first fiscal year immediately following the one in which the taxpayer ceased to be taxed in terms of this Chapter, the profit coefficient corresponding to the predominant activity of the taxpayers in accordance with Article 58 of the Federal Fiscal Code shall be considered as the profit coefficient.

The taxpayers referred to in this Article must file, no later than January 31 of the fiscal year immediately following the one in which they cease to apply the provisions of this Chapter, a notice of update of economic activities and obligations in accordance with the provisions of Article 29 section VII of the Regulations of the Federal Tax Code, before the Tax Administration Service (Servicio de Administración Tributaria).

In the event that taxpayers fail to file the notice referred to in the preceding paragraph, the tax authority may update the economic activities and obligations without the need for the taxpayer to file such notice.

The taxpayers referred to in this Article shall not be required to accrue the income received prior to the date on which they cease to apply the provisions of this Chapter, provided that such income had been accrued in accordance with Article 207 of this Law. In the event that the taxpayers had made the deductions under the terms of this Chapter, they will not be able to make them again.

The Tax Administration Service may implement, by means of general rules, the transition operating mechanisms for the filing of returns, notices and other types of information for taxpayers who cease to be taxed in accordance with the provisions of this Chapter and must pay the tax under the terms of Title II of this Law.

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Article 215 . The legal entities referred to in this Chapter shall apply the provisions of Article 12 of this Law when they go into liquidation.

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TEMPORARY PROVISIONS OF THE INCOME TAX LAW

ARTICLE EIGHTH. For the purposes of the provisions of section I, subsection a), paragraph 2 of Article 166 of the Income Tax Law, during the 2014 tax year, the interest referred to in such provision may be subject to a rate of 4.9 percent, provided that the beneficial owner of such interest is a resident of a country with which a treaty to avoid double taxation is in force with Mexico and the requirements set forth in such treaty are met to apply the rates provided therein for this type of interest.

TRANSITORY PROVISIONS OF THE INCOME TAX LAW

ARTICLE NINTH. With respect to the Income Tax Law referred to in Article Seven of this Decree, the following shall apply:

I. The Income Tax Law referred to in Article One of this Decree shall enter into force on January 1, 2014, unless different effective dates are established in other articles of this Decree.

The Income Tax Law published in the Official Gazette of the Federation on January 1, 2002 is repealed. The Income Tax Law Regulations dated October 17, 2003 will continue to apply insofar as they do not oppose this Income Tax Law and until a new Regulation is issued.

The obligations and rights derived from the Income Tax Law that is repealed pursuant to this section, which have arisen during its effectiveness, due to the realization of the legal or factual situations provided for in said Law, must be complied with in the forms and terms established in said law and in accordance with the provisions, resolutions to consultations, interpretations, authorizations or permits of a general nature or that have been granted on an individual basis, pursuant to the repealed Law.

III. When the Income Tax Law refers to legal or factual situations related to previous years, it will be understood to include, when applicable, those that were verified during the term of the Income Tax Law that is repealed.

IV. As of the date on which the Income Tax Law becomes effective, any legal, regulatory or administrative provisions, resolutions, consultations, interpretations, authorizations or permits of a general nature or that may have been granted on an individual basis, which contravene or oppose the provisions of this Law, shall be null and void.

V. Taxpayers who, prior to the entry into force of the Income Tax Law, had made investments under the terms of Article 38 of the Income Tax Law that is repealed, which had not been deducted in full prior to the date of entry into force of this Law, will apply the deduction of such investments in accordance with Section II of Chapter I of Title II of Title II of the Income Tax Law, only on the balance that, in accordance with the Income Tax Law that is repealed, would have been deducted in full prior to the date of entry into force of this Law, will apply the deduction of such investments pursuant to Section II of Chapter I of Title II of the Income Tax Law, only on the balance that pursuant to the Income Tax Law that is repealed is pending to be deducted, and considering as the original amount of the investment the amount that corresponded under the terms of the latter Law.

VI. Taxpayers that prior to the entry into force of the Income Tax Law, had suffered tax losses under the terms of Chapter V of Title II of the Income Tax Law that is repealed, that have not been fully abated as of the date of entry into force of this Law, will abate such losses under the terms of Chapter V of Title II of the Income Tax Law that is repealed, considering only the balance of such loss pending abatement under the Income Tax Law that is repealed, will reduce such losses under the terms of Chapter V of Title II of the Income Tax Law, considering only the balance of such loss pending to be reduced, according to the Income Tax Law that is repealed, is pending to be reduced.

VII.Until new Administrative Collaboration Agreements on Federal Tax Matters enter into force, the powers delegated in income tax matters contained in the Administrative Collaboration Agreements on Federal Tax Matters entered into by the Federal Government through the Ministry of Finance and Public Credit with the states in force and the corresponding annexes, as well as their respective amending agreements, will continue to be in force.

The exercise of the delegated powers in income tax matters, pursuant to the agreements in force referred to in the preceding paragraph, will be understood to refer to the Income Tax Law as of the date of its entry into force.

Income tax matters that at the date of entry into force of this Law are pending before the tax authorities of the federal entities, will be concluded by the latter, under the terms of the Income Tax Law that is repealed.

VIII . The federal entities will maintain in force the powers of verification referred to in the Federal Tax Code and the Income Tax Law that is repealed, with respect to the tax obligations of taxpayers corresponding to the 2013 tax year and prior years

IX. Taxpayers required to file informative returns under the terms of the Income Tax Law that is repealed, shall file the returns corresponding to the fiscal year ending December 31, 2013, no later than February 15, 2014.

X. For the purposes of the obligation to file informative returns and statements established in Articles 86, Sections III, IV, VIII, IX, X, XIV, 101, VI, 118, III, V, 143, last paragraph, 144 and 164 of the Income Tax Law that is repealed, such obligation must be complied with under the terms of that Law, as of January 1, 2014 and until December 31, 2016.

XI. Taxpayers who have opted to consider as income obtained in the fiscal year, the part of the price effectively collected in a forward sale in terms of Article 18, Section III of the Income Tax Law that is repealed, who still have amounts pending to accrue at the entry into force of this Decree, with respect to forward sales made up to December 31, 2013, shall be subject to the following:

a) They will apply the provisions of the Income Tax Law that is being repealed, until they accumulate the amount pending collection of the total price agreed upon in the sale, with respect to the total amount of the forward sales.

The tax resulting from the regime contained in the second paragraph of section III of Article 18 of the Income Tax Law that is repealed, may be paid in two equal parts, 50% in the year in which the income is accrued and the remaining 50% in the following year.

