Background and Relevance of the Case
The Supreme Court of the Nation (SCJN) has determined that municipal governments and local congresses lack the legal authority to impose taxes on permits for installing telecommunications and broadcasting infrastructure, as this falls exclusively under federal jurisdiction.
Who is Involved?
This ruling affects all 2,477 municipalities in Mexico. The case was presented by various local governments across the country, with the latest set coming from different local governments in Coahuila.
Why is this Relevant?
Telecommunications and broadcasting companies argue that some municipalities nationwide maintain a stance of collecting specific taxes for the use of land for infrastructure installation, particularly through the right-of-way. Local governments claim these are taxes for using public spaces or for a profitable activity within their territory.
The Supreme Court’s Decision
In a series of constitutional controversies, the SCJN decided that state legislatures and local governments lack the legal authority to legislate or impose taxes related to telecommunications and broadcasting infrastructure installation.
The Supreme Court’s decision, applicable to all Mexican municipalities, comes months before a new era begins in the Judicial Power. It also follows closely the approval of a new telecommunications legal framework by the Federal Congress, which implies significant economic costs for the sector due to infrastructure deployment and taxes.
As of 2023, burying one kilometer of fiber optic cable costs an operator 650,000 pesos, excluding taxes. In contrast, laying one kilometer of aerial cable costs 80,000 pesos. The SCJN clarified that while municipal governments can impose taxes on real estate through construction license issuance, the contested clause exceeds the supposed circumstances under which municipal authorities can collect payments for services provided to citizens.
The SCJN emphasized that the federal Congress holds the authority to enact telecommunications laws, and local legislatures lack competence in establishing telecommunications-related rights.
The Role of the Federal Telecommunications Institute
The SCJN highlighted that the Federal Institute of Telecommunications (IFT) remains the sole constitutional authority to regulate radioelectric spectrum use, grant or revoke telecommunications and broadcasting network concessions, and thus, the Supreme Court declares that municipalities cannot impose taxes on telecommunications infrastructure deployments.
The SCJN specified that the IFT is responsible for regulating, promoting, and supervising radioelectric spectrum, telecommunications networks, broadcasting services, and access to active, passive, and essential infrastructure and insumos.
Context and Impact
This ruling comes amidst complaints from telecommunications industry players that municipal governments complicate infrastructure and service deployments through taxes on the use of right-of-way for underground cable laying.
Telecommunications and broadcasting companies already pay federal taxes as stipulated in their public telecommunications network concession titles of national reach. The federal government then distributes each municipality’s share through the Federal Budget of Expenditures annually.
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