Simplified Trust Regime for Individuals

For the last 30 years different taxes payment regimes have been implemented, focused on facilitating and reducing the income tax payment (ISR, by its initials in Spanish) for individuals; likewise, it has been sought to simplify the fiscal obligations and to integrate the informal sector into the Tax Administration Service (SAT, by its initials in Spanish) contributors database, said regimes have been:

• Regime for minor taxpayers;
• Small taxpayers regime (REPECOS, by its initials in Spanish) as of 1998;
• Fiscal Incorporation Regime (RIF, by its initials in Spanish) in force since 2014;

Currently, with the fiscal amendment in 2022, the cancelation of the Fiscal Incorporation Regime (RIF) has been approved, and it is to be changed by the Simplified Trust Regime for Individuals (RESICO), which is ruled by an argument similar to the above regimes.
According to Article 113-E, the only subjects who can chose to pay taxes under RESICO are:
• Individuals performing business and professional activities and,
• Any person granting temporal use or possession of goods,
• Up to 3.5 million of pesos of effectively perceived gross income. Whenever this amount is exceeded, taxes must be paid according to Title IV, Chapter II, Section I or II of the LISR, as appropriate.

Said principle also points out which individuals cannot pay taxes pursuant this regime, namely:
• Partners or shareholders of corporations, or when being related parties.
• Individuals residing abroad,
• Those having incomes subject to Preferential Fiscal Regimes,
• Those having incomes referred to by Fraction III to VI of Article 94 of LISR.

The fiscal obligations that individuals must meet when choosing to pay taxes under RESICO must be taken into account, namely:
• Be registered at the Federal Registry of Taxpayers (RFC, by its initials in Spanish).
• Create his/her electronic signature.
• Have his/her income receipts.
• Obtain and keep Digital Tax Receipt (CFDI, by its initials in Spanish) showing proof of his/her expenses and inversions.
• Issue CFDIs to his/her clients for the operations carried out. The Global CFDI can be canceled only on the month on which it was emitted according to the general rules.
• File monthly payments at the latest on the 17th day each month. Incomes without emission of receipts do not pay taxes under this section.
• File Annual Declaration, determine the Employee Profit Sharing (PTU, by its initials in Spanish) by deducting essential expenses from incomes.

The method for determining both the provisional payment and the annual declarations consists of applying the rate ranging from 1% to 2.5%, to the actually received gross incomes which are supported by fiscal receipts and without taking into account any deductions, for which reason, when paying taxes under RESICO, any personal deduction such as, inter alia, medical expenses, dental or hospital expenses may not be applied.

In case of performing business activities, professional activities or that the temporary use or enjoyment of any good is granted to legal entities, these shall retain 1.25% of the payment amount being paid from the individual, such retention may be proven by the individual upon the ISR provisional payment.

Must be noted that a transitory article establishes that taxpayers currently being under RIF, can continue paying taxes under the same pursuant to the provisions of Section II, Chapter II of Title IV of LISR, in Article 5-E of the Law on Value-Added Tax (LIVA, by its initials in Spanish), and Article 5-D from the Law on Special Tax on Productions and Services (LIEPS, by its initials in Spanish), as well as continuing to enforce the stimuli scheme IVA and IEPS matters, during the permanence term established by the LISR, in force until 2021, by complying the corresponding requirements.

Even though with time there have been various attempts and mechanisms to broaden the taxpayers database, gaining the trust of the informal economy not been possible up to date, and this is not just due to the accountants services payment, or to the SAT forms filling complexity, but also to the uncertainty, even for the captive taxpayers, that exists in the correlation between the government revenue and the socioeconomic environment, since it does not reflects a difference in relation to the past, even when in this past few years the collection has been very profitable for the authority.