Welcome to the Cozumel Sun News for December 2nd, 2013
In this issue Ford Ironman Results and Extensive Reforms in Mexico Tax Laws that may affect you. The tax reform is very important! I urge all readers to pay close attention to the information as it affects Taxes, Banking, Real Estate, Small Businesses, and Non-profits to name a few. I want to take this opportunity to apologize to the many readers that have tried unsuccessfully to subscribe to the Cozumel Sun. The RSS Feed in the upper right hand side of the Home page is NOT WORKING and to date, experts have been unable to help me resolve this problem. I have one link that is working: On the HOME page scroll all the way down to the bottom of the page. On the right hand side you will find a box “SUBSCRIBE TO THE COZUMEL SUN“. Write in your email address and press submit. Follow the simple instructions on the next screen and you will be successful! I am very sorry for the inconvenience, we will resolve the issue as soon as possible.
Michael Weiss and Rachel Joyce Win Ford Ironman
The results are in for the Ford Ironman 2013 Competition. The strenuous competition consisted of a 2.4 miles swim, 112 miles of cycling (three laps around the island) and a 26.2 miles foot race. 73 competitors representing 50 countries fought in the Elite Class to qualify in the Ultraman World Championship to be held in Kona, Hawaii in 2014.
The event started at Hotel Presidente, instead of Chankanaab Park. An impressive crowd of almost 2,500 tri-athletes gathered in the early morning hours to begin their swim from the hotel to the Dolphin area in Chankanaab Ecological Park. There were 444 athletes from Mexico, 123 from Canada, 79 from Argentina, 68 from Brazil, 51 from Great Britain, and 44 from the United States, among others.
Thirty two-year old Australian Michael Weiss won the Men’s Category and thirty-five year old Rachael Sarah Joyce from Great Briton was the winner of the Women’s Category.
Michael Weiss who completed the three phases in 7 hours 55 minutes and 23 seconds was unrivaled. The Finish Line was at Quintana Roo Park. As he walked the last few meters to cross the finish line, mariachi music played, and a crowd of spectators cheered and applauded. Upon reaching the goal, his wife melted into his arms for a hug and a kiss. Subsequently Mayor Efren Fredy Marrufo Martin greeted him and placed on his neck the Ironman medal.
Barbour Tyler Butterfield of Bermuda won second place with a time of 8 hours and 2 minutes and 42 seconds. Michael Weiss met him at the finish line and they both waved and raised their arms in victory. Eneko Llanos, from Spain came in third place with a time of 8 hours 5 minutes and 21 seconds.
A few minutes after LLanos, Rachel Sarah Joyce came in to win first place in the women’s Elite. Great Britain’s Rachel Joyce only needed to finish the race to qualify her for Ironman 2014 in Kona, Hawaii. I found no winning time to report.
Other Women’s Elite winners were Jessie Donovan from the United State came in second place with a time of 9 hours one minute and 12 seconds and Amanda Stevens also from the United States, came in third place with a time of 9 hours 6 minutes and 40 seconds.
Minutes after the arrival of the third place winner, heavy rains showered Cozumel to calm the intense heat of the morning sun.
Extensive Reforms in Mexico Tax Laws
I received the following article from Lic. Spencer Richard McMullen, an attorney and translator living in Jalisco. He explained that he has written this article for newspapers and online sources to explain to foreigners the reach and extent of the new tax reforms.
Extensive Reforms in Mexico Tax Laws
Very extensive reforms have been made to Mexico´s tax laws and have been finalized in November, 2013 and will become effective on January 1, 2014 not giving people a lot of time to prepare.
That is going to be a problem. First, because all the appointment times at the SAT offices (Mexico’s tax department) are filled for quite a while, and second, because some of the changes will affect banks and businesses quite a bit. I think it’s going to be a messy transition as many will be unable to comply in time with only 2 weeks left until the government goes on vacation and returns January 2nd when the new laws take effect and even then there may be delays of weeks for people to be able to get appointments at the tax office to set themselves up or make changes.
There are new IVA sales taxes.
