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SHCP pays participations to federal entities of the 1H20

The Ministry of Finance and Public Credit (SHCP) released the payment of participations to corresponding federal entities in the first half of 2020.

The entities that received the most resources were: State of Mexico, Mexico City, Jalisco, Veracruz and Nuevo León.

The Participations to Federal Entities or Branch 28 are the resources assigned to the states and municipalities in the terms established by the Fiscal Coordination Law (LCF) and the Agreements of Adhesion to the Fiscal Coordination System and Administrative Collaboration in Federal Fiscal Matters.

The participations in federal income and the incentives that are delivered to the federal entities and municipalities, are made through the following funds:

  • General Participation Fund
  • Municipal Development Fund Special Tax on Production and Services
  • Inspection Fund
  • Compensation Fund
  • Hydrocarbon Extraction Fund
  • New Car Tax Compensation Fund
  • 0.136 percent of the RFP

Participations to federal entities

For analysis purposes, fiscal coordination can be defined as concertation in the exercise of tax powers between the different levels of government that make up a State.

In relation to Mexican Federalism, coordination is the set of actions whose purpose is to harmoniously order the tax powers and fiscal relations between the Federation and the Federal Entities.

Fiscal coordination, as an element of Mexican federalism, is regulated by the LCF, this regulatory instrument pursues the following objectives:

  • Coordinate the Fiscal System of the Federation with those of the states, municipalities and Federal District.
  • Establish the share that corresponds to your public finances in federal revenues.
  • Distribute among them said participations.
  • Establish rules for administrative collaboration between the various tax authorities.
  • To constitute the organisms in the matter of fiscal coordination.
  • Laying the foundations for its organization and operation.

To meet these objectives, article 10 of the LCF establishes that the federal entities adhere to the National System of Fiscal Coordination (SNCF) through the signing of an agreement with the Ministry of Finance and Public Credit, which must be authorized or approved by state legislatures.

Said adhesion grants the federal entities, municipalities and territorial demarcations the right to participate in the total of federal taxes and other income that the law indicates.

The SNCF seeks to solve the problem of tax competition, while harmonizing the tax systems in the three levels of government. Adherence to this system is carried out in a comprehensive manner, covering all the revenues of the federation.

 

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