Navigating Mexico: Tax Evaders
By JUAN DE JESÚS BREENE
Mexican tax season is upon us — with a March 31 deadline for businesses and an April 30 deadline for individuals to file with the Mexican Tax Administration Service, known by its initials in Spanish, SAT.
Individuals earning over 400,000 pesos a year in salary or interest from funds generated inside Mexico as pesos are required to file. And the fine for not doing so is hefty, about 35,000 pesos.
Pulse News Mexico has previously covered how to file.
What about those who operate under SAT’s radar?
Each year filing a tax return, whether as an individual or a business, everyone has likely thought, “That’s quite a bit I have paid in taxes. It seems pretty unfair that I am paying my fair share and others are not!”
Lower wage earners are not required to file, but anyone with income over what would be the equivalent of $1,700 a month would be.
Who are these folks? Lots of them operate as individuals or small businesses in Mexican beach cities as chiropractors, real estate agents, stage performers and restaurant owners. These are often jobs that foreigners and tourists use that easily pass the required monetary limit. These businesses refuse to give a receipt, and everything is done in cash.
But be warned: The SAT has a relatively sophisticated system in place to alert authorities about this type or other types of fiscal abuses.
The reporting process is simple. There is no complicated portal to use. The person reporting does not have to give any identifying information.
It is as simple as sending an email. The address to do so is email@example.com. The report should outline the concern, the physical address of the individual or business and characteristics of the business, as well as any social media references that are often the only trace back to the suspected evasion.
From there, your complaint is channeled to the appropriate SAT office for further investigation. You are given a complaint number.
Finally, you can follow up on the status of your complaint by either contacting the SAT or going online with your complaint number and a cryptic-like password given only to you.
The tax authority estimates that tax evasion represents about 6 percent of Mexico’s GPD, some 1.4 billion pesos, or about $69 million.
Is it worth it to report tax evasion? Is it worth it not to when you are paying your fair share and others are not?