1. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. Compilation of several tax benefits and administrative simplification measures Tax Decree WMTA Breakfast/meeting April 18, 2012 Héctor Silva Tax partner hsilva@deloittemx.com

2. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 2 Compilation of several tax benefits and administrative simplification measures Tax Decree Last March 30, the above mentioned Decree was published in the Official Gazette entering into effect as from April 1, 2012. Also it is noted that as from this date, prior Decrees regarding tax facilities on the Income Tax, Flat Tax, VAT, and EXCISE taxes issued by the President as well as the administrative provisions that violate or conflict with the provisions of this Decree, are no longer in force except for: The decrees on foreign trade and customs. Decree granting various tax benefits in income tax and flat tax, published on November 5, 2007, and its amendments of February 27, 2008 and October 12, 2011. Decree granting tax incentives regarding the computation of accelerated depreciation, published on June 20, 2003. Decree granting a tax incentive in the income tax to unionized workers; partial exemption on income taxes to companies that carry out assembly operations (maquiladoras), tax incentives to taxpayers manufacturers, assemblers and dealers residing in Mexico dedicated to the alienation of tractors, trucks and buses, published on October 30, 2003 and its amendments of January 12, 2005, May 12 and November 28, 2006, and March 4, 2008.

3. Significant tax benefits and administrative simplification measures of general interest

4. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 4 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Income Tax Calculation of the estimated payments considering the reduction of the employee’s profit sharing paid and the accelerated depreciation. Additional deduction of 5% of the cost of commodities donated to approved charity institutions. Exemption to non-Mexican residents of 80% of the income tax due from the income from the lease of trailers and semitrailers. Incentives to Mexican residents using airplanes licensed or authorized to be used in the transportation of passengers or property whose use or enjoyment is granted by residents abroad, of 80% of the income tax being caused. Additional deduction of 25% of wages paid to people who are 65 years or older or who have mobility disabilities.

5. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 5 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Income Tax The incentive for the production of movies may be applied against estimated payments. Immediate deduction of 100% of investments in real estate located in historic and archaeological sites. In lieu of the daily deduction of payments for the rent of cars for Ps$165 per day, a deduction of up to Ps$250 per day can be used. For the year of 2012, individuals may choose not to report interest earnings as long as the tax withholding made is considered as definitive payment. Individuals issuing a digital receipt for income received companies for professional services or lease of property, may consider such receipts as proof of withholding for income tax and VAT purposes.

6. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 6 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Flat Rate Business Tax For Flat Tax Revenues, taxpayers may accumulate on the same date as for income tax purposes and may deduct the tax losses for bad debt recovery and accrue its recuperation as received. Taxpayer not required to audit their financial statements for tax purposes in accordance with the Federal Tax Code and the taxpayers who under this Decree may exercise the option not file a tax audit report, instead of performing the calculation of the flat tax payments for odd months may choose to determine them considering the flat tax paid in the two months immediately preceding. This benefit may be applied as from the May 2012 estimated payment.

7. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 7 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Value Added Tax Taxpayers holding a approved IMMEX program (maquiladoras) acquiring goods from domestic suppliers approved under this program may withhold and credit VAT for the purchase of such goods, without having to comply with the requirement of having a Suppliers’ Program. A tax incentive is given to importers or alienating of juices, nectars, concentrated fruit or vegetable and drink products in which milk is a component that is combined with vegetables, dairy cultures or lactobacillus, sweeteners or other ingredients, such as drinking yoghurt, fermented milk product or liquefied and non-carbonated water and made to be filed in containers less than ten liters; consisting of an amount equal to 100% of the VAT to be paid on the importation or alienation of the above products. Taxpayers may choose not to submit the information requested in VAT income tax statements, provided they submit monthly VAT information.

8. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 8 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Federal Tax Code Taxpayers required to audit their financial statements for tax purposes whose in the preceding tax year reported taxable revenues for income tax purposes in excess of Ps$40 million, may choose not to present such reports provided that its assets and the number of workers do not exceed the amount stated in the Federal Tax Code. The 2012 audit tax report that will be filed by June 2012, for this one-time, taxpayers must file a notice no later than April 30, 2012, in which they express their choice not to submit the report. Taxpayers required to submit interim and/or final returns no later than the 17th day of the month following the period that corresponds to the return, either by taxes owed or withheld, may file the returns not later than the day indicated in the decree’s schedule according with the tax ID number, with the exceptions provided in the decree itself.

9. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 9 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Cash Deposit Tax Taxpayers who request a refund of the difference resulting IDE after applying the procedures of credit and compensation, may choose not to submit the corresponding audit report. Common provisions At the application of tax incentives, if any surplus, it will not result in return or compensation. The tax incentives provided for in this decree shall not be considered taxable income for income tax purposes.

10. © 2012 Galaz, Yamazaki, Ruiz Urquiza, S.C. 10 Compilation of several tax benefits and administrative simplification measures Tax Decree The tax benefits and administrative simplification measures of general interest that we consider most important are: Common provisions The SAT may issue rules for the proper implementation of this Decree. In the case of Holding and Subsidiaries filing a consolidated tax return applying this decree, the holding company may use the incentive applied by each of the subsidiaries or itself, against the consolidated income tax in the consolidated participation, and to reduce consolidated income tax base for the consolidated estimated payments, the employee’s profit sharing paid and the accelerated depreciation applied in the estimated payments of the Holding or the subsidiaries in the consolidated participation. The obligation of filing a notice set for in the Tax Code for the use of tax incentives is waived. The tax benefits established in this and other decrees shall apply whenever the taxpayer provide the information, which in its case, is required by the SAT in general rules.

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