Automotive Taxation Yields Results

The Mexican government has reported that the taxation of the automotive industry has resulted in historical collection results in 1H23. Between 2019 and 2023, the Tax Administration Service (SAT) has collected MX$49.224 million (US$2.91 million) from major contributors across the automotive industry, a 152% increase compared to the previous administration. 

This taxation process has been carried out in alignment with the government’s Master Plan for Tax Auditing and Collection 2023, managed by the General Administration of Large Taxpayers (AGGC). Results show that only in 1H23, SAT collected MX$14.860 million (US$878,755) from the automotive industry, already above the MX$14.500 million (US$857,466) collected during the entire 2012-2018 administration.

So far, the tax authority has concluded a total of 247 tax audits in this sector. Moreover, there are ongoing reviews with 207 taxpayers in the industry, which will be invited to rectify their tax situation as necessary, reported the government.

The government has been more vigilant of the mining and industrial sectors, paying special attention to the contributions for Value Added Tax (VAT) and Income Tax (ISR) from the automotive sector, reported Bloomberg. 

The so-called master plan is aimed at major contributors from several industries, such as automotive, construction, energy and mining, among others. Some of the key points of this plan include supporting taxpayers for voluntary compliance, monitoring for regularization, process optimization and coordination with federal entities in the area of authority management. The plan also considers actions to combat tax evasion schemes involving the creation of "fake invoicing" companies. 

From 2019 to 2022, the government collected MX$776 billion (US$45.86 billion) more than the previous administration did from 2012-2018. Nonetheless, according to El Economista, tax contributions from large taxpayers as a percentage of tax revenues declined 8% in 2022. 

Tax collection from large taxpayers still accounted for 46% of the over MX$3.8 trillion (US$224.715 billion) obtained from tax revenues in 2022. Collection from 11,895 large companies experienced two consecutive years of annual contractions, with a real annual decline of 2.3% in 2021 and 8% in 2022. However, the annual increases in collections from legal entities, individuals, wages and salaries showed a 5.8% real annual increase.