1. Mexican Tax Administration Service Major Developments & Results September, 2006 Mexican Tax Administration Service

2. Major Developments & Results  Tax Administration Model  Internet Portal Access  Authentication Methods  Billing  Electronic Filing  Compliance Cost  Integrated Solution Overview

3. Mexican Tax Administration Service Major Developments & Results ORGANIZATION PROCESSES CUSTOMERS RESULTS HUMAN RESOURCES EFFICIENCY CONTROLSERVICE CONTROL To define organization models To select employees with suitable profile To promote principles and values To implement Change Management To improve organizational culture To improve organizational communication TECHNOLOGY AND COMMUNICATION Quality technological developments for operations support Information Management Deployment Management Cycle Deployment To simplify services and procedures To improve service quality MISSION VISION To collect tax payments and control the inbound and outbound of products in the country, assuring correct tax law application and promoting voluntary and timely compliance. I.- To ease and motivate voluntary compliance II.- To fight against tax evasion, smuggling and out of law business III.- To improve Tax Administration efficiency IV.- To consolidate an integrated organization, recognized by its ethics, capacity and commitment To increase taxpayers compliance To extend compliance culture To improve SAT image and perception To decrease compliance cost To be an efficient and effective institution orientated to taxpayer, with integrated processes, honest, professional and compromised employees, at the service of Mexican citizen. To increase the taxpayers base To increase risk perception To improve service given in contact points to taxpayers To inform in an integral way to the different sectors To improve the preventive actions To identify taxpayer bad behavior To improve fighting of illegal products in the country To update and increase the quality of taxpayer data base To improve collection efficiency To add Risk administration technologies in control and taxation To assure rational use of resources To simplify internal rules and tax legislation

4. Mexican Tax Administration Service Major Developments & Results Integrated Services ISO 9000 Certification Taxpayer Culture Information / Data Administration Taxpayer Registration Programs Risk Management Process Reengineering Customs Model Digital Signature/ Invoicing Models Quality / Timely Information Integrated Government Indicators Government Private Network Human resources / Institutional Principles / Facilities Process Simplification / Good Practices Standardization Organization TI Programs

5. Mexican Tax Administration Service Major Developments & Results Internet Portal Access Time Internet 1.1 2.5 6.6 27.7 93.2 115.5 165.5* 113.1 2006 (August) Cost / Benefits InteractionInformation Transaction Evolution Virtual Office 200020012002200320042005 Millions of visitors / Transactions * Estimated

6. Mexican Tax Administration Service Major Developments & Results Authentication: Personal Identification Number (PIN) 1’702,887 939,923 1,165,865 793,221 191,207 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 20022003200420052006 (june) Accumulated (previous year) Current year 1’894,094 2’834,017 3’999,882 4,793,103 Taxpayers

7. Mexican Tax Administration Service Major Developments & Results Digital certificates 200420052006 4th Quarter 1’004,159 63,907 414,857 266,744 525,395478,764 258,651 Authentication: Advanced Electronic Signature

8. Mexican Tax Administration Service Major Developments & Results Paper vs Electronic Billing More than 1 million invoices issued Number of taxpayers who adopted electronic billing 2005 2006 (Sep) 1400 1200 1000 800 600 400 200 0 1,070 200 1,270 Taxpayers using paper invoices Authorized printing establishments Invoices / Tax bills printed 1.5 millions 8,500 4 billions

9. Mexican Tax Administration Service Major Developments & Results 2% Income revenue by electronic returns vs. traditional methods 200320042005 InternetTraditional methods (paper & Bank) 2006 (June) 52% 48% 98% 2% 98% 2% 98% 2% Electronic filing

10. Mexican Tax Administration Service Major Developments & Results Total operations Paper 2006 (June) 200320042005 Electronic filing InternetBank October 2006 59% 35% 6% 55% 40% 5% 52% 40% 8% 40% 10% 50%

11. Mexican Tax Administration Service Major Developments & Results Tax Return * At the end of the compliance term 2001200220032004 0 2005 0 100% 94.9% 5.1% 33% 46% 67% 54% 2006 32% 68% * 0 100% 2000 PaperInternet October 2006 Individual Tax Return Total operations *

12. Mexican Tax Administration Service Major Developments & Results Average cost return compliance For Individuals * 1,000 * Includes all expenses like professional tax assistance, transportation, Internet, tax forms, etc. Telephone survey to measure perception of compliance cost Compliance Cost Model US Dollars 0 200 400 600 800 1000 1200 1400 1600 1800 Nov-03 Dec-03 Jan-04 Fer-04 May-04 Aug-04 Oct-04 Dec-04 Feb-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06

13. Mexican Tax Administration Service Major Developments & Results Taxpayer’s liabilities (Federal Tax Laws) Compliance Cost in Mexico Tax Administration ABC Internal Cost Method Taxpayer Direct Cost Method Liabilities administration Information / Control Communication Service delivery channels and operation Taxpayer’s liabilities (taxpayer type) Compliance through any channel Liability Compliance Services under analysis 1.Taxpayer Register 2.Advanced Electronic Signature 3.Tax and Informative Returns 4.Tax refunds 5.Tax Credit 6.Invoices, tax bills 7.Audits Service delivery channels 1234 321 Electronic Design Development Implantation Maintenance Operation Paper Face to face Remote channels Internet Chat Phone (person to person) Phone, automated (person – IVR interaction) First output: December ´2006

14. Mexican Tax Administration Service Major Developments & Results Integrated Solution Release