Law of the Special Tax on Production and Services (IEPS)

22/9/2020

A single reform is proposed by adding Article 2 -B to the IEPS Law, to establish complementary quotas, to the IEPS quotas that are currently applied to fuels and that are provided for in article 2, section I, subsection D), of the IEPS Law, this with the purpose of protecting public finances in case of downward variations in crude oil prices, international references and exchange rates.

These complementary fees will be due to the absolute differences observed between the reference prices (United States) of gasoline and diesel, and the base prices (Mexico) of said fuels updated by inflation.

The quotas applicable to fuels established in article 2, section I, subsection D), of the IEPS Law will be adjusted with the complementary quotas, based on the following:

1. When the reference prices of gasoline and diesel are higher than the base prices, the complementary quotas will be subtracted from the quotas established in article 2, section I, subsection D), of the IEPS Law, as appropriate, and the result will be the applicable fee. The reduction of this quota will be limited to the quotas established in article 2, section I, subsection D) of the IEPS Law.

• When the reference prices of gasoline and diesel are lower than the base prices, the complementary quotas will be added to the quotas established in article 2, section I, subsection D), of this Law, as appropriate, and the result will be the applicable fee.

Complementary fees and applicable fees will be announced weekly in the DOF through the corresponding agreement, which will establish the period of validity of said fees.

Likewise, by means of a transitory article, it is proposed that said complementary fees will be applied until the assumption provided for in subparagraph a) above is updated for the first time.

It is worth mentioning that a similar mechanism called the IEPS fiscal stimulus applicable to fuels is currently being applied. With this stimulus, the IEPS fees are reduced when oil prices rise, and the stimulus is stopped when oil prices fall, so in this case there is no increase in the IEPS fees paid by the consumer. However, with the reform proposal there is the possibility that these quotas will be increased when there is a drop in oil prices such as the one that occurred during the first half of 2020. It can then be said that the reform proposal translates into the protection of government income and the increase in IEPS fees paid by the consumer, which technically means an increase in taxes,