“REFORMS TO THE TAX CODE OF MEXICO CITY (2025)”

“REFORMS TO THE TAX CODE OF MEXICO CITY (2025)”

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Dear clients and friends:

On January 1, 2025, various reforms to the Tax Code of Mexico City (CFCDMX) came into force. The following summarizes
the most relevant aspects:

1. Property Tax and Property Acquisition Tax (ISAI)

Modification of rates:
• The property tax and ISAI rates were reformed to try to correct the aspects that, in previous fiscal years, were
declared unconstitutional for violating the principle of tax proportionality.

ISAI reduction:
• By 2025, a 50% reduction of the ISAI will be applied, only in the event that the acquisition is derived from a succession by inheritance,
as long as any of the following assumptions are updated:

1. That the value of the property in question does not exceed the sum equivalent to 27.185 times the daily value of the Unit of Measurement
and Update.

2. That the granting, signing and application for registration before the Public Registry of Property and Commerce of Mexico City of the deed of allotment be no later than 5 years from the death of the original owner(s) of the property. in question, counted from the date of death indicated in the corresponding certificate.

3. The award of the real estate in question is in favor of the spouse, common-law partner, descendants and/or ascendants in the first degree.

Update of matrices and cadastral values:
• New matrices of characteristics and points were published, as well as application rules to calculate the base cadastral value of the property tax.
• They include an increase of 8% related to special installations, accessory elements or complementary works, whose constitutionality has been questioned by the Judicial Branch of the Federation.

Discounts for early payment of property tax:
• 8% discount if payment for the six two-month periods is made in January.
• 5% discount if payment is made in February.

2. Payroll Tax (ISN)
Increase in rate:
• The ISN rate increased from 3% to 4%. Tax benefits:
• Increase in workforce: Companies that increase their workforce by 33% during the 12 months prior to the ISN declaration may apply a 1% reduction on the 4% rate.
• New operations: Companies that start operations will be entitled to a 1% reduction in the rate.
• Micro and small businesses:
o Microenterprises: Benefit equivalent to 1% of the rate.
o Small businesses: Benefit equivalent to 0.5% of the rate.
o Application of benefits in accordance with general rules issued by the Secretariat of Administration and Finance.

3. Tax on the Emission of Polluting Gases into the Atmosphere Creation of the ecological tax:
• This new tax taxes direct emissions of polluting gases from fixed sources in Mexico City.
Subjects and object:
• Obligated: Natural and legal persons with fixed sources that emit polluting gases equal to or greater than one ton of CO2 equivalent.
(t CO2e) per month.
• Taxed gases: Carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
Tax base:
• Determined by the sum of CO2, CH4 and N2O emissions, converted to tons of CO2 equivalent.
• Conversion according to factors established in the general rules issued by the Secretariat.
Fee:
• $58.00 pesos per ton of CO2 equivalent or the corresponding proportional fraction.
Payment period:
• Monthly provisional payments, no later than the 17th day of the month following the month in which the tax is accrued.
• Annual declaration in July of the following fiscal year.
Formal obligations:
• Keep a Pollutant Emissions Register and present the corresponding receipt to the competent authority.
• The Secretariat will issue rules for compliance with these obligations.

Final recommendations
1. Property Tax and ISAI:
o Review of rates: Since the reforms seek to guarantee proportionality, it is recommended that companies and taxpayers analyze how changes in the cadastral valuation ranges affect their tax obligations.
o It is recommended to carry out a fiscal impact study to determine if the updated values ​​adequately reflect the taxable capacity.
o ISAI reduction due to inheritance: To take advantage of the 50% benefit, it is advisable to review the deadlines and documentation that prove compliance with the legal assumptions, especially in cases of inherited properties.
o Challenge of increases: The 8% increase in values ​​related to special facilities could be questioned again in court if it is considered to violate constitutional principles.
2. Payroll Tax (ISN):
o Cost analysis: Large companies should evaluate the impact of the increase in the 4% rate and, if feasible, consider labor or technological reorganization measures to optimize costs.
3. Tax on the Emission of Polluting Gases:
o Environmental audit: It is recommended that companies with fixed emission sources carry out an internal audit to calculate their emissions of polluting gases and confirm that the records are consistent with official methodologies.
4. Tax Defense Strategies:
o Constitutionality: If any of the reforms, such as the ecological tax or property increases, are excessively burdensome or lack technical support, the possibilities of promoting protections can be analyzed.
o Preventive analysis: Carry out a fiscal study that incorporates all the modifications to foresee the total impact in the years 2025 and later.

These recommendations should be customized according to the specific circumstances of each taxpayer or company; The lawyers that make up Valdés, Morán y Asociados, S.C., remain at your service and available to provide you with the necessary support in relation to the information provided here.