Provisional payments are a fundamental part of the tax system in Mexico, regulated by the Tax Administration Service (SAT). This mechanism allows taxpayers to make advance payments of income taxes, thus contributing to the collection of State resources and avoiding a significant financial impact when submitting the annual declaration.
Provisional payments are mandatory for individuals and legal entities that generate income and are subject to Income Tax (ISR). This includes self-employed workers, entrepreneurs and, in general, all those who earn taxable income. The obligation to make these payments depends on the economic activity carried out and the tax regime in which the taxpayer is located.
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How do provisional payments work?
Provisional payments are calculated based on income obtained in a specific period (usually monthly or quarterly) and must be presented on the dates established by the SAT. The basic formula to calculate the provisional payment is as follows:
- Cumulative income: All income obtained in the period is added up.
- Authorized deductions: Deductions allowed by law are subtracted.
- Tax rate: The corresponding ISR rate is applied to the result of the previous subtraction.
The result will be the amount that the taxpayer must pay as a provisional payment. These payments are applied as a credit to the tax that will be calculated at the end of the fiscal year at the time of filing the annual return.
When should they be done?
Provisional payments must be made periodically. For individuals, they are generally submitted monthly, while legal entities may have the option to submit quarterly payments. Specific due dates are established in the SAT fiscal calendar.
Making interim payments is crucial for several reasons:
- Avoid surcharges and fines: Complying with this obligation reduces the risk of facing sanctions from the SAT.
- Facilitate the annual declaration: By making provisional payments, the taxpayer has clearer control over their tax obligations, which simplifies the annual declaration process.
- Cash flow: Allows taxpayers to better plan their cash flow by making payments early and avoiding large outlays at the end of the year.
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Provisional payments are an essential tool in the Mexican tax system that helps taxpayers meet their obligations more effectively. Understanding how they work and the importance of carrying them out can facilitate the financial and fiscal management of any natural or legal person. For more information and specific details, it is advisable to consult directly with the SAT or a tax advisor.
With information from the SAT
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