Mexico: Energy Reform – Chapter III: PEMEX' Tax Regime

Last Updated: 30 June 2015
Article by Turanzas, Bravo & Ambrosi

We have said that as a result of the Energy Reform, PEMEX changed its legal nature from a decentralized state-owned company (organismo descentralizado) to an EPE. Pursuant to the provisions set forth in Article 2 of the LPEMEX, said company is the exclusive property of the Federal Government, with its own legal capacity and own assets and estate, and has technical, operative and managerial autonomy.

PEMEX will have EPS and affiliate companies. EPS are State-owned productive companies, with their own legal capacity and own assets and estate; while affiliated companies are those in which PEMEX participates, directly or indirectly, in more than 50% of their stock capital, regardless of whether they are incorporated in accordance to Mexican or foreign laws; these affiliate companies shall not be State-owned entities and shall have the legal nature and be organized according to the private laws of the place of their incorporation or creation.

1. General considerations of the tax regime

Before the Energy Reform, PEMEX and its subsidiary companies had a special tax regime, set forth mainly in the LIF. Currently, PEMEX and its EPS shall pay taxes pursuant to the general rules applicable to commercial legal entities, with the exception of specific rules, which shall be analyzed in this work.

PEMEX' affiliate companies shall also pay taxes according to the general rules applicable to commercial legal entities; however, since such companies are of private entities, they are not subject to tax rules (unlike PEMEX and its EPS).

2. Tax effects of the first corporate restructure

Transitory Article Eighth, section A, paragraph V of the LPEMEX provides that the transfer of assets, rights and obligations arising from PEMEX' first corporate restructure shall not be regarded as a sale for tax purposes. Additionally, said transfer and the other transactions that derive directly from the corporate restructuring are not subject to any federal tax.

Said rule follows a language similar to that of Article 14-B of the CFF, and it must thus be construed in the sense that the transfer of assets, rights and obligations that takes places as a result of the first corporate restructure shall have no tax consequences whatsoever, even if a sale takes place for other legal purposes.

We also consider that such rule provides that any civil, corporate and commercial acts in general, present and future, shall have no effect for tax purposes when they are required to implement (for one first occasion) the corporate chart approved by PEMEX' Board of Directors.

There is doubt regarding whether PEMEX' affiliate companies are also subject to the rule of no tax effects from the first corporate restructure. In our opinion, said rule should be applicable to affiliate companies since, in first place, pursuant to the interpretation principle set forth in Article 3 of the LPEMEX, the interpretation that best privileges the best achievement of PEMEX' purpose and objectives must be preferred, so that it can compete effectively in the energy industry; this occurs by granting such preferential treatment to affiliate companies.

In second place, we support the above with a systematic interpretation of the provisions of Transitory Article Ninth of the Regulations of the LPEMEX, which is noted below and makes express reference to certain tax effects in the affiliate companies arising from the first corporate restructure.

Actually, such Transitory provision sets forth that EPS and PEMEX' affiliate companies shall consider the market value of the assets, rights, obligations and undertakings at the time in which the transfer made in connection with the first corporate restructure, for all tax effects that may arise after such transfer.

Such article also empowers the Board of Directors to establish, upon prior opinion from the Special Committee, the methodologies to determine the market value of assets, rights and obligations and undertakings that are transferred in the above-mentioned terms.

3. Workers' Share in the Profits of the Company

Article 118 of the LPEMEX provides that profits obtained by PEMEX and its EPS have the purpose of increasing the Nation's income to be allocated to financing public expense, and that such profits shall not be distributed to their workers; the above, notwithstanding the fact that pursuant to labor law, they can grant any kind of incentive, benefit, bonus, gratuity or commission to their workers for executing their work.

Said article reflects what the Federal Judicial Power has previously resolved, in the sense that PEMEX has no obligations to pay workers' share in the profits of the company (PTU, for its initials in Spanish, Participación de los Trabajadores en las Utilidades) to its workers or employees.

It is important to distinguish that workers of PEMEX' affiliate companies will be entitled to receiving PTU, inasmuch said affiliate companies belong to the realm of private law; Notwithstanding the above, workers or employees of such companies may freely waive the benefit to such share in the profits.

4. Specific rules set forth in the LIF 2015

4.1. Payment on account of provisory payments of the Fee for shared profits

Article 7, paragraph I of the LIF 2015, provides that PEMEX, by itself and on behalf of its EPS that are considered Assignees, shall make a monthly payment on account of monthly provisory payments of the Fee for shared profits, PEMEX, in accordance to the following chart:

Month Payment
(Million pesos)
January 34,323
February 32,580
March 38,401
April 33,742
May 34,323
June 37,820
July 34,323
August 38,401
September 33,742
October 34,323
November 37,820
December 34,323

These monthly payments shall be made no later than on the 19th day of each month; in case such day is not a business day, payments shall be made on the following business day, and must be paid to the Mexican Oil Fund for Stabilization and Development.

Such monthly payments shall be transferred and concentrated in the Federal Treasury by the Mexican Oil Fund for Stabilization and Development, no later than on the next day following their receipt.

Rule 10.4 of the RMF 2015 provides the following specific rules applicable to the provisory payment of this fee:

  1. Assignees shall not file returns for the monthly advance payments made in accordance with the provisions set forth in Article 7, paragraph I of the LIF.
  2. Against provisory monthly payments set forth in Article 42 of the LISH, they can subtract monthly advance payments set forth in Article 7, paragraph I of the LIF, effectively paid in the preceding months for the corresponding tax year.

4.2. Exemption of special tax on products and services

Paragraph II of Article 7 of the LIF 2015, provides that whenever in a place or region of the country there are surcharges to the prices of gasoline or diesel, PEMEX and/or its EPS shall not be subject to payment of the Special Tax on Products and Services (IEPS, for its initials in Spanish, Impuesto Especial sobre Productos y Servicios) over such surcharges in the sale of these fuels.

4.3. Payments on account of income tax

Paragraph III of Article 7 of the LIF 2015 provides that on account of the Income Tax for 2015, for income obtained for Exploration and Extraction activities of Hydrocarbons, monthly payments of $1 billion pesos shall be made, which shall be paid no later than on the 17th day of the month immediately following that to which payment corresponds.

Such monthly payments effectively paid shall be credited against the resulting Income Tax for the fiscal year 2015.

4.4. Payments on account of income tax

Paragraph IV of Article 7 of the LIF 2015 contains the obligation to file tax returns, make payments and comply with the obligations to withhold and pay contributions payable by third parties to the Federal Treasury, through the scheme to file returns set forth for such purpose by the SAT.

4.5. SHCP Empowerment

The SHCP is empowered to amend the amount of monthly payments and, as the case may be, to determine suspension of such payments, in case there are changes in PEMEX' income and/or those of its EPS that so deserve it, and to issue specific rules for the enforcement and compliance of the provisions set forth in this Article.

The SHCP shall report and explain any changes to the amount that impact the monthly payments set forth in this article, due to extraordinary income or a descent thereon, in a report to be submitted to the Commission on Treasury and Public Credit and the Center for Studies on Public Finance, both in the Lower Chamber (Cámara de Diputados).

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