Definitely the requirements to be deductible, not to be income for the employee and to comply with the internal control of travel expenses, require more than before the vigilance of the accounting and tax areas of your business.

Regardless of the formats and authorization processes that each company implements, the corresponding CFDI must always be available and this is not enough, but it must also be ensured that the expense ceiling policies by category, as well as the compliance of means of payment and additional vouchers are part of the file of each voucher.

The purpose of this bulletin is to review which are the critical points in which due care must be taken in the verification and the deductibility of the same, in addition, that complying with this, will not have an impact on the cumulative income for the worker, and its negative impact on the tax that would be withheld.

Distance from where they are

In accordance with the provisions of the law, travel expenses are considered to be those that are incurred beyond a 50-kilometer (31.5-mile) distance from the taxpayer's place of business. From the taxpayer's place of business as established in the law.

In the case of the payment of per diems or travel expenses benefiting persons who provide the taxpayer with subordinate personal or professional
taxpayer personal subordinate services or professional services on behalf of the taxpayer,
will be deductible when such person travels outside a 50 kilometer band surrounding the taxpayer's establishment.
surrounding the establishment of such taxpayer.

In order to clarify how to consider the above, the Regulations of the law itself indicate what is understood by "Taxpayer's establishment" for this purpose:

Article 57. For the purposes of Article 28, Section V of the Law, the establishment of the taxpayer shall be understood as that in which the person in favor of whom the expenditure is made
of the taxpayer shall be understood as that in which the person in favor of whom the expenditure is made normally renders his services .

That is to say, depending on the place where the worker normally renders his services, is the point from which the 50km should be measured.
from which the 50km should be measured.

Voucher requirements

The digital tax receipts to prove Travel Expenses or Per Diems must comply with the provisions of Art. 29 of the Federal Tax Code when they are issued in the country, and in a more lax manner, the requirements for travel expense receipts when they were made abroad are listed.

Verification of per diems abroad

However, if the expense is incurred abroad, a CFDI will not be required as a tax receipt; however, it is necessary to have the supporting documentation. Rule 2.7.1.16 of the RMF 15 establishes that taxpayers who intend to deduct or credit tax based on receipts issued by residents abroad without a permanent establishment in Mexico, may use such receipts as long as they contain the requirements referred to therein, such as:

1. Name, denomination or company name
2. Address and, if applicable, tax identification number, or its equivalent, of issuer
3. III. Place and date of issue;
4. RFC code of the person in favor of whom it is issued or, in its absence, name, denomination or corporate name of such person;
5. The requirements established in article 29-A, section V, first paragraph of the CFF (quantity, unit of measurement and class of the goods or merchandise, or description of the service or use or enjoyment covered);
6. Unit value stated in number and total amount stated in number or letter.

LIMITS BY EXPENDITURE CATEGORY

Among the items of travel expenses, some limitations for the deduction of such expenses are indicated:

Feeding

Cap in Mexico - $750.00 per day
Foreign cap - $1,500.00 per day
Accompanying proof of transportation or lodging. If only transportation is included, it must be paid with the traveler's credit card.

Rent a car

Cap for both Mexico and abroad $850 per day.
Accompanying proof of transportation or lodging.

Hosting

No cap in Mexico
Cap of $3,850.00 per day abroad
Accompanying transportation documentation

Conventions and seminars

When all or part of the per diem or travel expenses are for seminars or conventions held in the country or abroad, and these in turn are part of the recovery quota established for such purpose, and in the tax receipt or in the supporting documentation that covers them or the amount corresponding to such expenses is itemized, only an amount that does not exceed the limit of travel expenses per day for food will be deductible from such quota, that is to say, an amount that does not exceed the limit of travel expenses per day for food:

When it is paid in Mexican territory the maximum amount of deduction will be $750 pesos per day for each beneficiary. However, when it is paid abroad, the maximum amount of deduction will be $1,500 pesos per day for each beneficiary.

Expenses incurred for the use of the employee's automobile (mileage payment).

In some companies, employees use their own automobiles for the development of their work activities and in the event that it has been previously agreed that the company will reimburse them for the services of such automobile (gasoline, oil, services, repairs and spare parts), the company may consider and deduct such expenses under the concept of travel expenses.

However, in order for these expenses to be deductible, in addition to meeting the above requirements, the following must be met:

• The deduction may not exceed 93 cents M.N. per kilometer traveled by the automobile, and such mileage may not exceed 25,000 km traveled in the fiscal year.
• To distinguish the vouchers from those that cover the expenses incurred in the vehicles owned by them.
• The expenses must be incurred in Mexican territory, i.e., if they are incurred abroad, the deduction will not apply.
• The tax voucher covering the lodging of the person driving the vehicle must be attached.

The difference that exceeds the above limits will not be deductible in any case. Finally, it should be noted that the limits for each item do not include VAT.

