In the Simplified Trust Regime, VAT is in limbo

The Simplified Trust Regime for individuals is great news for taxpayers due to the low rates and the reduction of the administrative burden; however, it is not clear what will happen to the taxation of the Value Added Tax (VAT) under this new tax scheme.

“If (the authority) tells me to pay Income Tax (ISR) on collected income, but why does it force me to keep tax receipts for deductions or investments? (…) This leads me to (think about) VAT because I have deductions that will generate an accreditation, “said Eduardo Marroquín, managing partner of Tax at the Baker Tilly consultancy.

In this sense, he recalled that the VAT Law specifies that the requirements to obtain a tax credit is that it be deductible.

“In a strict sense it is not deductible because the scheme does not allow me to deduct. I have vouchers that meet requirements, such as paying with transfer and other issues required by the VAT Law, why would I not have the right to accreditation? “, Asked Baker Tilly’s partner at the” Tax Summit Economic Package 2022 “, organized by Thomson Reuters.

The VAT Law establishes that “taxpayers may credit the VAT that has been transferred to them when making expenditures for the acquisition of goods, services or temporary use or enjoyment of goods.”

In this vein, Marroquín, recommended that taxpayers approach their legal advisors or accountants to clarify the doubts that the Simplified Trust Regime could generate.

The new regime is interesting

Meanwhile, José Antonio Hernández, tax partner of the same consultancy, said that the new tax scheme is a “flat tax” in the sense that the ISR will be paid on effective income with “very low” rates.

Also, he said, this new regimen is something that has not been adequately presented in the past, which makes it more interesting.

It should be remembered that the ISR rates proposed in the new regime range from 1 to 2.5 percent.

The ISR rates proposed in the new regime range from 1 to 2.5 percent. Income up to 300,000 pesos per year, 1%; up to 600,000, 1.1%; 1 million pesos 1.5%; 2.5 million, 2%; and up to 3.5 million 2.5 percent.

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