Tax Administration Service Mexico Mexico

Mexican Tax Administration Service President AGGC CA International Fiscal Audit AGAAGAFFAGRAGJAGAC Other Gral Admons CA Int Legal Affairs & Legal Criteria CA Transfer Pricing CA Diverse Taxpayers CA Sector Gobierno CA Legal Disputes CA Consolidated Corporations CA Programing CA Planning, Supervision & Evaluation, CA Tax Collection CA Legal Affairs

Specific Atributions (Art. 7 Tax Administration Service Law) Crossborder Payments: a) Foreign Earned Income b) Deduction of Mexican Resident Foreign Tax Credit Investments in Tax Heavens Permanent Establishments Origin Verifications Exchange of Information

Information Sources Auditor’s opinion for tax purposes Tax Return Multiple Informative Overseas Payments Investments in Tax Heavens Foreign Financing Related Parties Customs Database Taxpayers Database & Tax Returns Exchange of Information Filed before Tax Returns

Audit Focus Compliance Planning Create awareness on taxpayers based on the constant monitoring and analysis to detect agressive tax planning and non compliance of international fiscal regulations (surveillance)

Crossborder Payments Foreign Earned Income Audit Programs Withholding rate (Law or Convention) Compliance of the Convention Tax Withholding and payment

Crossborder Payments Deduction of Mexican Resident Compliance of fiscal deductions regulations (Arts. 29 to 32 Income Tax Law) Back to back credits (Art. 92 Income Tax Law) Withholding tax and payment Audit Programs

Most of the resources are used for auditing corporations, nevertheless we seek to have more fiscal presence in individuals. Due to the significant increase in the turistic and real estate industries, new audit programs will focus on leasing operations of individuals (turistic destinations)

Specific Audit Programs Interests. Debt Planning. Royalties Related Parties Services Artistes & Sportsmen Leasing Sale of Stocks Crossborder Payments Foreign Earned Income

Foreign Tax Credit Determine the limit of the credit (art. 6 Income Tax Law) Payment of tax effectively done overseas In 2004, 2,472 tax returns with foreign tax credit were filed for an amount of $587 million pesos, representing a 72% increase with respect to fiscal year 2003 Audit Programs

Investments in Tax Heavens Determine tax for investments in tax heavens File Informative Tax Returns regarding such investments Benefit for corporations with enterprise activities that have such type of investments In 2004, 540 tax returns of corporations were filed, from which 63% declared investments in stocks for an amount of $6,916 million pesos Audit Programs

Permanent Establishments Tax determination regarding PE’s Verification of depreciation rates and amortization of assets Allocated expenses Intercompanies expenses from abroad Audit Programs

Origin Verifications Questionnaries Visits to the premises of an exporter or producer Verification types (exporter/producer) Imports under preferential treament for customs tariff purposes Audit Programs

Support area in charge of international matters related to nationals with foreign earned income Exchange of Information Spontaneaous Automatic or Routine Upon Request (Specific) Types Audit Programs