What is the profit coefficient and how can it be obtained?

The profit coefficient is a valuable fiscal resource that allows companies to minimize their provisional tax payments, thus providing a means to strengthen their financial operations in Mexico.

There are two ways to request the reduction of the profit coefficient: in person or online through the SAT portal. The application must contain all necessary details, such as taxpayer identification and justification for the request.

When to apply for a reduction in the profit coefficient

Companies can submit their applications during the second half of the year, between July and December. To ensure proper processing, applications should be submitted one month in advance of the payment date. Once the application has been submitted, the SAT has a period of three months to make a decision. In certain cases, the SAT may require additional information to process the application. In such situations, taxpayers have a period of ten business days to provide the requested information. If this requirement is not met, the application may be denied. In addition, the Income Tax Law states that procedures before the SAT are straightforward and once authorization has been obtained, which has a high probability of being granted, the benefit of the profit coefficient can be used until the next annual ISR declaration is submitted, which must be before March 31 of the year following the one in which the benefit was requested.

Benefits of the profit coefficient for companies in Mexico

The application of this tax strategy can bring several advantages to companies, such as improving their annual cash flow, optimizing budgets, and improving the planning of their operations. However, if after the application of the reduction of the profit coefficient, the payment turns out to be less than what was definitively determined, supplementary declarations will have to be submitted including updates and surcharges for the part not reported and paid.

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