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  • Writer's pictureJorge Luis Peña Maheda L.C

Non-Profits: Tax implications by COVID-19

What type of fiscal obligations arose for the purpose of monitoring programs that combat and mitigate the effects of the SARS-CoV2 pandemic?

The Federal Tax Authority again published a rule (RFM 3.10.28.) for the year 2022 regarding certain requirements to be met by the following two groups of organizations.

1. First group – Organizations that receive donations for the purpose of combating and mitigating the pandemic caused by COVID 19.

Which organizations are required to comply?

Civil organizations and/or escrows, both authorized to receive deductible donations whose corporate purpose or authorized purpose corresponds to:

a) Medical assistance or rehabilitation. b) Have the authorization to financially support another civil organization or authorized escrow. c) Those that by law, in accordance with their corporate purpose, goals or attributions, may allocate donations to combat the pandemic.

What obligations must they fulfill? a) Indicate the phrase “COVID-19”, in the legend section of the CFDI (Internet Digital Tax Receipt) complement issued by charities, in the following cases: b) When they receive donations for the purpose of combating and mitigating the pandemic generated by the SARS-CoV2 virus, which causes the COVID 19 disease. c) When they donate resources in cash or in goods, for the same purpose mentioned above to the health sector at the three levels of government, they must request it in the corresponding CFDI. d) Submit a report in electronic form called Informative Declaration of donations to mitigate and combat the SARS-CoV2 virus.

2. Second Group -Charities authorized to receive deductible donations in terms of the Income Tax Law that acquire goods in national or foreign territory for the purpose of combating or mitigating the pandemic.

What obligations must they fulfill? a) In the case of acquisitions in national territory, request that the phrase “COVID-19” be indicated in the description section.. ** b) In the case of imports, request that the phrase “COVID-19” be indicated in the observations section of the import request. c) Submit a report in digital form called Declaration. Informative Declaration of donations to mitigate and combat the SARS-CoV2 virus.

** In the case of charities, it is an obligation to have tax receipts that comply with the requirements (including this rule). Therefore, if the supplier does not indicate in the description the phrase COVID-19, it would result in a failure to comply with the form requirement in the tax receipt, originating a possible payment of ISR (Income Tax) for the concept of a false remanent (distributable remanent, even if it has not been delivered in cash or in goods to its members or partners): The amount of omissions of income or purchases not made and improperly recorded).

The aforementioned report must be submitted through the SAT (Tax Administration System) portal, which corresponds to the fifth report. “Donations to mitigate and combat the SARS-CoV2 virus” in the month of July 2022 according to the 146/ISR form of Annex 1A of the Miscellaneous Tax Resolution for the fiscal year 2022, where all the data of the donation will be requested (Type of donation, donor, beneficiary, amount of the donation) and for this the e.signature or password must be updated.

It is important to mention that failure to submit the aforementioned report is a cause for loss of validity of the authorization.

The charities that are involved in actions to mitigate the effects of the COVID-19 pandemic, either by receiving resources or purchasing goods to be destined to programs related to this issue, must comply with these requirements in the issuance of CFDI and make their information transparent, otherwise they could be subject to Income Tax (ISR) on the expenditures they make, or risk their authorization as a charity.

Even though these requirements are not new, our group of specialists have detected that there are still many situations in which the charities are unaware of the mentioned obligations. So, if this is your case, do not hesitate to contact us for a specific diagnosis and, if necessary, to design an action plan for a correct compliance with the obligations required by the tax authorities.


Published on May 02nd, 2022.

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