In this article we review the fundamental aspects in cases of capital reduction and its fiscal effects, what is it for? and what are the consequences in their omission?
We commented in a previous article of the blog about the distribution of dividends and its fiscal effects , and We mention the following: “The legal entities that distribute dividends or profits must calculate and pay the corresponding tax to them, applying the 30% rate of the Income Tax Law . For these purposes, dividends or distributed profits will be added with the income tax that must be paid in the terms of the Income Tax Law. In the case of the distribution of dividends or profits through the increase of social shares or the delivery of shares of the same legal entity or when they are reinvested in the subscription and payment of the capital increase of the same person within 30 calendar days following their distribution, dividend or profit shall be understood as received in the calendar year in which the refund is paid “.
What happens with the reduction of capital? What is it used for? What would be the consequences when there is an omission?
Before answering the questions that have been raised, I consider it important to state the following: cumulative income is considered to be the gain derived from the alienation of fixed assets and land, securities, shares, social shares or equity certificates issued by national companies. credit, as well as the realized profit that derives from the merger or division of companies and the one derived from capital reduction or liquidation of mercantile companies resident abroad, in which the taxpayer is a partner or shareholder.
In cases of capital reduction or liquidation of mercantile companies resident abroad , the gain shall be determined according to the following: the income shall be determined by subtracting from the amount of the reimbursement per share, the proven cost of acquisition of the share updated by the period from the month of acquisition until the one in which the refund is paid.
Residents in Mexico may accredit , against the tax that according to the Income Tax Law they are entitled to pay, the income tax they have paid abroad for income from a source located abroad, provided that they are income for which it is obliged to pay the tax. The crediting referred to in this paragraph will only proceed as long as the accrued, accrued or accrued income includes the income tax paid abroad.
The losses resulting from the merger, reduction of capital or liquidation of companies, in which the taxpayer has acquired shares, social shares or certificates of equity contribution of the national credit companies will not be deductible.
The legal entities resident in Mexico that reduce their capital will determine the profit distributed according to the following:
I. The balance of the contribution capital account per share held on the date on which the reimbursement is paid shall be reduced from the reimbursement per share.
The distributed profit will be the amount that results from multiplying the number of shares that are reimbursed or those that have been considered for the reduction of capital in question, as appropriate, for the amount that results in accordance with the previous paragraph.
The taxable distributed profit determined in accordance with the preceding paragraph may come from the net fiscal profit account up to the part that corresponds to the number of shares that are reimbursed from the balance of said account. The amount of the net fiscal utility account that corresponds to the indicated actions will be reduced from the balance that said account has on the date in which the reimbursement was paid.
The amount of the balance of the capital account of contribution per share determined for the calculation of the distributed profit will be multiplied by the number of shares that are reimbursed or by those that have been considered for the capital reduction in question. The result obtained will be reduced from the balance that said account has to the date in which the refund was paid.
To determine the amount of the balance of the capital account of contribution per share, the balance of said account will be divided on the date on which the repayment is paid, without considering it among the total of shares of the same person existing on the same date, including those corresponding to the reinvestment or capitalization of profits, or any other concept that integrates the accounting capital of the same.
II. The legal entities that reduce their capital, additionally, will consider such reduction as distributed profit up to the amount that results from subtracting the stockholders ‘equity according to the statement of financial position approved by the shareholders’ meeting for the purposes of said reduction, the balance of the account of contribution capital that is held on the date on which the aforementioned reduction is made when it is lower.
It is important to mention the stockholders’ equity , which must be updated according to the Financial Information Standards (NIF), when the person uses these principles to integrate their accounting; otherwise, the stockholders’ equity must be updated in accordance with the rules of a general nature issued by the Tax Administration Service.
