15 Companies Owe US$2.24 Billion to SAT

In mid-February, the Tax Administration Service (SAT) demanded Walmart to pay MX$10.6 billion (US$477.8 million) for the sale of Vips to the Mexican company Alsea, in the form of taxes, fees, surcharges and updates, according to Notimex. Yesterday, Walmart reported that it had reached an agreement with SAT and made a payment of MX$8.79 billion (US$390 million). However, Walmart is only one of the 15 companies that jointly owe MX$50 billion (US$2.23 billion) in tax contributions to SAT, not only from 2019 but from years ago, according to a note from La Jornada. 

President López Obrador, during his morning conference on March 16, explained that on average each of the 15 companies has a debt of MX$3.5 billion (US$134 million) but two of them owe more than MX$10 billion (US$477.8 million). Despite the fact that the list has not been made public, President López Obrador sent a letter to the President of the Business Coordinating Council (CCE) to alert him of the situation. In addition, López Obrador stressed that “some companies have already agreed to pay taxes but others have chosen to resort to legal entities under SAT to address the situation.”

SAT reported last week that during 1Q20, collection through the payment of taxes reached MX$1 billion (US$44.8 million), which symbolizes an increase of about 13.4 percent compared to the same period during 2019 when MX$855 million (US$38.4 million) were collected, according to a note from El Financiero. SAT made public that for the whole year of 2020, the tax collection goal was of MX$3.5 billion (US$160 million).

According to the OECD, tax payment is vital to the growth and development of countries, as governments are in a less favorable position to perform their duties when there is an unfavorable tax collection. Studies carried out by the OECD estimate that on average, tax collection is around 34.2 percent, while Mexico barely reaches half of this figure. In addition, countries like France, Denmark, Belgium, Sweden and Finland are above 42 percent, compared to Mexico’s 16.1 percent which is below countries like Senegal, Kazakhstan, Peru, Egypt and Thailand.

According to the President of the Mexican Institute of Public Accountants Francisco Macías, taxpayers pay a rate of 30 percent on ISR and employees have more limited deductions. In comparison, companies are more likely to deduct and do so according to their activity. In addition, Macías explained that companies also enjoy exemptions, incentives and other types of special regimes authorized to decrease their tax burden, according to a note by El Economista.

This unequal reality is also evident throughout the country. Nationally, the Tax and Management Report for the Third Quarter of 2019 reported the tax revenue reached MX$2.4 billion (US$200 million), of which 53.1 percent was from ISR, 29.06 percent from VAT and 17.84 percent from IEPS. However, when analyzing each state, it can be seen that the collection of taxes (ISR, VAT, IEPS, foreign trade, ISAN and others) in states does not necessarily coincide with the resources distributed by the federation, according to the Economic and Budgetary Research Center (CIEP). Mexico City, Nuevo Leon, Tamaulipas and Veracruz were the states that contributed the most compared to Tlaxcala, Nayarit, Durango, Guerrero, Zacatecas and Oaxaca that contributed the least in taxes.