Yesterday, March 15th, 2023, the Second Chamber of the Mexican Supreme Court of Justice (MSCJ) resolved the conflict of thesis 413/2022, determining that the figure of civil offsetting is not a payment method of value tax added (VAT) nor can it give the right to refund applications regarding favorable balance or credit the VAT.
The Second Chamber of the MSCJ concluded that the following Criterion should prevail as Jurisprudence: “ADDED VALUE. THE INTERPRETATION OF ARTICLES 1, 1-B, 5, 17 AND 18, OF THE REFERRED LAW, GENERATES THE NON-APPLICATION OF CIVIL OFFSETTING AS AN EXTINCTIVE FIGURE OF THE TAX OBLIGATION OF THE ALLUDED TAX, THEREFORE IT DOES NOT GIVE THE RIGHT TO REFUND APPLICATIONS REGARDING FAVORABLE BALANCE OR CREDIT SUCH TAX. (CURRENT LEGISLATION IN TAX YEARS 2019 AND 2020)”. In the next few days, the Jurisprudence in question will be published.
Comments
In the Criterion that prevails as Jurisprudence, it was determined that, for the purposes of analyzing the origin of a refund application of favorable balances, the offsetting figure applicable in civil law is not a payment method to credit the VAT.
Said Criterion specifies that the offsetting figure applicable in the civil matters, although it is a form of extinguishing obligations that under a tax perspective can result in establishing when the obligation to pay the VAT arises, it does not confer the possibility to credit the tax because it is necessary that it is effectively paid in the proper month, in such way the offsetting is not a form of VAT payment.
Although we consider that the conclusions of the conflict of thesis 413/2022 implied an incorrect analysis and a deficient interpretation of the provisions under study, said Criterion has the character of mandatory Jurisprudence for all the Mexican Courts, and even will be used by the tax authorities in order to deny the credit of VAT and reject the refund of favorable balances whose origin comes from the offsetting figure, regardless of the facts or omissions that will surely be observed when they exercise their powers of verification (i.e. audits) in order to review the VAT and will determine the corresponding tax assessments.
Recommendations
A review and analysis of those cases in which the due considerations were extinguished through the offsetting figure, including the VAT payment, is immediate required in order to identify risks or contingencies that may result from such Criterion and, and, if applicable, take the measures deemed necessary.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
Mexico City, March 16, 2023