The distributed profit will be the amount obtained from decreasing the amount paid for the acquisition of each of the shares, the balance of the capital account of contribution per share, on the date on which the shares are purchased, multiplying the result by the number of shares purchased. The income distributed under the terms of this paragraph may be reduced, if applicable, by the balance of the net fiscal profit account of the issuing company. The amount of the balance of the net fiscal profit account and the balance of the contribution capital account, which were reduced, will be reduced from the balances of the aforementioned accounts that are held at the date of purchase of shares by the company itself. station.
A capital reduction is also considered the acquisition that a company makes of the shares issued by another company that in turn is a direct or indirect holding company of the shares of the acquiring company. In this case, it is considered that the issuing company of the shares that are acquired is the one that reduces its capital. For these purposes, the amount of the reimbursement will be the amount paid for the acquisition of the share.
In the case of spin-off of companies, the transfer of monetary assets to the companies arising from the spin-off will be considered a capital reduction , when said transfer causes the companies that arise the aforementioned assets to represent more than 51% of their assets. totals A capital reduction shall be considered when, on the occasion of the spin-off, the spin-off company keeps monetary assets that represent more than 51% of its total assets. For purposes of this paragraph, an amount equivalent to the value of the monetary assets that are transferred is considered as capital reduction . It will not be applicable in the case of spin-off of companies that are members of the financial system. The amount of the capital reduction determined will be considered for subsequent reductions as capital contribution, as long as no refund is made at the time of the split.
In order to determine the updated contribution capital, the legal entities will have a capital account of contribution that will be added with the capital contributions, the net premiums for the subscription of shares made by the partners or shareholders, and will be reduced with the capital reductions that be made. The capital corresponding to the reinvestment or capitalization of profits or any other concept that corresponds to the stockholders’ equity of the corporate entity or the proceeds from reinvestments of dividends or profits in capital increase of the persons who distribute them will not be included as capital. within thirty days following its distribution . The concepts corresponding to capital increases mentioned in this paragraph will be added to the capital account at the time they are paid and the concepts related to capital reductions will be reduced from the aforementioned account at the time of payment. the refund.
The balance of the account envisaged in the previous paragraph that is held on the day of the close of each fiscal year will be updated for the period from the month in which the last update was made up to the closing month of the year in question. When contributions or reductions of capital are made, after the update provided in this paragraph, the balance of the account held at that date will be updated for the period from the month in which the last update was made and up to the month in which the contribution or reimbursement is paid, as appropriate.
When a legal entity has increased its capital within a period of two years prior to the date on which the reduction is made and this causes the cancellation of shares or the decrease in the value of the shares, said moral person shall calculate the profit that would have corresponded to the holders of the same ones of having alienated them.
In order to determine the gain on the sale of shares , taxpayers will reduce the income obtained per share, the average cost per share of the shares they sell, determining the average cost per share, which will include all the actions that the taxpayer has of the same moral person on the date of the alienation, even if it does not alienate all of them. Said cost will be obtained by dividing the adjusted original amount of the shares among the total number of shares held by the taxpayer at the date of the sale.
The aforementioned shall apply, indistinctly, to the repayment, amortization or reduction of capital, regardless of whether or not there is a cancellation of actions . It will also be applicable to joint ventures when they make reimbursements or reductions of capital in favor of their members.
In the case of reduction of capital of legal persons , the calculation of the profit distributed by determined action will be made by decreasing from said profit the balances of the net fiscal profit accounts . Said balances will be determined by dividing the balances of the aforementioned accounts held by the legal entity at the time of the reduction, between the total of the same person’s shares at the date of redemption, including those corresponding to the reinvestment or capitalization of profits or any other another concept that integrates the accounting capital of the same.
For the Fiscal Code of the Federation (CFF) , it is not considered that there is alienation of goods, therefore, it contemplates granting the split of companies the capital reduction treatment.
It is important to keep these requirements in mind, so that in case of capital reduction, we will do it correctly.
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The comments or opinions contained in the articles published in Soy Conta, are the responsibility of the author, and may be different from the criteria given by the tax authorities; neither do they represent advice, advice or provision of services of any kind. 2018. Total or partial reproduction is prohibited.