Among the tax reforms approved for 2007, there are some in the matter of Tax on Assets that will surely have a negative impact on companies. Such reforms became effective on January 1, 2007. These reforms are basically as follows:
- The possibility to deduct any contracted debts from the value of assets during the same fiscal year is removed.
- Taxpayers who, in the past, chose to determine the Tax on Assets in terms of article 5-A of the Tax on Assets Law in force until fiscal year 2006 will have to calculate the tax for tax years 2007 through 2010 without deducting any debts from the value of assets for the fiscal year.
- The estimated tax payments for fiscal year 2007 will be calculated considering the tax for the next preceding fiscal year, without taking into account any deductions for debts corresponding to that fiscal year. As of 2008, all estimated tax payments will be calculated considering the tax for the next preceding fiscal year (obviously, without deducting any contracted debts).
In our opinion, the elimination of the possibility to deduct any contracted debts from the value of assets for purposes of calculation of the assets tax violates the constitutional principles that should be observed by all taxes, that is, in our opinion, it is unconstitutional. We have the same opinion in connection with the calculation of estimated tax payments.
The amendment regarding the calculation of the tax for fiscal years 2007 through 2010 (without deducting any debts from the value of the assets during the fiscal year in question) is also unconstitutional for those taxpayers who, in the past, chose to determine their Tax on Assets in terms of article 5-A of the Tax on Assets Law in effect until fiscal year 2006.
The corresponding laws should be contested through amparo actions, which should be filed by each company that may be affected by such laws in an individual manner. The consequences of a favorable resolution in an amparo action might be, for example, in the case of the exclusion of the possibility to deduct contracted debts, to be able to deduct them from the value of the assets; in the case of the estimated tax payments, would be to calculate them by deducting the contracted debts from the tax calculation for the fiscal year in question; in the case of taxpayers who chose in the past to determine the Assets Tax in terms of article 5-A of the Aseets Tax Law in effect until fiscal year 2006, the effect would be to carry on the application of this last procedure.
We propose, in general terms, that the petition for the corresponding amparo action be filed within 30 business days following the effective date of the laws mentioned above (which expires on February 12, 2007), and within 15 business days following the first application; that is, the filing of the estimated tax payment corresponding to January 2007. However, an analysis on a case-by-case basis should be done to determine precisely the foregoing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.