Dear clients and friends,

On June 28, the Regional Plenary on Administrative and Civil matters of the Central-North region of the Federal Judiciary declared, as a matter of jurisprudence, the unconstitutionality of Article 113 of the Tax Code for Mexico City (“CFCDMX”), considering it a violation of the principles of tax proportionality and progressivity.

This was based on the finding that there is an error in determining the fixed rate of the property acquisition tax (“ISAI”), which results in a regression in the taxable base, affecting taxpayers in a decreasing manner as the tariff ranges increase. In other words, the closer a taxpayer is to the lower limit of a given range, the higher the tax paid compared to other taxpayers in the same range.

In general terms, based on this criterion, the taxpayer is excused from making the ISAI payment, and if the taxpayer has already made that payment, they should be refunded the total amount paid, updated accordingly.

At K&G, we have legal and tax strategies to achieve: (i) the total restitution of the amount paid for this tax, if it has already been paid; and (ii) the removal of the payment obligation for ISAI if it has not yet been settled.

The referenced criterion focuses on the fiscal years 2021 and 2022; however, the regulation remains in force and has not been amended to date, which leads us to the opinion that its unconstitutional nature persists. Therefore, our services include the possibility of conducting a review of cases prior to 2021, post-2021, future cases, and even in other federal entities outside of Mexico City.

Should you have any questions or require advice on this matter, our team of experts is available at the following email:

Paul Kavanagh: paul@k-g.com.mx

Miguel Alonso: malonso@k-g.com.mx

Luis Kanchi: Lkanchi@k-g.com.mx