The tax that may be deferred in accordance with the preceding paragraph will be that which corresponds to the proportion represented by the disposals in installments, with respect to the totality of the operations carried out by the taxpayer in the period in question. The tax that is deferred in accordance with this paragraph, will be updated from the month for which the option was taken, and until the month in which it is paid.

b) When the taxpayer disposes of the documents pending collection or gives them in payment, it must consider the amount pending accrual as income obtained in the year in which the disposal or payment is made, in terms of the Income Tax Law that is repealed.

c) In the event of noncompliance with forward sale contracts, the seller will consider as income obtained in the year, the amounts collected in the same from the buyer, reduced by the amounts that had already been returned in accordance with the respective contract, in terms of the Income Tax Law that is repealed.

XII. Taxpayers that have opted to accumulate their inventories, in order to determine the cost of sales, must continue to apply the provisions of sections IV, V, VI, VII, IX and XI of Article Three of the Transitory Provisions of the Income Tax Law of the Decree that amends, adds, repeals and establishes various provisions of the Income Tax Law and the Asset Tax Law and establishes the Subsidies for Employment and Income Equalization, published in the Official Gazette of Mexico, The provisions of the Decree amending, adding, repealing and establishing various provisions of the Income Tax Law and the Asset Tax Law and establishing the Subsidies for Employment and Income Equalization, published in the Official Gazette of the Federation on December 1, 2004, are amended, added, repealed and established.

XIII. Capital investment companies that as of December 31, 2013, had exercised the option provided in Article 50 of the Income Tax Law that is repealed, and only with respect to the investments in promoted companies that they had made up to that date, must accumulate the gains from the sale of shares, interest and the annual adjustment for inflation, until the tax year in which they distribute dividends to their shareholders.

For purposes of the preceding paragraph, the capital investment companies will restate the gains from the sale of shares and interest, from the month in which they obtain them and until the month in which they distribute them to their members. The companies that exercised the aforementioned options will deduct the deductible annual adjustment for inflation, the restated interest, as well as the restated loss on disposal of shares, in the year in which the gain or interest is distributed. The deductible interest and the loss on disposal of shares will be restated for the period from the month in which the interest accrued or the loss occurred until the last month of the year in which they are deducted.

When capital investment companies that have opted to accrue income in the terms indicated in the preceding paragraph distribute dividends, they must comply with the provisions of Article 10 of the Income Tax Law.

In the cases referred to in the preceding paragraph, the investment company in question must deduct from the net tax profit determined under the terms of the third paragraph of Article 77 of the Income Tax Law, corresponding to the year in which the referred distribution was made, the amount of the dividends distributed under the terms of this section.

The provisions of this section shall only apply to investments in shares of promoted companies made up to December 31, 2013.

Capital investment companies for gains on disposal of shares, interest and the annual adjustment for inflation, with respect to investments in promoted companies made as of January 1, 2014, for their accrual, will be subject to the provisions of the Income Tax Law.

XIV. As of January 1, 2014, credit institutions will not be able to deduct losses from bad debts arising from the creation or increase of global preventive reserves that have been deducted in accordance with Article 53 of the Income Tax Law that is repealed.

When the accumulated balance of the global preventive reserves for which the option provided in Article 53 of the Income Tax Law that is repealed was exercised, which in accordance with the tax provisions or those established by the National Banking and Securities Commission, credit institutions have as of December 31 of the fiscal year in question, is less than the updated accumulated balance of said reserves as of December 31 of the immediately preceding fiscal year, the difference will be considered accumulated income in the fiscal year in question. The balance of the global preventive reserves that credit institutions have as of December 31, 2013 in terms of the fourth paragraph of Article 53 of the Income Tax Law that is repealed, may be maintained in the accounting account established for such purposes by the National Banking and Securities Commission and not apply the provisions of this paragraph until the credits that gave rise to such reserves are liquidated, bankrupted, renewed or restructured. Taxpayers that apply the provisions of this paragraph must report no later than February 15 of each year the items deducted under the terms of this paragraph in the immediately preceding calendar year, in accordance with the provisions issued for such purpose by the Tax Administration Service.

The accumulated balance of the global preventive reserves will be restated for the period from the last month of the immediately preceding fiscal year to the last month of the fiscal year in question. In this case, the restated excess of the global preventive reserves pending deduction may be deducted from the accumulated income referred to in the preceding paragraph, until it is exhausted, provided that they have not been deducted previously under the terms of Article 53 of the Income Tax Law that is repealed.

For the calculation of the cumulative income referred to in the preceding paragraph, the decreases applied against the reserves for write-offs ordered or authorized by the National Banking and Securities Commission will not be considered.

Credit institutions that as of December 31, 2013 have surplus Global Allowance for loan losses pending application in terms of Article 53 of the Income Tax Law that is repealed, may deduct them in each year provided that the amount of the losses for uncollectible loans in the corresponding year is less than 2.5% of the average annual balance of the loan portfolio for the year in question. The deductible amount will be the amount resulting from subtracting from 2.5% of the average annual balance of the loan portfolio of the year the amount of the bad debt losses deducted in the corresponding year.

Once the credit institution has deducted, in accordance with the preceding paragraph, the total of the surplus of Global Allowance for loan losses pending application, it may deduct, in addition to the provisions of Section XV of Article 27 of this Law, the amount of the write-offs, forgiveness, bonuses and discounts on the loan portfolio that represent services for which interest accrues in its favor, as well as the amount of the losses arising from the sale of such portfolio and for those losses suffered in the dations in payment. The foregoing, provided that it does not give rise to a double deduction over time and has not been made between related parties.

XV. Taxpayers that as of December 31, 2013 were authorized to determine their consolidated tax result under the terms of Chapter VI of Title II of the Income Tax Law that is repealed and had complied with the five-year term provided in the third paragraph of Article 64 of the aforementioned Law, shall be subject to the following:

a) Due to the repeal of the Income Tax Law, the holding company must deconsolidate all the companies of the group, including itself, and pay the deferred tax due as of December 31, 2013, applying for such purposes the procedure set forth in Article 71 of the repealed Income Tax Law, or the following procedure:

Recognize the effects of the deconsolidation at the close of the 2013 fiscal year, by means of a supplementary tax return for such year, for which purpose the following will be added or subtracted, as the case may be, from the consolidated tax profit or consolidated tax loss for such year:

i) The special consolidation items, if any, that would have continued to be determined for the transactions corresponding to fiscal years prior to fiscal year 2002 under the terms of the second paragraph of section XXXIII of Article Two of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on January 1, 2002 and that due to the deconsolidation should be considered as made with third parties, from the date on which the transaction that made them qualify as special items of consolidation was made, calculated in the terms of Article 57-J of the Income Tax Law and other applicable provisions in force until December 31, 2001.

ii) The amount of tax loss carryforwards for prior years that the controlled companies and the holding company are entitled to reduce at the time of deconsolidation, considering for these purposes only those years in which the tax loss carryforwards of such companies were subtracted to determine the consolidated tax result.

