One of the constant concerns of companies is to determine if the distribution of profits to shareholders through the decree and payment of dividends will be taxed on Income Tax (ISR), so it is important to make an assessment prior to distribution. thereof.
For these purposes, the first paragraph of Article 10 of the Income Tax Law establishes that the corporate entities that distribute dividends must calculate the tax on them, applying the 30% rate to the result of multiplying said dividends by the factor of 1.4286.
The tax will have the character of definitive payment and will be heard before the authorized offices, no later than the 17th day of the month immediately following the one in which the dividends were paid.
On the other hand, the third paragraph of said article 10 states that the aforementioned tax will not be paid when the dividends come from the balance of the Net Tax Profit Account (CUFIN).
The tax paid for the distribution of dividends in excess of the CUFIN may be credited according to the following:}
i. The credit can only be made against the ISR for the year that is the responsibility of the entity in the year in which the tax is paid.
The amount of the tax that can not be credited according to the previous paragraph, may be credited up to the following two years against the tax of the year and against the provisional payments of the same.
When the tax for the year is less than the amount that was credited in the provisional payments, only an amount equal to the latter will be considered creditable against the tax for the year.
When the taxpayer does not credit the tax determined in accordance with Article 10 in an exercise, and may have done so, he will lose the right to do so in subsequent years up to the amount in which he could have done so.
ii. In the fiscal year in which the tax is credited according to the previous fraction, taxpayers must decrease the net tax profit, the amount that results from dividing the tax credited by the factor 0.4286.
It is also important to consider that since 2014, the ISR Law includes the additional tax of 10% on dividends , regulated in Article 164 of the Income Tax Law, which establishes that in the income from dividends or profits, and in In general, for the profits distributed by moral persons, the source of wealth will be considered to be in the national territory, when the person who distributes them resides in the country.
For these purposes, dividends or profits distributed by legal entities are considered , among others, the income that for these concepts, in accordance with the provisions of article 10 of the same Law and the tax, are paid together with the provisional payment of the month. corresponding.
It also states that the legal entities that distribute the dividends or profits referred to in this article must withhold the tax that is obtained from applying the 10% rate on said dividends or profits , and provide the persons to whom they make payments to this paragraph refers to, record in which indicates the amount of the dividend or utility distributed and the tax withheld, while the tax paid will have the character of definitive.
In this sense, the ninth article of the transitory provisions of the Income Tax Law for 2014 , mentions that the additional tax established in section I of article 164 of this Law, will only be applicable to the profits generated as of the year 2014 that are distributed by the legal entity resident in Mexico or permanent establishment.
In this way, the person who will make the distribution will be obliged to the following:
i. Maintain the net fiscal profit account with the profits generated until December 31, 2013.
ii. Start another net fiscal utility account with the profits generated as of January 1, 2014, under the terms of article 77 of this Law.
It also clarifies that when the legal entities do not carry the two accounts referred separately or when they do not identify the mentioned utilities, it will be understood that they were generated as of the year 2014.
For its part, Article 76 of the much-touted ISR Law states that taxpayers, in the case of corporations that make payments for dividends or profits to individuals or corporations, will have, among other obligations :
- Make payments with a non-negotiable nominative check of the taxpayer issued in the name of the shareholder or through transfers of funds regulated by the Bank of Mexico to the account of said shareholder.
- Provide the persons to whom they make payments for the items referred to in this section, tax receipt in which their amount is indicated, the income tax withheld in terms of article 164 of this Law, as well as whether these come from the CUFIN, or if it is about the dividends or profits referred to in the first paragraph of article 10 thereof. Said voucher will be delivered when the dividend or utility is paid.
Finally, for the purpose of making a dividend distribution, sufficient retained earnings must be available and, in accordance with the General Law of Commercial Companies, the distribution of profits can only be made after they have been duly approved by the shareholders’ meeting. or shareholders the financial statements that throw them.