Problems to deduct outsourcers' per diems

Companies that use the services of outsourcing companies may have to pay per diems for those employees assigned to their services.
travel expenses for those employees assigned to their services. This represents a problem since,
tax provision requires that the per diems be paid by employees or professional service providers.
employees or professional service providers. This does not apply when the contractor does not have directly hired personnel.
directly. In this case there is the following SAT criterion:

"Expenses in favor of third parties. Expenses made in favor of persons with whom there is no labor relationship or who do not render professional services are not deductible.

In this sense, expenditures are not strictly indispensable when there is no employment relationship or rendering of professional services between the person in favor of whom such expenditures are made and the taxpayer who intends to make the deduction, even when such expenditures are destined to personnel provided by third party companies.

Therefore, it is considered that taxpayers who enter into contracts with individuals or corporations for the rendering of a service, and deduct social welfare expenses, travel expenses or travel expenses, in the country or abroad, whose beneficiaries are individuals hired by the service provider or shareholder of the latter, are engaging in an undue tax practice.

Due to the above, we suggest that payments be made through the service provider, operator, outsourcing, etc... and not directly.

Per diems that are income for the employee

Per diems also represent a matter of care for the employee. Article 93 of the Income Tax Law states that they are not income for the worker...
Article 93. Income tax will not be paid for obtaining the following income:

XVII. Per diems, when they are effectively disbursed in the employer's service and this circumstance is proven with the corresponding tax vouchers.

Therefore, a contrario sensu, they would be when it is not proven that they were paid in the service of the employer, and that in addition to this condition, it is proven with the corresponding tax receipts. There are different opinions regarding the fact that travel expenses are not considered as a tax base in any article of the law, and only by interpretation of this article, it is inferred that if these assumptions are not met, it would be in the presence of an income for the employee. If your company wishes to take a conservative stance, it should comply with all the provisions where travel expenses not duly verified are considered as income, and if it wishes to take a more strategic stance, it could omit this interpretation and all the provisions that refer to it.
devices that refer to it.

However, the Regulations of the same law grant an option for certain cases of travel expenses not duly substantiated and that were covered with an advance payment for the expense, consisting of not substantiating up to 20% of the total amount disbursed for each occasion when there are no services to issue the voucher (no internet, computer, electricity, etc.), without in any case, the amount not substantiated exceeding $15,000 in the fiscal year. For this option to be applicable, the unverified items must have been paid with the employer's credit or debit card or service card. That is to say, this only applies to expenses with advance payment, and that are paid with the company's card. This possibility does not apply to lodging expenses or airline tickets.

If these requirements are complied with, and in addition to those of the ceilings per category of travel (those are the ones referred to in Article 28 section V), the amount not verified with CFDI may not be considered as taxable income.
Finally, the part that is not paid must be returned by the individual to the company.

For the purposes of Article 93, Section XVII of the Law, individuals who receive per diems and effectively disburse them in the employer's service, may not submit tax receipts for up to 20% of the total per diems disbursed on each occasion, when there are no services to issue the same, without in any case the amount that is not verified exceeding $15,000.00 in the fiscal year in question, provided that the remaining amount of the per diems is disbursed by credit card, debit card or the employer's service card. The portion that is not disbursed must be reimbursed by the individual receiving the per diems or otherwise the provisions of this article will not be applicable.

The amounts not proven will be considered exempt income for tax purposes, provided that the requirements of Article 28, Section V of the Law are also met.

The provisions of this article are not applicable in the case of lodging expenses and airline tickets.
airline tickets.

Per diem statements accruable to employees

The law establishes among the obligations for those who pay salaries, the obligation to deliver a statement of payments and withholdings, no later than February 15 of each year to all employees.

By provision of rule 2.7.5.3 of the current Miscellaneous Tax Law, it is possible not to issue such statement, when the information of the accrualable per diems has been added in the payroll CFDIs and these have been issued in due time and form.

Non-issuance of a certificate and CFDI for per diems verified by the employee, when the issuance of the payroll CFDI has been complied with.

2.7.5.3. For the purposes of Articles 28, Section V, 93, Section XVII and 99, Section VI of the Income Tax Law and 152 of the Income Tax Law Regulations, taxpayers that make payments for wages and salaries may consider as complied with the obligations to issue the tax receipt and the tax voucher for the total amount of the travel expenses paid in the calendar year to which the provisions of Article 93, Section XVII of the Income Tax Law were applied, by issuing and delivering in due time and form to their employees the CFDI referred to in Article 99, Section III of the Income Tax Law, XVII of the Income Tax Law, by means of the issuance and delivery in due time and form to their employees of the payroll CFDI referred to in Article 99, Section III of the Income Tax Law, provided that in such CFDI they have reflected the corresponding per diem information in terms of the applicable tax provisions.

LISR 28, 93, 99, RLISR 152

Since the current salary payment format requires that one of the data to be included is the amount of unverified travel expenses, the areas of treasury, accounting, personnel, payroll, or the area that reviews the travel expense verifications, must inform in a timely manner, and before issuing the CFDIs for salary payments, the amounts to be considered for these purposes.

We remain at your service.