Mexico’s Government on 30 November 2016 Publishes the Decree containing the tax reform package for 2017 in the Official Gazette. The reform will be effective as of 1 January 2017.

The main amendments to the income tax law are summarised below:

–The economic or cash support received by taxpayers through government programmers will not be considered taxable income if certain requirements are met.

–The investments made in electric cars will be deductible up to an amount of MXN 250,000.

–Payments made for the rental of electric cars will be deductible up to an amount of MXN 285, provided that other requirements are met.

–Income received by donees from activities different from those established as part of their social objectives may not exceed 10% of their total income. For these purposes, cost recovery fees will not be considered in calculating the 10% threshold.

–Legal entities, constituted by individuals, may opt for determining their income tax on a cash-flow basis, provided that their annual income is lower than MXN 5 million and certain conditions are met. For these purposes, a notice must be submitted to the Tax Administration Service indicating the year in which the option will be applied. Where, after the election has been made, the legal entity exceeds the MXN 5 million thresholds, it may not apply the option any longer, but must calculate its income tax on an accrual basis.

–Taxpayers investing in research and development of technology may credit against the annual income tax an amount equal to 30% of the expenses incurred and the investments made for such purposes. The tax credit will not be taxable for income tax purposes.

–Taxpayers investing in infrastructure projects of high-performance sports, as well as in programs designed for the development, training and competition of Mexican high-performance athletes, may credit against the annual income tax the contributions made to those projects. The tax credit may not exceed 10% of their annual income for the previous tax year.

–Taxpayers investing in national theatre production, dance, music, visual arts and jazz projects may credit the contributions made to those projects against the annual income tax and the advance income tax payments. The amount credited may not exceed 10% of the income tax for the previous tax year.

–Taxpayers investing in electric car charging equipment may credit 30% of the amount invested in the tax year against the annual income tax. The tax credit is not taxable for income tax purposes.

–In the case of personal deductions, individual taxpayers may deduct payments made for the provision of psychological and nutrition services, provided that certain conditions are met.

–Remuneration in kind received by contractors referred to in article 6 of the Hydrocarbons Law will not be taxable income for income tax purposes, provided that such remuneration is not considered to be the deductible cost of sales when the goods are alienated or transferred to a third party.

–Contractors and assignees defined under the Hydrocarbons Law must prepare and keep transfer pricing documentation, regardless of their income level.