1. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. “HIGHLIGHTS BEFORE FILING THE MEXICAN ANNUAL TAX RETURN” Héctor Silva Meeting - Breakfast March 17, 2010

2. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. Computation of SH and tax credit requires the following information from the US. -Machinery of equipment.- Value and acquisition date. -Inventory.- Monthly balances of inventories kept in México. 2 COMPUTATION OF S. H. AND TAX CREDIT

3. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. 3 S. H. NOTIFICATION -File a notice with the Mexico City tax authorities. -Pending to confirm if the electronic return is going to be mandatory; this will include companies electing the transfer pricing option.

4. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. INFORMATION FOR IMPORT/EXPORT OPERATIONS 4 -Since 2008 this information is requested in the annual tax return. Necessary to obtain official customs database ("glosa" from SAT) to compare with own records. -2009 is not mandatory to report in the annual tax return. -2009 is mandatory for those filing an tax audit report.

5. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. OFFSETTING OF INCOME TAX VS. FLAT TAX -During the year estimated income tax payments can be credited against monthly Flat Tax. -At year end, estimated income tax payment is offset (compensation) vs. Flat Tax. -Compensation notice must be filed within 5-18 days (upon the letter of the tax ID number). 5

6. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. INTERCOMPANY ACCOUNT BALANCE Intercompay balances in excess of a reasonable period 80-100 day may impact tax calculations. A/P.-More likely, will require a transfer pricing adjustment to report a reasonable mark up. Thin capitalization, when intercompany debt exceeds 3/1 equity, exchange losses, that are deemed as interest, may be limited for deduction. A/R.-May require a transfer pricing adjustment. May be considered as a deemed dividend for US tax purposes (956 IRS tax code). 5

7. ©2010 Galaz, Yamazaki, Ruiz Urquiza, S.C. Héctor Silva hsilva@deloittemx.com +52 (664) 622 7840