Audits

Financial, tax, social security (IMSS and INFONAVIT, local taxes (payroll and property taxes) as well as internal control.

What is an audit?

An audit, in general terms, is a systematic review that medium and large companies regularly perform to provide transparency in their operations for users of financial information. It results in process improvements and helps address key operational risks. In the case of tax audits, it allows companies to avoid tax credits, fines, surcharges, and penalties derived from calculation or filing errors.

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Financial Statement Audit

Consists of a systematic review by a Certified Public Accountant independent from the Company, with the purpose of to verify that the financial statements accurately reflect the company's financial position. and comply with the applicable regulatory framework.

An audit provides trust and security to users of the financial information (such as shareholders, investors, financial institutions, creditors, or authorities), ensuring the figures are reasonably accurate. Although its primary goal is not fraud detection, fraud may be discovered during the review.

Tax Report (SIPRED)

This is an opinion issued by a Registered CPA before the SAT (Tax Authority) regarding a taxpayer’s compliance with tax obligations for a given fiscal year. There are two types of reports: Optional: Applicable to companies that, in the previous fiscal year, had: Taxable income over $157,785,270 MXN Assets exceeding $124,650,380 MXN, or At least 300 employees every month of the year. Mandatory: For companies with: Taxable income over $1,940,178,120 MXN, or That have issued stock to the public via the stock exchange.

1. Optional: It applies to companies that, in the previous fiscal year, had accrued income exceeding $157,785,270; assets exceeding $124,650,380; or employed at least 300 workers in each month of the year.

2. Mandatory: Companies that, in the previous fiscal year, had accrued income exceeding $1,940,178,120, as well as entities that, by year-end, had offered shares to the general investing public (through stock exchanges).

Capital Gains Report (Stock Sale)

This consists of issuing a tax opinion and report regarding the sale of shares outside the stock exchange. When an individual sells shares, they are typically subject to a 20% withholding tax on the total transaction. However, the law allows a reduced tax if a fiscal opinion is submitted. This allows you to: Pay tax only on the actual gain, not the total sale amount Possibly pay zero tax if there is a fiscal loss Main benefits of the tax opinion: You may pay less than 20%, resulting in financial savings You may avoid paying Income Tax if a loss is reported You get exact figures for your annual tax return

The sale of shares by an individual is subject to a 20% withholding tax on the total amount of the transaction. However, the law provides an option to apply a lower tax rate, which involves submitting a tax opinion (fiscal report) and making a provisional payment lower than 20%. If the transaction is audited and the tax opinion is issued, the tax can be calculated based only on the actual capital gain rather than the full transaction amount. In such cases, the tax liability may even be zero if the transaction results in a tax loss.

As this is a provisional tax, the tax opinion provides the following benefits:

1. You may pay a tax of less than 20%, resulting in financial savings.
2. No Income Tax is due if the transaction results in a tax loss.
3. You already have the exact figures needed for the annual tax return.

Social Security Audit Report (IMSS)

It is the professional opinion of a Certified Public Accountant regarding the tax compliance of social security obligations before the Mexican Social Security Institute (IMSS).

It is mandatory for employers with an average of more than 300 employees, or optional for companies with fewer than 300 employees that choose to do so voluntarily in order to confirm that they are correctly complying with their social security contribution obligations.

Incorrect payment or failure to properly comply with social security obligations is one of the main issues faced by companies in Mexico.

Payroll Tax Audit Report – State of Mexico

In the State of Mexico, companies that employ more than 200 workers or that have paid average monthly remunerations exceeding $400,000 MXN are required to submit a Payroll Tax Audit Report. This audit consists of validating that the payroll tax paid has been calculated and paid correctly.

This audit helps ensure the correct calculation of the tax and helps avoid penalties due to non-compliance with this obligation.

Payroll Tax Audit Report – Mexico City

In Mexico City, companies with more than 150 employees are required to submit a Payroll Tax Audit Report. This audit serves to verify that the payroll tax paid has been properly calculated and reported.

This report helps ensure the accurate determination of the payroll tax and prevents penalties associated with non-compliance with this mandatory requirement.

Property Tax Audit Report – Mexico City

It is a report prepared by an authorized Certified Public Accountant to verify compliance with tax obligations related to a taxpayer's property tax. Taxpayers are required to submit this report when they own real estate properties whose cadastral value exceeds a certain threshold, as established by the Mexico City Tax Code.

This report helps, first, to comply with the legal obligation; second, to accurately determine the amount of tax due; and third, to avoid penalties related to non-compliance. It also serves to confirm that the cadastral values of the properties used to calculate the tax are up to date.