The losses pending reduction referred to in the preceding paragraph and those referred to in Article 71, second paragraph of the repealed Income Tax Law, will include both those determined as of December 31, 2012, and those generated in 2013.

iii) The amount of losses arising from the disposal of shares of controlled companies and of the controlling company, when such losses have been subtracted to determine the consolidated taxable income for the year in which they were generated and provided that such losses could not have been deducted by the company that generated them.

For purposes of this item, special items of consolidation and tax losses from prior years, as well as losses on disposal of shares corresponding to the controlled and controlling companies, will be added or subtracted, as appropriate, in the consolidable interest for the year 2013. The special consolidation items corresponding to years prior to 1999 of the controlled and controlling companies will be added or subtracted, as appropriate, in the average daily shareholding of the 2013 fiscal year. The shareholdings referred to in this paragraph are those determined in accordance with the provisions of the penultimate paragraph of Section I of Article 68 of the Income Tax Law that is repealed.

The special consolidation items mentioned in the preceding paragraph will be restated for the period from the last month of the fiscal year in which the transaction that gave rise to such items took place in the case of the transactions referred to in Articles 57-F, Section I and 57-G, Sections I and II of the Income Tax Law in effect until December 31, 2001, and from the last month of the period in which the restatement was made in the case of the deduction for the investment of assets subject to the referred transactions and until the month in which the deconsolidation takes place. Losses arising from the sale of shares will be restated from the month in which they occurred until the month in which the deconsolidation is made. In the case of tax losses pending to be reduced of controlled companies and of the holding company, they will be restated from the first month of the second half of the year in which they occurred and up to the month in which the deconsolidation is performed.

Once the consolidated taxable income for the year 2013 is determined in accordance with the provisions of this paragraph, the holding company will determine the resulting tax under the terms of Article 10 of the Income Tax Law that is repealed. Said holding company will determine the corresponding consolidated net tax profit and the excess thereof with respect to the net tax profit for the year stated in the return prior to the one to be filed in accordance with the provisions of the first paragraph of this item, may increase the balance of the consolidated net tax profit account for purposes of the mechanism provided for in item 3 below.

The controlling company must pay the tax payable under the terms of Article 78, first paragraph of the repealed Income Tax Law, on dividends or profits not derived from its net taxable income account, or from its reinvested net taxable income account, paid by the controlled companies to other companies of the same consolidation group. The tax will be determined by applying the rate established in Article 10 of the aforementioned Law, to the amount resulting from multiplying by the factor of 1.4286 the restated amount of such dividends or profits for the period elapsed from the month of their payment until the month in which the deconsolidation is made.

For purposes of the preceding paragraph, the holding company will not consider dividends or profits in cash or property paid or distributed prior to January 1, 1999 that did not come from the net taxable income account.

Dividends or profits distributed in cash or property, in accordance with the preceding paragraph, will not increase the referred accounts of the companies that have received them.

For purposes of the first paragraph of this item, it is possible to opt for the corresponding tax to be paid by the company that, being a controlled company, carried out the distribution of dividends or profits, in which case such payment must be made within the five months following the month in which the deconsolidation referred to in paragraph a) of this item takes place. In this case, the company making the payment may credit the tax in terms of the provisions of Section I of Article 10 of the Income Tax Law in force as of January 1, 2014 and must reduce the balance of the net tax profit account as of January 1, 2014 by the amount resulting from dividing the tax effectively paid in terms of this paragraph by the factor of 0.4286.

In the event that the amount to be reduced is greater than the balance of the aforementioned account, the difference will be deducted from the balance of the net tax profit account to be determined in the following years until it is exhausted.

Once the tax referred to in the preceding paragraph has been paid, the company that received the dividend or profit in question may increase the balance of its net taxable income account with the restated amount of the dividends or profits on which the tax has been paid. For such purposes, the company that would have been controlled and that makes the payment must issue a statement to the company that received the dividend or profit, containing the data indicated by the Tax Administration Service through general rules.

The application of the aforementioned option is subject to the controlling company filing a notice with the Tax Administration Service no later than the last day of February 2014, by means of a free writing in which the name or corporate name of each of the companies that will pay the tax is indicated, indicating both the amount of the dividend or profit and the tax that corresponds to each one of them, as well as the name or corporate name of the company or companies that have received the dividend or profit in question and that will increase the balance of their net tax profit account as a result of the option exercised.

The parent company shall determine, if applicable, the profit corresponding to the comparison of the balances of the net taxable income account, as follows:

It will compare the balance of the individual net tax profit accounts of the controlled companies and that of the controlling company in the corresponding shareholding, with that of the consolidated net tax profit account, including, if applicable, the effects indicated in paragraph 1 of this subsection. If the latter balance is higher than the former, only the individual balance of the subsidiaries and the parent company itself will be deducted from the consolidated net tax profit account balance. If, on the other hand, the balance of the consolidated net tax profit account is lower than the sum of the individual balances of the subsidiaries and the parent company, the result of multiplying the difference between the two balances by a factor of 1.4286 will be considered as profit. The parent company will determine the resulting tax on such profit in accordance with the terms of Article 10 of the Income Tax Law that is repealed, and the balance of the consolidated net tax profit account will be reduced by the balance of the individual accounts of the subsidiaries and the parent company itself, until it is reduced to zero.

For purposes of the comparison referred to in this paragraph, only the balances of the individual net taxable income accounts of the parent company and the subsidiaries, as well as the consolidated net taxable income account generated from January 1, 2008 through December 31, 2013 will be considered.

The income tax payable upon deconsolidation will be the sum of the tax determined in accordance with items 1, 2 and 3 of this subsection.

The procedure indicated in this subsection will not apply with respect to items for which the taxpayer has already paid the deferred tax referred to in Section VI of Article Four of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on December 7, 2009, or referred to in Article 70-A of the same Law, or when such tax is pending payment because it is subject to the payment scheme established in the aforementioned tax provisions.

