Tax recovery
Industrial companies can recover the tax on these materials:
- Raw materials
- Intermediate materials that are used in the manufacturing process but not as a raw material
- Packing materials that are purchased for use in the product’s manufacturing
The recoverability of taxes should be considered in the accounting entries of the purchase invoice.
The invoice amount reduced by the recoverable tax amount is the acquisition cost that should be booked to inventory.
Mexico specifics
The Mexican Tax Authority can claim the payment of VAT for operations that were performed by the taxpayer during the past five years. VAT is due from the date on which the corresponding return was filed or should have been filed. These terms can be extended to 10 years.
Taxpayers can recover VAT balances for their operations that are performed during the last five years. VAT is due from the date on which the corresponding return was filed or should have been filed.