Understanding the Proposed Changes to Ahorro ISR Retention
The Mexican Secretariat of Treasury and Public Credit (SHCP) has clarified that the proposed changes in the Economic Package do not equate to an increase in taxes for individuals with savings or investment accounts. Instead, it aims to assist taxpayers in fulfilling their fiscal obligations through partial payments without adding pressure when filing annual declarations.
Exemptions for Small Savers
According to SHCP, small savers with account balances below 206,000 pesos will continue to be exempt from ISR retention. Furthermore, those with annual incomes under 400,000 pesos can still opt not to file a tax return. Deductions for medical, educational expenses, home loan interests, and retirement contributions remain valid. This setup allows taxpayers to potentially have a positive balance that can be refunded by the Tax Administration Service.
Update on Retention Rate from 0.5% to 0.9%
SHCP explained that the increase in the retention rate from 0.5% to 0.9% annually does not signify an increase in taxes. Here’s a breakdown using an example provided by El Economista:
- Current Model: An individual with 500,000 pesos in savings would earn approximately 18,950 pesos in interest annually and pay around 4,737 pesos in ISR. During tax filing, they would owe an additional 2,237 pesos, constituting nearly half of the total tax.
- Proposed Model: With the new retention rate, after annual deductions, the taxpayer’s final declaration payment would amount to 237 pesos—only 5% of their total tax—while still paying the exact same amount in taxes.
Impact on Taxpayers
Under the proposed conditions, taxpayers would face a final declaration payment of 237 pesos post-annual deductions, equivalent to just 5% of their total tax. This change ensures that taxpayers continue paying the same amount in taxes without the burden of a large lump-sum payment at the end of the year.
Key Questions and Answers
- Q: Who is exempt from the increased ISR retention? A: Small savers with account balances below 206,000 pesos and those with annual incomes under 400,000 pesos who opt not to file a tax return.
- Q: Does this proposal mean higher taxes for savings account holders? A: No, the proposal aims to facilitate partial payments throughout the year instead of a large lump sum at tax filing.
- Q: How does the new retention rate of 0.9% affect taxpayers? A: Taxpayers will face a final declaration payment of 237 pesos, which is only 5% of their total tax, ensuring they still pay the same amount in taxes without a significant year-end payment.
