The presumption may be made by the tax authority when it detects that a taxpayer has claimed deductions based on tax losses in any of the following scenarios:
- The taxpayer declared tax losses in any of the three fiscal years subsequent to its formation, in an amount greater than the value of its assets, and more than half of its deductions are related to transactions with related parties.
- The taxpayer declared losses after the three fiscal years following its formation, with more than half of its deductions relating to transactions with related parties, and such deductions would have increased by more than fifty percent (50%) with respect to those tax losses incurred in the immediately preceding fiscal year.
- The taxpayer reduces its material capacity to perform its primary business activity by more than fifty percent (50%) in fiscal years following those in which it declared a tax loss as a result of a transfer of all or part of its assets by means of a corporate restructure, spin-off or merger or because said assets were transferred to a related party.
- The taxpayer declared tax losses with knowledge of the existence of the transfer of assets involving the separation of its ownership rights, without considering said separation in determining the proven cost of acquisition.
- The taxpayer declared tax losses, having knowledge of the change in treatment of investment deductions pursuant to the Federal Income Tax Law, before having realized at least fifty percent of the deduction.
- The taxpayer tax declared losses, having knowledge of the deduction of such tax losses, the consideration for which was paid by means of credit instruments and the payment obligations which were extinguished by means of a form of payment other than those set forth in the Federal Income Tax Law for deduction purposes.
When the tax authority becomes aware of the existence of any of the above scenarios, it will notify taxpayers who have taken such tax loss deductions so that they may respond and provide the information and documentation necessary to rebut the facts and presumption that triggered the tax authority’s notice. The tax authority will then evaluate the evidence and defenses set forth by the taxpayer within six (6) months and will publish on its website and in the Official Journal of the Federation a list of taxpayers who did or did not successfully counter the tax authority’s case against them.The publication of the final list of taxpayers who did not disprove the tax authority’s case will confirm the final determination of impropriety of the tax loss deductions in question. Therefore, in order to avoid triggering a notice from the tax authority, it is important for all Mexican taxpayers to analyze the above scenarios in light of any planned corporate restructure, spin-off or merger, or, more generally, a change of shareholders.