Tax credits examples

In Mexico, as a result of the tax relationship between the taxpayer and the tax authorities, obligations and rights arise for both parties. The taxpayer’s main obligation is to pay taxes, and the tax authority has the power to verify that the taxpayer complies with this and other tax obligations.

The tax authority has inspection or verification powers to monitor the taxpayer’s compliance with its tax obligations, and also has collection powers, that is, if the taxpayer does not comply voluntarily with its main tax obligation, which is the payment of taxes, the tax authority has the power to collect them coactively from the taxpayer.

The Administrative Procedure of Tax Execution or PAE is of an administrative nature and the tax authorities are empowered to carry it out in accordance with Article 16 of the Political Constitution of the United Mexican States, and in conformity with the applicable tax provisions such as the Federal Tax Code or the Tax Codes of the Federal Entities and municipalities and their regulations.

Forms of extinction of the tax credit

In other words, the tax credit is an economic amount in favor of the taxpayer at the time of liquidating a tax. This allows the taxpayer to pay less taxes or to have a balance in favor with the tax authority.

The amount of this balance in favor depends on the deductible expenses incurred by the taxpayer. These can be included in the tax return by the law that regulates the tax in question.

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So, if we are obliged to pay, for example, $1,000 of a tax and we have a tax credit of $80, our payment obligation will be $920. This, since the amount of the tax credit is already in the hands of the administration (We will present an example with more details later).

But, let’s go back to the concept of deductible expense. We must remember that when we acquire a certain good or service we face the payment of the price of the product plus the corresponding tax, thus incurring in an expense. This could be the case of a deductible expense.

Forms of extinguishment of the tax obligation in Mexico

In the case of Vehicle Ownership or Use Tax, to register the vehicle in the vehicle registry of the entity, within thirty days from the date of acquisition, as well as to carry out all those vehicle control procedures that modify and update the registration of the vehicle, in accordance with the procedures and requirements established by the Secretariat.

II. To process the deregistration of the vehicle from the vehicle registry of the entity, in case of accident resulting in total loss of the vehicle, theft, ceasing to be the owner, holder or user, within a term not exceeding thirty days from the occurrence of the event. The presentation of the notice does not release of contributions pending payment.

VIII. Provide at their tax domicile or at the offices of the tax authority, within the term established for such purpose, the data, reports and other documentation related to the fulfillment of their tax obligations, as well as allow the visitors to obtain copies thereof for their comparison and certification.

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Sat Tax Credits

When you apply for health insurance coverage on the Health Insurance Marketplace, you may qualify for a “premium tax credit” that lowers your premium – what you pay each month to your insurance plan.

In addition to a tax credit, your income qualifies you to save on out-of-pocket costs you pay each time you receive medical care, such as deductibles and co-payments. But you receive these savings only if you purchase a plan in the Silver category. Learn more about cost-sharing reductions.