The holding company that has special consolidation concepts referred to in item i) of paragraph 1 of this item a), may pay the deferred tax corresponding to them, until the assets that gave rise to such concepts are disposed of to persons outside the group in terms of Chapter VI of Title II of the repealed Law.

b) Regardless of the procedure chosen to determine the tax resulting from the deconsolidation referred to in paragraph a) of this section, when the holding company in 2010, 2011, 2012 or 2013 had chosen to apply the provisions of rule I.3.5.17. of the Miscellaneous Tax Resolution for 2009, published in the Official Gazette of the Federation on March 31, 2010; I.3.6.16. of the Miscellaneous Tax Resolution for 2010, published in the Official Gazette of the Federation on December 28, 2010 or I.3.6.13. of the Miscellaneous Tax Rulings for 2011, 2012 and 2013, published in the Official Gazette of the Federation on July 1, 2011, December 1, 2011 and December 31, 2012, and December 31, 2012, respectively. .6.13. of the Miscellaneous Tax Resolutions for 2011, 2012 and 2013, published in the Official Gazette of the Federation on July 1, 2011, December 28, 2011 and December 28, 2012, respectively; it must determine and pay the income tax corresponding to the comparison of the balances of the consolidated net tax profit account that due to the option exercised was not determined or paid in the corresponding year.

For the purposes of the provisions of the preceding paragraph, the controlling company may add to the consolidated net tax income account the amount resulting from reducing the amount of the tax losses for which the deferred tax referred to in paragraph a) of section VIII of Article Four of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on December 7, 2009 or section I of Article 71-A of the same Law, the income tax that would have corresponded to them in terms of the provisions indicated.

c) The tax determined in accordance with the provisions of paragraphs a) and b) of this section shall be paid by the controlling company in five fiscal years, in accordance with the following payment schedule:

1. 25%, no later than the last day of May 2014.

2. 25%, no later than the last day of April 2015.

3. 20%, no later than the last day of April 2016.

4. 15%, no later than the last day of April 2017.

5. 15%, no later than the last day of April 2018.

The payments referred to in paragraphs 2 to 5 of this item shall be paid updated with the factor corresponding to the period from the month in which the payment referred to in paragraph 1 of this item should have been made until the month immediately preceding the month in which the payment in question is made.

d) Companies that as of December 31, 2013 had the character of controlling companies and that as of that date are subject to the payment scheme contained in Section VI of Article Four of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on December 7, 2009, or in Article 70-A of the repealed Income Tax Law, they must continue to pay the tax they have deferred due to the tax consolidation in 2007 and prior years in accordance with the aforementioned provisions, until the payment is completed in accordance with the aforementioned scheme.

e) The controlling company, in order to determine the tax on assets to be paid as a result of the deconsolidation, as well as the tax that may be recovered by the controlled companies and itself, must comply with the provisions of Section III of Article Three of the Decree amending, adding and repealing various provisions of the Income Tax Law, the Federal Tax Code, the Law of the Special Tax on Production and Services and the Value Added Tax Law, and the Value Added Tax Law, The taxpayer must comply with the provisions of Section III of Article Three of the Decree amending, adding and repealing several provisions of the Income Tax Law, the Federal Tax Code, the Law of the Special Tax on Production and Services and the Value Added Tax Law, and establishing the Employment Subsidy, published in the Official Gazette of the Federation on October 1, 2007.

The balance of the consolidated net taxable income account as of December 31, 2013, which may result after the deconsolidation referred to in this section, will not have any subsequent tax effect.

XVI. Taxpayers that as of December 31, 2013, have authorization to determine their consolidated tax result under the terms of Chapter VI of Title II of the Income Tax Law that is repealed, and are within the period of five fiscal years indicated in the third paragraph of Article 64 of said Law, may continue to determine the consolidated income tax during the fiscal years pending to conclude such period, in accordance with the provisions set forth in the aforementioned Chapter, as well as in Chapter V of Title II of the Income Tax Law Regulations and other provisions that were in effect as of December 31, 2013. Likewise, such taxpayers must comply with the obligations related to the filing of the notices referred to in the aforementioned Chapter VI, and the infractions and fines referred to in sections XI and XII of Articles 81 and 82 of the Federal Tax Code, in force until December 31, 2013, will be applicable to them.

For purposes of the foregoing, once the five-year period has elapsed, the holding company must determine the deferred tax in accordance with the provisions of Section XV above and pay it in accordance with the following payment schedule:

a) 25% in the month of May of the first fiscal year following the end of the five-year period.

b) 25% in the month of April of the following fiscal year to the one mentioned in the preceding paragraph.

c) 20% in the month of April of the following fiscal year.

d) 15% in the month of April of the following fiscal year to the one mentioned in the preceding paragraph.

e) 15% in the month of April of the following fiscal year to the one mentioned in the preceding paragraph.

The payments referred to in paragraphs b) to e) of this section shall be restated with the restatement factor that corresponds to the period from the month in which the payment referred to in paragraph a) of this section should have been made until the month immediately preceding the month in which the payment of the installment in question is made.

XVII. Taxpayers that as of December 31, 2013, were authorized to determine their consolidated tax result under the terms of Chapter VI of Title II of the Income Tax Law that is repealed, may exercise as of January 1, 2014, the option referred to in Chapter VI of Title II of the Income Tax Law, without it being necessary to obtain the authorization referred to in Article 63 of the Income Tax Law; The foregoing, provided that no later than February 15, 2014, the integrating company files a notice in which it indicates that it will exercise such option and states the name or corporate name of all the companies that will form the group as well as the percentage of the integrating company's integrable participation in each integrated company.

For purposes of the provisions of the preceding paragraph, the group of companies must meet the requirements referred to in Articles 60 and 61 of the Income Tax Law and also not be located in any of the cases referred to in Article 62 of said Law. The integrating company that as of January 1, 2014, does not have the participation established in article 61 of this Law in its integrated companies, may exercise the option mentioned above, provided that as of December 31, 2014, it complies with the participation required in said articles and it is not a company referred to in article 62 of the same Law. In the event of not complying with such participation as of the latter date, the integrating company must disincorporate the company in question in accordance with the provisions of Article 68 of said Law, considering January 1, 2014 as the date of disincorporation, and will be obligated to pay the income tax that was deferred in the provisional payments of the year with restatement and surcharges, calculated from the date such payments should have been made until such payments are made.

The companies referred to in the first paragraph of this section that have tax losses from previous years pending to be reduced in terms of the provisions of Article 57 of the Income Tax Law that have been generated up to December 31, 2013, may join this optional regime for groups of companies, without being able to reduce such losses.

