Mexico: New binding Court Opinion on crediting of Value Added Tax ("VAT") on offsetting transactions

In brief

On 15 March 2023, the Second Chamber of the Supreme Court of Justice of the Nation (SCJN) issued a binding opinion in the form of jurisprudence, in which it establishes that civil offsetting is not a mean of payment of VAT and thus, it cannot allow the crediting of VAT such amounts or the refund of a VAT favorable balance. In this context, the SCJN considers that the VAT crediting should not be allowed upon offsetting of mutual receivables between taxpayers, and the VAT related to such offsetting operations is deemed to be not effectively paid or disbursed.


In more detail

In general terms, the Second Chamber of the SCJN considered that the offsetting of VAT amounts for civil and tax purposes is not allowed unless the tax legislation expressly allows it, therefore the offsetting of VAT amounts should not give rise to the crediting of input VAT charged to taxpayers.

This resolution has important consequences for structures where there is reciprocal compensations between taxpayers where there is no disbursement for the payment of VAT related triggered on said operations.

At Baker McKenzie, we offer you our team of lawyers and professionals for the analysis of adequate compliance of your operations with the applicable legislation.

If you would like any further advice regarding any of the topics described above, as well as to resolve any other inquiry you may have, please do not hesitate to contact us.

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