In regards to disbursements and expenses, the Article 31, section IX of the Income Tax Act (Mexican acronym “LISR”), provides that in order to be legally deducted, they shall be actually paid before the closing of the fiscal year (December 31st).
For purposes of the aforementioned Article, actually paid shall mean: the payment in cash, check ordered to the account of the tax payer, deposit or wire transfer. Regarding checks, it is important to highlight that the payment is only deductible until the check is cashed (providing that a period no longer than 4 months passes).
The above regulations apply to, among others, the following expenses:
- Any payment that constitutes a tax income for a individual tax payer: wages, fees, interests, royalties, leasing... Etc.
- Services of collection of domestic wastes and supply of water, rendered by Decentralized Agencies.
- Payments to entities of the Simplified Regulations.
- Services rendered by Civil law Companies or Associations (“Sociedades Civiles” or “Asociaciones Civiles”).
In addition, it is important to consider that in order to apply the above deductions, the company shall have the corresponding receipt for tax purposes required by the LISR and its Regulations.
The above is provided as general information prepared by professionals with regard to the subject matter. This document only refers to the applicable law in Mexico. While every effort has been made to ensure accuracy no responsibility can be accepted for errors or omissions. The information contained herein should not be relied on as legal, accounting or professional advice being rendered.