It’s now going be 16% nationally (whereas it’s been about 11% in the border areas), and it will include taxes on soda, chewing gum, and pet food throughout Mexico. Those weren’t included in the past. So, people with pets should stock up at Costco before the New Year. Dog shelters will be especially hard hit. And, for people driving back from up north after Christmas, or coming back from nationalizing their vehicles at the border, they’ll want to fill up their tanks near the border, where the gas tax will still be 11% until the end of the year.
Will anything change at customs (Aduana)?
Yes, temporary importation of certain goods will also start being taxed. That could open the door in the future for a tax on the temporary importation of vehicles. Not yet, though. And, the mandatory use of customs agents for any value of goods to be imported has been eliminated. The use of an agent will be optional, which is a good thing because then they’ll have to be more competitive in terms of rates and quality of service.
Also, customs is going to be checking the value of imported goods more closely and communicating with the countries where merchandise is leaving to check declared values. People may be more likely to get caught if their car nationalization pedimento say the car is worth 10,000 pesos, but it is clearly worth much more.
What about new banking regulations?
Starting in 2007, there had been a tax on large cash deposits: 2% on the amounts of deposits exceeding 15,000 pesos, changed in 2010 to 3% on amounts exceeding 15,000 pesos. Those taxes have now been eliminated. But, banks are now required to report to SAT any deposits over 15,000 pesos, and any payment of credit card debt of $20,000 pesos made at a time in cash. SAT may also audit you and compare your credit card expenditures to your declared income. They can then contact you to explain these transactions within a certain time frame. If you don’t respond within that time frame (say, 20 days), they could start collection action. And, of course, you wouldn’t respond if the address they have for you is old. So, it will become very important for people to make sure their bank has up-to-date home addresses and email addresses. That’s especially true for Snow Birds. They’ll need to check their email frequently while they’re gone.
Also, banks will require people to have an RFC (tax ID number) in order to open a bank account. They have enabled the ability to get an RFC number online but people first need a CURP number which has to be processed through immigration, but that could take time to set up. With offices closing for the holidays, people may have problems in January and would have to wait until February to open the account as they need their CURP first through the immigration office.
Anything new for businesses?
Yes, the current process for small business reporting (REPECO) will be eliminated. Currently, small businesses report their gross earnings every two months. For January, that will still be the case in order to report earnings for the November – December months. After that, there will be more paperwork. The process will come through the regular tax system. That is, earnings will need to be reported, and so will deductions and facturas (invoices) – just like big businesses do today. And the tax rates will be between 2% and 35%. Not only will there be more paperwork, but there will also need to be greater mastery of Spanish.
Another change is the elimination of the business IETU tax (single-rate flat tax started in 2007).
And, non-profits will start being required to be authorized by the SAT to receive donations which would allow them to continue preferential tax treatment. That’s obviously going to be critical for them. They should probably start that process immediately, and try to get their major contributors to donate before January 1st.
The most controversial of the new business regulations is probably the requirement for electronic facturas and the elimination of paper facturas and to give all employees online facturas (CFDI) rather than paper facturas when they get paid in order to be able to deduct their wages. That system may not be ready by January 1st, by either the SAT or the businesses, so that’s going to create a lot of problems.
What about tax changes for investors and real estate owners?
Mexico has caught up to many other countries and will tax capital gains on the sale of stock at a rate of 10% as well as tax dividends at the same rate of 10%.
For real estate sales there will be a maximum capital gains tax exemption pegged using the UDI index (investment units) with a new limit of 700,000 which equates to about 3,500,000 pesos so any gains over that amount from a sale will be taxed, the prior limit was 1,500,000 UDIs with that exemption waived if someone could prove they lived in the home for the preceding 5 year period.
That’s a lot of changes.
There are more. Those are just the ones that I think will affect expats the most. SAT is also firming up the tax code in other ways. They did some research to determine where and why they lost tax court cases in the past, and have now plugged some of the advantages taxpayers had in court. I’ll know more next week (1st week of December), so I can give you an update then when I go to another 5 hour tax update class.
Source: Chapala Legal / Financial Services (chapalalegal@gmail.com)
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