Interest on loans should be billed
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MEXICO CITY – When borrowing money from a friend or relative, as well as when receiving an inheritance, the beneficiary must declare the income. These movements do not pay mandatory taxes, but they are not exempt from falling into tax discrepancies when they are not declared in your personal accounts.
Declaring before the Tax Administration System (SAT) a transfer of money, a loan or a donation will avoid any problem of unverifiable income. This has been made stricter by the agency since 2021.
There is a time limit to be able to declare before the SAT a loan and it must be 15 days after receiving the deposit. The information must be submitted in the SAT page with the information of the transfer and who made it.
The SAT considers the undeclared income as “accumulable omitted” that later will have to pay ISR, that is to say, that money that at the beginning should not pay taxes, finally will be charged an extra.
How to invoice a loan
Individuals residing in Mexico who have obtained loans or donations do not have to pay Income Tax (ISR) on such income. This will happen if they meet the requirements to exempt the tax.
However, such taxpayers are required to report, in the annual return, loans, donations and prizes, provided that individually or in the aggregate they exceed 600 thousand pesos. [Income Tax Law 90, second paragraph].
Therefore, it is advisable that taxpayers who receive deposits for loans or donations, declare to the Tax Administration Service (SAT) the aforementioned income. This is because the tax authority may presume that it is income on which ISR must be paid.
The Income Tax Law establishes that deposits in the taxpayer’s bank account, which do not correspond to accounting records when the taxpayer is obliged to keep them, are income and value of acts or activities for which taxes must be paid. [Income Tax Law 59, section III].
Mortgage loans are tax-deductible.
* RDF is committed to maintaining regular updates and validations of our impact data to ensure adequate transparency in reporting. This may result in changes in value.
With a national presence, RDF is positioned to respond to the needs of Latino and poor communities, facilitate project financing and provide technical assistance with the goal of breaking the cycle of poverty in low-income communities across the country.
As the largest Latino Community Development Financial Institution (CDFI), with more than $400 million in total assets under management, RDF has provided capital to Latino-serving organizations across the country.
Other uses of short-term business loans are to obtain working capital to cover temporary shortfalls in funds so you can cover payroll and other expenses. You may be waiting for credit customers to pay your bills. You may also need short-term business loans to pay your own bills, for example, to meet your accounts payable obligations (what you owe your supplier). You may only need a short-term loan to balance your cash flow, especially if your company is a cyclical business.
Your lender will check your credit score and credit history through at least one of the three major credit bureaus. Your credit score may need to reach a minimum level.
In a normal economy, interest rates on short-term loans are lower than interest rates on long-term loans. However, in a recessionary economy, short-term borrowing rates may be higher than long-term borrowing rates. The graphical representation of interest rates as a function of time and percentage is called a yield curve. Short-term loan rates are generally based on the prime rate plus a premium. The bank or other lender determines the premium by determining the risk your business represents to them. To do this, refer to the documentation you provide them to qualify for short-term financing.