XVIII. The controlling companies that in the 2013 fiscal year had opted to determine their deferred income tax in accordance with the procedure provided in Article 71-A of the Income Tax Law that is repealed, may opt to determine the effects of the deconsolidation, in accordance with the following:

a) They must determine the deferred tax for the years from 2008 to 2013 by applying the provisions of Article 71-A of the Income Tax Law that is repealed and pay it in accordance with the provisions of Article 70-A of the aforementioned Law.

b) Determine the tax on assets that must be paid as a result of the deconsolidation, as well as the tax that may be recovered by the companies that had been controlled and controlling companies, for which purpose they will apply the provisions of paragraph e) of section XV of this transitory article.

c) When the company that would have been the controlling company has opted in 2010, 2011, 2012 or 2013 to apply the provisions of rule I.3.5.17. of the Miscellaneous Tax Resolution for 2009, published in the Official Gazette of the Federation on March 31, 2010; I.3.6.16. of the Miscellaneous Tax Resolution for 2010, published in the Official Gazette of the Federation on December 28, 2010 or I.3.6.13. of the Miscellaneous Tax Resolutions for 2011, 2012 and 2013, published in the Official Gazette of the Federation on July 1, 2011, December 1, 2011 and December 1, 2012 and 2013. .6.13. of the Miscellaneous Tax Resolutions for 2011, 2012 and 2013, published in the Official Gazette of the Federation on July 1, 2011, December 28, 2011 and December 28, 2012, respectively; the income tax corresponding to the comparison of the balances of the consolidated net tax profit account that was not determined and paid in the respective fiscal year must be determined and paid in the deconsolidation.

For purposes of the provisions of the preceding paragraph, the controlling company may add to the consolidated net tax income account the amount resulting from reducing the amount of the tax losses for which the deferred tax referred to in paragraph a) of section VIII of Article Four of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on December 7, 2009 or section I of Article 71-A of the same Law, the income tax that would have corresponded to them in terms of the provisions of Article 71-A of the Income Tax Law, published in the Official Gazette of the Federation on December 7, 2009 or section I of Article 71-A of the same Law, the income tax that would have corresponded to them in terms of the provisions indicated.

XIX. The companies that have had the character of controlling companies may pay the tax referred to in paragraph e) of section XV or b) of section XVIII of this transitory article, as the case may be, in terms of the provisions of sections I to V of the sixth paragraph of article 70-A of the Income Tax Law that is repealed and considering the restatement referred to in the seventh paragraph of said article.

XX. For the purposes of the provisions of Section IX of Article 62 of the Income Tax Law, those tax losses that have not been fully reduced and that were obtained in accordance with the provisions of Article 61 of the Income Tax Law that has been repealed shall be considered.

XXI. The legal entities that prior to the entry into force of this Law were taxed in accordance with Title II, Chapter VII of the Income Tax Law that is repealed, must comply on behalf of their members with the pending obligations that have been generated until December 31, 2013 in terms of the Income Tax Law that is repealed.

As of the entry into force of this Law, the individuals or legal entities that are members of the legal entities mentioned in the preceding paragraph must individually comply with the obligations established in this Law, under the terms of the corresponding Title.

XXII. Civil societies or associations engaged in education, with authorization or recognition of official validity of studies in terms of the General Education Law, as well as institutions created by presidential decree or by law whose purpose is education, which are not authorized to receive deductible donations, as well as civil associations or societies organized for sports purposes, as of the entry into force of this Decree must comply with the obligations of Title II of the new Income Tax Law, notwithstanding, they must determine the distributable surplus generated prior to the entry into force of this Decree under the terms of Title III of the Income Tax Law that is repealed and their partners and members will consider such surplus as income when the aforementioned legal entities deliver it to them in cash or in goods.

XXIII. The Tax Administration Service, by means of general rules, may grant administrative and verification facilities for the compliance of the tax obligations of the taxpayers of the Regime of agricultural, livestock, forestry or fishing activities. The administrative facilities for the verification of expenditures for the labor of temporary farm workers, livestock feed and minor expenses may not exceed 10% of their own income with a limit of 800 thousand pesos.

XXIV . For the purposes of Article 78 of the Income Tax Law, taxpayers who started their activities before January 1, 2014, may consider as the initial balance of the contribution capital account, the balance of such account determined as of December 31, 2013, pursuant to Article 89 of the Income Tax Law in force until such date

XXV. For the years from 2001 to 2013, the net tax profit will be determined under the terms of the Income Tax Law in effect in the fiscal year in question. Likewise, for such period, dividends or profits received shall be added and dividends distributed in accordance with the provisions of the Law in force in the aforementioned fiscal years shall be subtracted.

When the sum of the income tax paid in the year in question, of the non-deductible items for income tax purposes and, if applicable, of the employee profit sharing, both for the same year, is greater than the taxable income for such year, the difference will be reduced from the sum of the net taxable income as of December 31, 2013 or, if applicable, from the net taxable income determined in the following years, until it is exhausted. In the latter case, the amount to be reduced will be restated from the last month of the year in which it was determined until the last month of the year in which it is reduced.

For the purposes of the preceding paragraph, the income tax will be that paid under the terms of Article 10 of the Income Tax Law in force until December 31, 2013, and within the non-deductible items, those indicated in Sections VIII and IX of Article 32 of the Income Tax Law in force until December 31, 2013 will not be considered.

Net tax profits obtained, dividends or profits received and dividends or profits distributed in cash or property will be restated for the period from the last month of the year in which they were obtained, the month in which they were received or the month in which they were paid, as applicable, through December 31, 2013.

XXVI. Taxpayers who as of December 31, 2013, were taxed pursuant to Section III of Chapter II of Chapter II of Title IV of the Income Tax Law that is repealed and, as of January 1, 2014, do not meet the requirements to be taxed under the terms of Section II of Chapter II, of Title IV of the Income Tax Law, will pay the tax pursuant to Section I of the last mentioned Chapter.

For purposes of the provisional payments to be made in the first fiscal year in accordance with Section I mentioned in the preceding paragraph, the profit coefficient will be considered to be that which corresponds to their predominant activity under the terms of Article 58 of the Federal Fiscal Code.

The taxpayers referred to in the first paragraph of this section, as of the date on which they begin to pay taxes under Section I mentioned in the preceding paragraph, may deduct the investments made during the time they were paying taxes under Section III of Chapter II of Chapter II of Title IV of the Income Tax Law that is repealed, provided that they had not been deducted previously and they have the supporting documentation for such investments that meets the tax requirements.

In the case of fixed assets, the investment pending deduction will be determined by subtracting from the original amount of the investment, the amount resulting from multiplying such amount by the sum of the maximum percentages authorized by the Income Tax Law to deduct the investment in question, corresponding to the years in which the taxpayer has had such assets.

