Tax incentives for hurricane victims in Acapulco

Executive Summary:

• On October 30, 2023, a decree was published granting tax benefits to taxpayers affected by Hurricane Otis, which devastated Acapulco on October 24, 2023. 
• To access these tax benefits, taxpayers must have their tax domicile or establishment in the affected areas and have registered the corresponding notice in the RFC before October 24, 2023. 
• These incentives are intended to alleviate the financial burden of those affected and support the rapid restoration of Acapulco and surrounding areas. 

On October 30, 2023, a decree was published granting tax benefits to taxpayers affected by Hurricane Otis, which devastated Acapulco on October 24, 2023. These incentives will be for the municipalities specified in the Natural Disaster Declaration, which will be issued by the corresponding authority, and which will surely include Acapulco and other impacted municipalities.

To access these tax benefits, taxpayers must have their tax domicile or establishment in the affected areas and have registered the corresponding notice in the RFC before October 24, 2023. Taxpayers whose tax domicile is not in these areas, but who have an establishment in them, will be able to obtain tax benefits only for operations related to that establishment. 

The benefits are as follows:

1. Those affected will be able to apply an immediate deduction on investments in fixed assets, whether new or used, acquired from October to December 2023, allowing them to deduct up to 100% of the initial cost, without adhering to the deduction percentages established in the Income Tax Law (ISR), as long as they are used for the replacement or reconstruction of fixed assets.
2. Salary withholdings and payments corresponding to value-added tax (VAT) and special tax on production and services (IEPS) for October, November and December 2023 can be made in three payments in January, February and March 2024, without generating updates, surcharges or fines.
3. Taxpayers are exempt from making provisional ISR payments for October, November and December 2023.
4. Taxpayers who continue to pay taxes under the fiscal incorporation regime (RIF), as well as those who pay ISR on income derived from technological platforms and who pay the tax definitively, will be allowed to do so no later than February 2024.
5. Those in agricultural and primary sector activities with semi-annual provisional payments will be able to choose to submit monthly VAT returns for the second half of 2023.
6. The process for VAT refunds requested until December 2023 will be accelerated, reducing the time by half.
7. Taxpayers authorized to make partial payments of omitted contributions will be able to defer payments from October 2023, resuming them in February 2024. These taxpayers will not need to guarantee the tax interest. 
8. Individuals with a home in the affected areas should not consider financial support from authorized donors as cumulative income, provided that it is used for the reconstruction of their home.
9. Authorized donors who assist in the reconstruction of homes will be recognized as fulfilling their social purpose, regardless of their activity.

The main objective of these incentives is to alleviate the financial burden of those affected and to support the rapid restoration of Acapulco and surrounding areas.