The aggressive Mexican crusade to increase collection in the middle of the pandemic

Due to the national emergency due to COVID-19, SAT officials began to assist citizens by appointment only, in April 2020.MOISES PABLO / CUARTOSCURO

Miguel Herrera, the popular and flamboyant Mexico soccer coach from 2013 to 2015, has been one of the last celebrities to check-in to catch up on his taxes.

The former soccer player recently paid the Mexican treasury 1.6 million pesos ($ 78,000) that he owed in 2014, the year he led the Mexican team in the World Cup in Brazil.

The settlement of this debt was communicated by Carlos Romero, the tax attorney of the Ministry of Finance, who has become a fundamental piece of the Government of Andrés Manuel López Obrador to increase collection during the pandemic through an aggressive strategy in the courts against debtors.

"If you commit a foul, the party is over!" Romero tweeted when announcing the agreement with the footballer.

In addition to the Herrera case, this Wednesday another agreement reached by the authorities of the Tax Administration Service (SAT) was announced.

The pharmaceutical Genomma Lab, which has a presence in Mexico, Brazil, Argentina, the United States and 12 other countries, will disburse 750 million pesos, about 36.7 million dollars, in back taxes in the last eight years.

The company considers that this puts an end to the audits that had been opened since 2013. This case is further proof of the government's successful strategy with large taxpayers.

This week the SAT has revealed that during 2021 it will double the bet with large companies through greater control "within a framework of legality, legal certainty and openness to dialogue."

The Attorney General's Office has become the strong hand that twists the arm of defaulters.

The institution criminally sued 1,018 taxpayers (514 people and 504 companies) for various crimes, according to a report recently presented by the SAT to Congress.

The public coffers entered 136,300 million pesos (6,600 million dollars) more in taxes during 2020, which means an increase in collection of 0.8% if compared to 2019, a year where the collection of VAT and ISR fell .

"It is estimated that in 2020 tax revenues will be 14.5% as a proportion of GDP, the highest percentage in the last 10 years and an additional 1.3% compared to 2019, the last year without a pandemic," says the Treasury report.

Mexico is still lagging behind in collection as a percentage of GDP compared to the average for Latin American and Caribbean countries (23%).

The fuel for this change is simple but effective: fear.

The López Obrador government and the head of the SAT, Raquel Buenrostro, set themselves the target of large taxpayers.

The maneuver has paid off.

The Walmart supermarket chain signed one of the largest reparation agreements with the Government in July 2020, for more than 8,000 million pesos (389 million dollars).

Giants such as IBM, BBVA Mexico, Grupo Modelo, Femsa (Coca Cola), América Móvil and the powerful conglomerate Grupo BAL also settled their debts.

From these and other large companies the Administration obtained 216,000 million pesos (10,500 million dollars).

Among them, two companies that paid more than 3,500 million pesos (170 million dollars) after a litigation with the Fiscal Attorney.

"The very relevant issues of last year were exemplary," explains attorney Carlos Romero in his office.

“A tsunami formed.

When people saw what was happening to these large companies they said 'we are going to regularize'.

It was a very important amount of surcharges and fines that were paid ”, indicates the tax attorney, who before coming to the public service was a partner in a law firm and who has given his personal touch to the office with a cape signed by Enrique Ponce.

“The president gave us the instruction that whoever it is, if they owe taxes, they have to file complaints.

That is why we had very famous cases last year ”.

Romero is, in court lingo, a shark.

Doctor of Law from the Universidad Panamericana, he wears good suits and shows off the cuffs of his shirt embroidered with his initials.

His talk reveals passion for the conflicts that must be resolved by the judges.

He commands what he calls a SWAT tactical team that implements "a change in criminal tax policy."

He elaborates his theory: “Before there was an unwritten pact between the Government and the big taxpayers.

Economic and political power were fused.

Part of the pact was that you should not touch them because they are the ones who come to invest, the ones who come to generate wealth ... Leave them, they said.

Yes, leave them, but how much money do they stop paying?

War on the 'billing companies

'

The prosecutor's speech has been impregnated with the bellicose language that marks the speech of many officials.

“My goal is that there are no more

billing companies

.

I want to dismantle these criminal groups ”, he summarizes in a few words.

Romero refers to the companies that simulated millionaire accounting operations to defraud the treasury.

For years this was a bloody corruption scandal that went unnoticed until the López Obrador government placed it at the center.

The Administration believes that between 2014 and 2018, during the mandate of the PRI Enrique Peña Nieto, the

billing companies

took 500,000 million pesos annually (24,300 million dollars) using false receipts to request refunds from the Treasury, justify non-existent losses and avoid tax withholdings through services that were never done.

Romero says that when he took office, there was no ongoing case against these companies or large taxpayers in the prosecutor's office.

"It was a national sport to defraud the treasury," he says.

The official believes that this responds to the legal loopholes - which he considers were created on purpose - in the new penal system established in Mexico since 2007, which indicated that the tax offense did not merit preventive detention.

"Nothing happened, no crimes were prosecuted."

The López Obrador government corrected this with a reform that came into effect on January 1, 2020. Since then, prison is a punishment for crimes such as fraud and selling or buying false invoices.

The State has equated this to organized crime if there are three or more people linked to the deception and the amounts defrauded exceed 7.8 million pesos ($ 379,000), which means that there were at least operations for 24 million pesos, just over a million dollars.

The current Administration even went further and amended the Law to turn the aforementioned tax crimes into threats to national security.

This has led to seven lawsuits against 43 sham operations companies that defrauded 93,000 million pesos (4,500 million dollars).

In the coming weeks, new complaints will be filed against "seven or eight" people for the same crime.

The attorney explains that they are going "against the heads" of these companies because the reform of the law allows him to grant benefits and reduced penalties to low-level accountants in exchange for information against the big shots.

There are those who consider that all this has created a climate of fiscal terrorism in Mexico, which Romero rules out.

“Here the reins of control of the treasury were simply released.

And the only thing that was done was to retake them.

All we want is for the federal treasury to be respected again ”.

Lawsuit against Interjet

The Ministry of Finance reported on Sunday that it has denounced ABC Aerolíneas (Interjet) for not paying 66 million pesos of income tax withheld on wages.

Interjet is owned by businessmen Miguel Alemán, son of the former president of Mexico of the same name, and his son Miguel Alemán Magnani, who is part of the Business Advisory Council of President López Obrador.

The area company has been bordering on bankruptcy for months between debts, lack of liquidity, strikes by workers.

Now he adds to his problems the legal harassment on the part of the Public Prosecutor's Office.

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