Implications for the Oil and Gas Sector of the Proposed Tax Amendments for Fiscal Year 2022

 Professional related: Enrique Ramírez , Nora Morales   |      September 15th, 2021

On September 7, 2021, Mexico’s President submitted before Congress the proposed bill of amendments to several tax laws that, if approved, will enter into force on January 1st, 2022 (the Proposed Amendment.) The Proposed Amendment includes relevant modifications for the oil and gas sectors that are described below.

I. Thin Capitalization.

Article 28, Section XXVII of the Income Tax Law establishes that interest derived from debts contracted by the taxpayer with related parties abroad are not deductible when the amount of the debts exceeds three times the taxpayer’s equity. However, such section states that debts incurred for the construction, operation or maintenance of productive infrastructure related to strategic areas for the country or for the generation of electricity will not be included in the calculation of the amount in excess of three times the taxpayer’s equity.

 

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