Today, Annex 7 of the First Resolution of Amendments to the Miscellaneous Tax Resolution for 2020 (“Annex 7”), among others, was published in the Official Gazette of the Federation (“DOF”), containing regulatory criterion 46/IVA/N entitled “Withholding of 6% of the Value Added Tax referred to in section IV of article 1o-A of the Value Added Tax Law”.
Following the publication in the DOF of the “Decree amending, adding to and repealing various provisions of the Income Tax Law, the Value Added Tax Law, the Special Tax on Production and Services Law and the Federal Tax Code,” generally effective as of January 1, 2020, a section IV was added to article 1-A of the Value Added Tax Law (“VAT”), to establish the obligation to withhold 6% of the value of the consideration actually paid in the case of certain services. However, given the uncertainty generated by the addition of this section to the aforementioned article 1-A, in stating that the withholding applies to services through which personnel is made available to the contracting party, regulatory criterion 46/IVA/N was issued and published in order to clarify the cases in which the aforementioned withholding must be carried out. In this regard, pursuant to what is set forth in said criterion, when a legal entity under Title II or Title III of the Income Tax Law or an individual with business activity, in its capacity as contracting party, receives services in which personnel is made available to it, withholding will apply if the functions of said personnel are used directly by the contracting party or by a related party of the latter. On the contrary, there will be no withholding if the services rendered correspond to a service in which the contractor's personnel performs functions that are used directly by the contractor itself. It is important to note that regulatory criterion 46/IVA/N had previously been made known in the advance version of Annex 7 (on January 31, 2020 through the website of the Tax Administration Service), whose text remains intact in the published version of Annex 7, which can be consulted here. For additional information, contact our experts: Fernando Moreno, Partner: +52 (55) 5258 1008 | fmoreno@vwys.com.mx Jorge Díaz, Associate: +52 (55) 5258 1008 | jdiaz@vwys.com.mx }Diego Benítez, Associate: +52 (55) 5258 1008 | dbenitez@vwys.com.mx