In the first fiscal year in which the tax is paid in accordance with Section I of Chapter II, Title IV of the Income Tax Law, the original amount of the investment of the assets will be increased by the percentage established in this Law for the asset in question, in the proportion that the months elapsed after the tax is paid in accordance with the aforementioned Section I represent with respect to the entire fiscal year.

Taxpayers who have obtained income from credit transactions for which tax has not been paid under the terms of the penultimate paragraph of Article 138 of the repealed Income Tax Law, and who cease to be taxed under Section III of Chapter II of Title IV of the repealed Income Tax Law, in order to do so under the terms of Section I of Chapter II of Title IV of the Income Tax Law, will accrue such income in the month in which it is collected in cash, in goods or in services.

XXVII. Production cooperative societies that prior to the date of entry into force of the Income Tax Law, have been taxed in terms of Chapter VII-A of Title II of the Income Tax Law that has been repealed, that have opted to defer the tax corresponding to the years, will continue to apply the provisions of Article 85-A of the Income Tax Law that has been repealed, until the tax they had deferred is covered only for the income received up to December 31, 2013.

As of the entry into force of this Decree, the individuals who are members of the legal entities mentioned in the preceding paragraph will not be able to comply individually with the obligations established in the new Income Tax Law, being the cooperative society the one that calculates and pays the income tax as a single legal entity in terms of said Law.

The taxpayers referred to in the first paragraph of this section who had accrued their income in accordance with the Income Tax Law that was repealed, when it was effectively received, and who at the entry into force of this Law have income pending collection, will continue to apply the provisions of the Income Tax Law that was repealed, until they effectively receive the amount pending collection, only for the income received up to December 31, 2013.

XXVIII. Production cooperative societies that have been taxed in terms of Chapter VII-A of Title II of the Income Tax Law that is repealed, and that have deferred the tax with respect to the fiscal years prior to January 1, 2014, shall pay such tax in the fiscal year in which the taxable profit corresponding to them is distributed to their members, for these purposes, the deferred tax shall be paid by applying to the amount of the profit distributed to the member in question, the rate referred to in Article 152 of the Income Tax Law.

As of the effective date of this Decree, production cooperative societies must comply with their tax obligations in terms of Title II of the Income Tax Law.

XXIX. Financial intermediaries will not withhold any withholding on interest income paid to individuals from securities referred to in Article Two, Sections LII, LXXII, fifth paragraph of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on January 1, 2002, and Article Two, Sections XI and XV of the Transitory Provisions of the Income Tax Law, published in the Official Gazette of the Federation on January 1, 2002, published in the Official Gazette of the Federation on January 1, 2002, and Article Two, sections XI and XV of the Transitory Provisions of said Law, published in said Official Gazette on December 30, 2002, until the interest rate can be reviewed or revised, in accordance with the conditions established in its issuance.

XXX. The additional tax established in the second paragraph of Article 140, and Sections I and IV of Article 164 of this Law, will only be applicable to the profits generated as of fiscal year 2014 that are distributed by the legal entity resident in Mexico or permanent establishment. For such purpose, the legal entity or permanent establishment that will make such distribution will be obliged to maintain the net tax profit account with the profits generated up to December 31, 2013 and initiate another net tax profit account with the profits generated as of January 1, 2014, under the terms of Article 77 of this Law. When legal entities or permanent establishments do not keep the two accounts referred to separately or when they do not identify the aforementioned profits, it will be understood that they were generated as of 2014.

XXXI . For the purposes of the last paragraph of Article 152 of the Income Tax Law, the oldest month of the period to be considered will be the month of December 2013

XXXII . For purposes of paragraph a) of the third paragraph of article 129 and paragraph nine of article 161 of this Law, in the case of the sale of shares issued by Mexican companies or of securities that exclusively represent such shares, when the sale is made on the stock exchanges or derivatives markets recognized under the terms of the Securities Market Law or of shares issued by foreign companies listed on such stock exchanges or derivatives markets, the sale of shares issued by Mexican companies or of securities representing stock indexes sold on such stock exchanges or derivatives markets, the sale of securities representing stock indexes sold in such stock exchanges or derivative markets, and the sale of shares issued by Mexican companies or securities exclusively representing such shares, provided that the sale of such shares or securities is made in stock exchanges or derivative markets located in recognized markets referred to in section II of article 16-C of the Federal Tax Code of countries with which Mexico has in force a treaty to avoid double taxation; when the acquisitions of such shares or securities have been made prior to the entry into force of this Law, instead of considering the average acquisition cost, referred to in paragraph a) of the third paragraph of Article 129 of this Law, in order to determine the profit or loss derived from the sale of shares and securities for each issuing company or securities representing such stock indexes, the Company may choose to make such determination by decreasing the sale price of the shares or securities, reduced by the brokerage commissions paid for their sale, by the average acquisition value resulting from the last twenty-two closing prices of such shares or securities immediately prior to the entry into force of this Law. If the last twenty-two closing prices are unusual in relation to the behavior of the shares in question in the preceding six months with respect to the number and volume of transactions, as well as their value, instead of taking the last twenty-two closing prices, the values observed in the last events of the preceding six months will be considered. When the above procedure is chosen, the average acquisition value of the shares or securities may be updated from the date of December 31, 2013 to the month immediately preceding the date of the first disposal.

XXXIII. For the purposes of the third paragraph of Article 88 and the twelfth paragraph of Article 151 of this Law, in the event that the acquisitions of the shares issued by the variable income investment companies have been made prior to the entry into force of this Law, instead of considering the price of the assets subject to variable income investment on the date of acquisition, as referred to in the third paragraph of Article 88 of this Law, in order to determine the gains or losses derived from the sale of such shares, it will be possible to choose to make such determination by reducing the price of the assets subject to variable income investment on the date of sale of such shares, in order to determine the gain or loss derived from the sale of such shares, it will be possible to choose to make such determination by decreasing the price of the assets subject to variable income investment on the date of sale of the shares of such investment company, the average value resulting from the last twenty-two closing prices of the assets subject to variable income investment immediately prior to the entry into force of this Law. If the last twenty-two closing prices are unusual in relation to the behavior of the assets subject to equity investment in question in the previous six months with respect to the number and volume of transactions, as well as their value, instead of taking the last twenty-two closing prices, the values observed in the last events of the assets subject to equity investment in the previous six months will be considered.

XXXIV. Taxpayers who prior to the entry into force of this Law had opted to make the immediate deduction of new fixed assets, pursuant to Chapter II, Title VII, of the Income Tax Law that is repealed, may not deduct the undeducted portion thereof.

