EY’s Americas Tax Center Addresses Cross-Border Tax Concerns

Michael Mundaca brings a broad range of experience and education to his work at Ernst & Young, including a masters in philosophy from the University of Chicago, a JD from the University of California at Berkeley Boalt Hall School of Law, and a master of laws degree with a specialization in international tax from the University of Miami School of Law. Michael Mundaca also worked in the United States Treasury Department during the Obama administration and won the prestigious Alexander Hamilton Award while serving there. His current position is co-director of the National Tax Department and Americas Tax Center.

Ernst & Young’s Americas Tax Center (ATC) is one of three such global EY centers designed to help clients navigate the intricacies of diverse administrative, legislative and political environments. The ATC is a platform that brings together a team of more than 10,000 tax professionals, spanning 33 countries to provide borderless client service across the Americas

The ATC helps its clients with a range of issues regarding tax policy, tax controversy, global tax compliance and reporting, tax effective supply chain management, customs, and value added tax, as well as other matters.

New Tax Law for Outsourcing Relationships in Mexico

Since 2011, Michael Mundaca has served as co-director of Ernst & Young’s (EY) National Tax Department and Americas Tax Center. In this role, Michael Mundaca co-leads EY’s Americas-wide network of tax professionals who provide tax law consulting and other tax services in both North and South America.

In the December 12 edition of the Americas Tax Center Roundup newsletter, EY shared 2017 compliance rules regarding outsourcing relationships for companies in Mexico, where it is common for businesses to outsource certain employee services, such as payroll, to service companies. Service companies typically recognize income for a service fee, transfer the value-added tax (VAT) on that service fee to operating companies, and deduct payments to employees. Operating companies then deduct the service fees and issue a credit for the VAT paid on those fees.

On July 15, 2016, a court in Jalisco ruled that if an outsourcing relationship does not fulfill certain requirements outlined in Article 15-A of the Federal Labor Law (FLL), the relationship between the operating company and the service company will be considered a payroll cost instead of an independent personal service cost. If the operating company is considered an employer, the VAT does not apply to service fees, and the operating company cannot credit the VAT. 

To learn more about this new tax law, visit http://www.ey.com/gl/en/services/tax/international-tax/alert--mexicos-new-compliance-rules-for-outsourcing-relationships-will-go-into-effect-in-january-2017.

What Is the Estate Tax?

 


A graduate of New York’s Columbia University with degrees in philosophy and physics, Michael Mundaca now serves as the codirector of the national tax department at Ernst & Young LLP. Prior to assuming this role, Michael Mundaca served as assistant secretary for tax policy in the treasury department as part of the Obama administration.

The United States government’s office of tax policy is responsible for the development and implementation of federal tax policies and programs, including policies regarding the federal estate tax.

The estate tax is a mechanism through which the government generates revenue when property is transferred to heirs after the original owner passes away. The definition of “property” may include real estate but also encompasses assets like cash, stocks, and other valuables. In general, for 2016, federal estate to be due, the total value of the property transferred be at least $5.45 million for an individual heir.

Federal estate tax receipts for 2014 equaled $19.3 billion.