Tag Archives: taxes

More on the Cell Phone Debacle

Many Mexicans were surprised that there was no ‘prorroga‘ (extension) on the deadline for registering your cell phone; in fact, anyone who has lived in this country for any length of time knows that any new law requiring anything to be done on the part of the populace, ends up getting postponed and those who rushed to comply on time feel foolish, cheated and are laughed at by the more seasoned pros who knew that the deadline was not really that firm.

You might remember when former president Fox announced his ‘borron y cuenta nueva‘ tax program, essentially forgiving fines and back taxes on those who had not paid their federal taxes. Those of us who did pay their taxes felt like a bunch of idiots as the tax cheats laughed their way to the bank.

Water bills? Same thing. The JAPAY regularly forgave debt in order to invite customers to get back on track. While some of these folks might have had real economic troubles, a great number of them did not and simply abused – and continue to abuse – the system.

Well, everyone expected the deadline for the cell phones to be extended and were indeed surprised when it was not. Lineups at TelCel offices were long and the whole RENAUT system collapsed under the pressure of so many people doing last minute registering via text message.

Meanwhile, the question of whether this idea was really that great in the first place has come up. Turns out that a good number of people registered their cell phones in the name of Felipe Calderon (president) and many more registered them in the name of someone else (read more on this here). You perhaps? You’ll never know, unless a crime is committed somewhere with that phone and you get the knock on the door – if they are polite; if not, they will kick it in, to use a phrase by our illustrious governor.

And now, the major player in the cell phone market in Mexico, TelCel, has announced that it has in place an ‘amparo‘ which is essentially a legalistic delay tactic that permits them to NOT cancel any unregistered cell phone accounts, as the law dictates it should. Telef├│nica, another cell phone provider here is in the process of doing the same. It is difficult to imagine the “powers” that be telling Carlos Slim what he can or cannot do, so it will be interesting to see how the government handles this.

Aren’t you glad you took the time and trouble to register your phone? I know I feel good about it.

And if you thought that last post was fun…

Here’s another one!

When filing your business’s annual tax declaration, you make out the onerous paperwork – well, your accountant does because the Mexican tax system is so complicated that it is virtually impossible for anyone to understand what the hell it is you are supposed to actually put in the scores of little boxes and what to deduct or declare – and you file it, paying at the bank via internet since Mexico is such a modern country. Once you have paid and received/printed your receipt, and have verified that your money has been removed from your bank account in order to help promote a comfortable lifestyle for Mexican politicians once they have retired and live in France, you think you are done right? Wrong.

It turns out that there is a little-known and never-used (up till now) in the marvelous taxation laws of this advanced democracy that states that besides filing your declaration and paying, you have to (or your accountant has to) LET HACIENDA KNOW THAT YOU HAVE PAID by means of an official letter or notification. Failure to do this will result in a $50,000.00 peso fine! Can you believe this? You pay and they already have your money, but since you didn’t tell them you paid, you automatically get slapped with a fat fine which will presumably cover the cost of Mr. Carstens weekly lunch bill.

This is nothing less than outright highway robbery and a wonderful incentive for investors to come to Mexico to subject themselves to this abuse. Perhaps the Mexican government should consider promoting the country to the International Masochist Businessmens Association, whose members might enjoy this kind of pain.

I am not making this up. I have first-hand knowledge of such a case right now. The accountant alleges that while it is technically his fault because he is supposed to be watching his clients’ back, he prefers to fight the fine legally (with the clients money of course).

Meanwhile, for your enjoyment, look for a photo of Mr. Carstens, Mexico’s Minister of All Things Taxable and believe me as you will see, he needs the money.

More on the $2000 Peso Rule for Small Business Owners

This note is of interest for those considering coming to Mexico and starting a small (or large) business…

In their infinite and constantly increasing wisdom, the powers that be at the Secretaria de Hacienda y Planeacion (SHCP) known simply as ‘Hacienda’ established a rule that said you can not declare as a legitimate expense any expense that reaches or exceeds $2000 pesos if you paid for it in cash. This ingenious little rule will somehow make the country less prone to tax evasion and help the 30% of Mexico that pays taxes pay more taxes either directly or in fines and therefore support the other 70% that pays no taxes whatsoever.

Let’s say you are buying something in Costco and the bill comes to $1999.99. That’s OK, you can pay in cash. But if it comes to $2000.01 then you must pay with a company check.

There are a couple of ways around this little rule, none of them particularly illegal (check with your accountant though, don’t take my neurotic word for it):

  • Let’s say you have $7000 pesos worth of goods you have bought for your business. You ask the cashier, or the person who is making up your invoice, to split the purchase into several separate purchases with each invoice totaling less than the $2000 peso total. This way you can pay for them in cash (petty cash) and then issue a check later for reposition of petty cash. This helps because if you want to pay by check in some of these places, it’s a pain in the butt since you will need to have extra paperwork done in the case of Sam’s Club or Costco, for example.
  • The other way is to pay your $7000 in cash; then make the check, and it’s accompanying poliza* out separately. Make the check out to yourself, but on the poliza make it look like the check was paid to the company in question.

This ‘petty cash’ rule is one of the rules that business owners must abide by and that make doing business in Mexico such a downright pleasure, especially when you see so many people not paying any taxes at all; it makes you feel proud to be part of that select group that pays for all the rest of the population.

The poliza is the copy of the check that must accompany each and every check in your accounting records and contains all the information on the check. It’s usually green which is another bit of completely useless information.