When they dispose of the assets to which they applied the immediate deduction, lose them or they cease to be useful, they will calculate the deduction for the amount resulting from applying, to the original amount of the investment adjusted with the restatement factor corresponding to the period from the month in which the asset was acquired and until the last month of the first half of the period in which the deduction was made in accordance with Article 220 of the Income Tax Law that is repealed, the resulting percentages according to the number of years elapsed since the deduction was made and the percentage of immediate deduction applied to the asset in question, according to the table provided in Article 221 of the Income Tax Law that is repealed.

For purposes of employee profit sharing, taxpayers who have opted to apply the immediate deduction of the assets referred to in this section must consider the deduction of such assets that would have corresponded to them, in the amount resulting from applying to the original amount of the investment, the percentages established in articles 34, 35, 36 and 37 of the Income Tax Law.

XXXV. The corporations that as of December 31, 2013, had applied the incentive established in Article 224-A of the Income Tax Law that is repealed, shall be subject to the following:

Shareholders who contributed real estate to the corporation will accrue the gain from the disposal of the contributed assets, when any of the following events occur:

a) Dispose of the shares of such company, in the proportion that such shares represent of the total shares received by the shareholder for the contribution of the real estate to the company, provided that such gain had not been previously accumulated.

b) The company disposes of the contributed assets, in the proportion that the disposed part represents of the same assets, provided that such gain has not been previously accumulated.

If as of December 31, 2016, the events referred to in the preceding paragraphs have not occurred, the shareholders referred to in this section must accrue the total gain from the disposal of the contributed assets that has not been previously accrued.

The profit accrued in accordance with the preceding paragraph shall be restated from the month in which it was obtained until the month in which it is accrued.

Taxpayers who, prior to the entry into force of this Law, had opted to deduct the acquisition cost of the land in the year in which they acquired it, in accordance with Article 225 of the Income Tax Law that is repealed, shall, at the time of the sale of the land, consider as accumulated income the total value of the sale of the land in question, instead of the gain referred to in Article 20 section IV of the Income Tax Law that is repealed.

When the land is disposed of in any of the fiscal years following the one in which the deduction referred to in this section was made, an amount equivalent to 3% of the amount deducted in accordance with this section, in each of the fiscal years elapsing from the fiscal year in which the land was acquired and up to the fiscal year immediately preceding the one in which the land is disposed of, will be additionally considered as accumulated income. For the purposes of this paragraph, the amount deducted in accordance with this section will be restated by multiplying it by the restatement factor corresponding to the period from the last month of the year in which the land was deducted until the last month of the year in which the 3% referred to in this paragraph is accrued.

XXXVII. Employers that during the term of Chapter VIII, of Title VII of the Income Tax Law that is repealed, have established newly created positions to be occupied by first-time workers under the terms and conditions established in said Chapters, will have the benefit referred to therein with respect to said jobs for a period of up to 36 months, in accordance with the provisions of Article 232 of the Income Tax Law that is repealed.

XXXVIII. Taxpayers who have been obligated to pay the asset tax, who in the fiscal year in question effectively pay income tax, may continue to apply, under the terms of the Third Transitory Article of the Single Rate Business Tax Law, published in the Official Gazette of the Federation on October 1, 2007.

XXXIX. For the purposes of Article 189 of the Income Tax Law, the Inter-Institutional Committee shall publish the general rules for the granting of the incentive to investment projects in the distribution of national cinematographic films, no later than January 15, 2014.

XL. Legal entities resident in Mexico that have accumulated income from dividends distributed by foreign residents in tax years prior to 2014 and that have pending to be credited the proportional amounts of income tax paid by foreign companies in the first and second corporate levels for such income, will be obliged to keep the registry referred to in Article 5 of this Law. However, noncompliance with this obligation will not cause the loss of the right to the crediting provided in the aforementioned article.

XLI. The Tax Administration Service, by means of general rules, may grant administrative and verification facilities for the compliance of the tax obligations of taxpayers exclusively engaged in federal, foreign passenger and tourism land transportation of cargo up to an amount of 4% of their own income. With respect to such verification facility, it may be established that an income tax withholding may be made on the amounts disbursed, not exceeding 17%.

XLII. The following are territories for which the informative declaration referred to in Title VI of the Income Tax Law and Title IV Chapter II of the Federal Fiscal Code must be filed:

Eel

Antigua and Barbuda

Netherlands Antilles

Svalbard Archipelago

Aruba

Ascension

Barbados

Belize

Bermuda shorts

Brunei Darussalam

Campione D'Italia

Commonwealth of Dominica

Commonwealth of the Bahamas

United Arab Emirates

State of Bahrain

State of Kuwait

State of Qatar

Independent State of Western Samoa

Commonwealth of Puerto Rico

Gibraltar

Grenada

Greenland

Guam

Hong Kong

Cayman Island

Christmas Island

Norfolk Island

San Pedro Island and Miguelon

Island of Man

Qeshm Island

Azores Islands

Canary Islands

Cook Islands

Cocos or Kelling Islands

Islands of Guernsey, Jersey, Alderney, Great Sark Island, Herm, Little Sark, Brechou, Jethou Lihou (Channel Islands)

Falkland Islands

Pacific Islands

Solomon Islands

Turks and Caicos Islands

British Virgin Islands

United States Virgin Islands

Kiribati

Labuan

Macao

Madeira

Malta

Montserrat

Nevis

Niue

Patau

Pitcairn

French Polynesia

Principality of Andorra

Principality of Liechtenstein

Principality of Monaco

Kingdom of Swaziland

Kingdom of Tonga

Hashemite Kingdom of Jordan

Republic of Albania

Republic of Angola

Republic of Cape Verde

Republic of Costa Rica

Republic of Cyprus

Republic of Djibouti

Republic of Guyana

Republic of Honduras

Republic of the Marshall Islands

Republic of Liberia

Republic of Maldives

Republic of Mauritius

Republic of Nauru

Republic of Panama

Republic of Seychelles

Republic of Trinidad and Tobago

Republic of Tunisia

Republic of Vanuatu

Republic of Yemen

Oriental Republic of Uruguay

Democratic Socialist Republic of Sri Lanka

American Samoa

St. Kitts

Saint Vincent and the Grenadines

St. Helena

St. Lucia

Serene Republic of San Marino

Sultanate of Oman

Tokelau

Trieste

Tristan de Cunha

Tuvalu

Canary Islands Special Zone

Ostrava Free Zone

XLIII . The Federal Executive shall issue general rules establishing economic incentives to facilitate the incorporation of taxpayers to the regime referred to in Section II of the Income Tax Law within a period of no more than 30 days as of the entry into force of this Decree

The incentives should include financing schemes through development banks, other institutions or individuals, for the modernization of the operations of these taxpayers; flexibility in the rates for the use of public services based on profits; training, entrepreneurship and business growth programs, as well as tax culture.

