Supreme Court removes acreditation of VAT in compensations

April 13th, 2023

On March 15, 2023, the Supreme Court of Justice of Mexico established a core precedent where the civil compensation is not a form to extinguish obligations between creditor and debtor, nor a mean of payment of Value Added Tax (Hereinafter “VAT”) for its accreditation and refunding.

On the other hand, all VAT considerations are considered, without taking into account that the tax paid is a requirement for its crediting.

Additionally, the tax authority warns that there is no way for the VAT payment obligations cease to exist; on the contrary, the VAT that has been compensated will be considered as an additional cost.

The foregoing will generate a greater control with respect to all VAT taxpayers and affecting centralized treasury processes. The tax authority will also be able to see the history of the use of compensations and refunds, VAT, income tax deductions, among other.

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