EMPLOYMENT SUBSIDY

ARTICLE TEN. The employment subsidy is granted in the following terms:

I. Taxpayers who receive income as provided in the first paragraph or section I of Article 94 of the Income Tax Law, except those received for seniority bonuses, retirement and severance payments or other separation payments, will enjoy the employment subsidy that will be applied against the tax payable under the terms of Article 96 of the same Law. The employment subsidy will be calculated by applying to the income used as a basis for calculating the income tax corresponding to the calendar month in question, the following:

TABLE

Monthly employment subsidy
Lower Limit	Upper Limit	Employment Subsidy
0.01	1,768.96	407.02
1,768.97	1,978.70	406.83
1,978.71	2,653.38	359.84
2,653.39	3,472.84	343.60
3,472.85	3,537.87	310.29
3,537.88	4,446.15	298.44
4,446.16	4,717.18	354.23
4,717.19	5,335.42	324.87
5,335.43	6,224.67	294.63
6,224.68	7,113.90	253.54
7,113.91	7,382.33	217.61
7,382.34	From now on	0.00

In cases in which the tax payable by the taxpayer obtained from the application of the rate of Article 96 of the Income Tax Law is less than the monthly employment subsidy obtained in accordance with the above table, the withholder must deliver the difference obtained to the taxpayer. The withholder may credit against the income tax payable by him or the tax withheld from third parties the amounts delivered to the taxpayers under the terms of this paragraph. The income received by the taxpayers derived from the subsidy for employment will not be cumulative nor will it be part of the calculation of the taxable base of any other contribution because it is not a remuneration for subordinate personal work.

In those cases in which employers make salary payments for periods of less than one month, in order to calculate the employment subsidy corresponding to each payment, the amounts corresponding to each of the columns of the table contained in this section will be divided by 30.4. The result thus obtained will be multiplied by the number of days to which the payment period corresponds to determine the amount of the employment subsidy corresponding to the worker for such payments.

When the salary payments are for periods of less than one month, the amount of the employment subsidy corresponding to the worker for all the payments made in the month may not exceed the amount corresponding according to the table provided in this section for the total amount received in the month in question.

When employers make in a single installment payments for salaries covering two or more months, in order to calculate the employment subsidy corresponding to such payment, they will multiply the amounts corresponding to each of the columns of the table contained in this section by the number of months to which such payment corresponds.

When taxpayers render services to two or more employers, they must choose, before any of them makes the first payment corresponding to them for the rendering of subordinated personal services in the calendar year in question, the employer that will provide them with the employment subsidy, in which case, they must communicate this situation in writing to the other employers, so that they will no longer provide them with the corresponding employment subsidy.

II. The persons obligated to make the annual income tax calculation referred to in article 97 of the Income Tax Law, for the concepts referred to in the first paragraph or section I of article 94 of the same Law, who have applied the subsidy for employment under the terms of the preceding section, shall be subject to the following:

a) The annual tax will be determined by deducting from the total income obtained in a calendar year, for the concepts set forth in the first paragraph or section I of article 94 of the Income Tax Law, the local tax on income from salaries and in general for the rendering of a subordinated personal service that would have been withheld in the calendar year, to the result obtained the rate of article 152 of the same Law will be applied. The tax payable by the taxpayer will be reduced by the sum of the amounts corresponding to the taxpayer as monthly employment subsidy.

b) In the event that the tax determined in accordance with Article 152 of the Income Tax Law exceeds the amount of the monthly employment subsidy paid to the taxpayer, the withholder will consider the resulting excess as tax payable by the taxpayer. The amount of the provisional payments made will be creditable against the tax payable.

c) In the event that the tax determined in accordance with Article 152 of the Income Tax Law is less than the amount of the monthly employment subsidy paid to the taxpayer, there will be no tax payable by the taxpayer and no amount will be paid to the taxpayer as employment subsidy.

The taxpayers referred to in the first paragraph and section I of Article 94 of the Income Tax Law, who are required to file an annual tax return under the terms of said Law, will credit against the tax for the year determined in accordance with Article 152 of said Law the amount of the employment subsidy determined in accordance with the previous section during the corresponding fiscal year, as provided in the tax receipt provided by the employer for such purposes, without exceeding the amount of the tax for the year determined in accordance with said Article 152.

In the event that the taxpayer has had two or more employers during the fiscal year and any of them has delivered differences in the employment subsidy under the terms of the second paragraph of the preceding section, this amount shall be reduced from the amount of the withholdings credited in such fiscal year, up to the amount of such withholdings.

III. Those who make payments to taxpayers entitled to the employment subsidy may only credit against the income tax payable by them or withheld from third parties, the amounts paid to the taxpayers for such concept, when they comply with the following requirements:

a) Keep records of payments for income received by the taxpayers referred to in the first paragraph or section I of article 94 of the Income Tax Law, identifying individually each of the taxpayers to whom such payments are made.

b) Keep the tax receipts showing the amount of income paid to the taxpayers, the income tax withheld, if any, and the differences resulting in favor of the taxpayer as a result of the employment subsidy.

c) Comply with the obligations set forth in Sections I, II and V of Article 99 of the Income Tax Law.

d) Keep the documents presented by the taxpayers under the terms of the sixth paragraph of section I of this precept, as the case may be.

e) Submit to the authorized offices, no later than February 15 of each year, a statement providing information on the amounts paid for the employment subsidy in the immediately preceding year, identifying for each worker the total income obtained during the year in question, which served as the basis for determining the employment subsidy, as well as the amount of the latter in accordance with the general rules issued for such purpose by the Tax Administration Service.

f) Pay the social security contributions payable by the workers who benefit from the employment subsidy and those mentioned in Article 93, Section X, of the Income Tax Law, which correspond to the income in question.

g) Enter the amount of the employment subsidy in the tax vouchers issued to their employees, for income from benefits for subordinate personal services, expressly and separately identifying it.

h) Provide the persons who have rendered subordinate personal services to them with the tax voucher of the amount of the employment subsidy determined during the corresponding fiscal year.

i) Deliver, as the case may be, the employment subsidy in cash, in the cases referred to in the second paragraph of section I of this provision.