Dancing legislation

PricewaterhouseCoopers is and has been the leading accounting firm in Mexico not only because it is the oldest, established 103 years ago, but also because of its expertise, innovative approach and professionalism.

The tax line of service has always stood out for its dynamism and ability to resolve issues. This is reflected in its size and number of specialists. This line of service has more than 600 specialists, which provides a good measure of its importance in the sector and its leadership among professional services firms.

The legal services area, which is relatively new with only three decades in place, can be seen on its own as a first rate legal firm, to a degree that it is one of the biggest in the country which includes a tax litigation group, that allows PwC to provide all type of tax services.

in Mexico, as everywhere in the world, have become a priority for businesses. However, frequent changes to the tax framework, together with unclear rules, make providing tax services in Mexico a bigger challenge.

This is in fact a very interesting topic, as Mexican tax legislation suffers changes year on year that generate uncertainty and do not allow companies to properly plan. For example, the new tax rules entering into force in 2010 were discussed and approved in late 2009. As such, companies are not able to have a reliable long term financial plan adequately.

It is true that all systems can be improved, and undoubtedly Mexico requires a better tax system. However, frequent changes have only made it more complex, discouraging investment without fully resolving the revenue problem.
Additionally, the tax authorities issue regulations during the year, attempting to clarify tax rules in their application, which is not always achieved, thus complicating even more the business scenario.

Furthermore, some of the rules are not clear, leading the taxpayer to different interpretations which open a variety of alternative positions that can range from conservative to very aggressive.

In this scenario, PwC continuously offers professional advice to companies so that they can comply correctly with their tax obligations and have sufficient grounds to take a supportable position on any provision that is confusing or controversial.

Companies have also to deal on a daily basis with the taxing attitude of the authorities, who have become very aggressive in their reviews, resulting in the companies' spending significant time and resources to deal with the requests from and resolve controversies with the authorities.

Mexico, being an OECD member country, participates in the rules and the initiatives such organisation issues, as well as in the exchange of knowledge and programmes that other countries apply. This allows the Mexican tax authorities to be up to date with respect to tax matters internationally, even helping them to take in some cases very aggressive positions that force the taxpayers to turn to legal means for defence, for which the firm has the necessary resources to provide such services.

In this respect, PwC has developed a new area called the Global Dispute Resolution practice, where advisory and support services are provided to companies, starting from the preparation for dealing with the requests from the authorities, and up to applying the provisions of the tax treaties entered by Mexico with more than 30 countries and assisting in the process of negotiating under the mutual agreement procedures with the competent authority of a certain country.

This new area demonstrates PwC's leadership when dealing with the issues affecting its clients, with the support of the international network of firms, that allows dealing with the matter in the corresponding country (or countries).
The transfer pricing area is another success story as it anticipated the need for such expertise in Mexico by seconding personnel to countries where transfer pricing rules were already in force. As such, when the area was created in the nineties, the firm already had Mexican personnel with the expertise on the matter. Now that the Mexican tax authorities are focusing intensively on reviewing the transfer pricing practices of the taxpayers, the PwC experience of many years in the field allows it to have all the elements to assist clients in dealing with such reviews.

The International Tax Services group has historically been at the forefront in international tax matters and continues to focus in having the lead in the specialised knowledge and in providing value-added services to its clients. These have resulted in the multiple awards received by the group.

Learning and providing value-added services are essential in a world where competition is constant and in cases so aggressive that it exceeds ethical standards.

A quality service with strong technical background that provides PwC's clients confidence is the basis of the day to day work.

In said environment, the challenge that the firm faces is to maintain the highest quality service standards that as of today have been its trademark, as well as a culture of dedicated service and attention to every detail in our delivery.
For this to be possible it is necessary to continue innovating, taking the lead against the challenges that the business environment raises and anticipating what is to come.

Some people consider the firm arrogant. This is as a common reaction to cases where PwC does not accept changing its opinion to favour an aggressive position or to avoid disclosing certain information.

Unfortunately, that is sometimes the result of sustaining a position that after due consideration and study we consider as correct. However, in the long term this prevails and in many cases clients realise that difference in an answer, as well as the technical arguments and support, always have merit on their own.

The increasingly complex scenarios that Mexico is facing due to the global and local economic and financial crisis, together with its dependence on the US, are challenges that require innovation and the development of alternative ways that make companies succeed, and the tax arena is a good field for finding such ways, keeping in mind always paying the fair share of tax in accordance with the applicable legislation. The complexity in the tax compliance processes, require also having a specific set of skills and updated knowledge to be able to assist and resolve these issues.

Considering this complex scenario, having the most capable human resources allows for a competitive advantage that is reflected in the levels of client satisfaction. The search for such personnel, national or foreign, or their constant development to keep the highest levels of proficiency, is the norm the firm has followed from its incorporation, and the constant measurement of these requires a significant effort and cost that has never been sacrificed. On the contrary, such efforts are constantly increasing due to the competitiveness of the environment and the complexity, and evolution of the rules.

Having the best team not only in technical terms but also with an enthusiasm to stand out, also results in an increasing effort to retain the most talented people in a market that demands qualified personnel. However, these costs and efforts are incurred considering the internal policy of maintaining and increasing the wealth of knowledge required for an excellent service.

In order to support that such a commitment to excellence is fulfilled, PwC carries out surveys and with clients to understand and act on the areas in which it must do so, to pursue such commitment or in which it is required to improve, and also to understand the needs of clients and train the appropriate resources so that it is able to address them with anticipation.

In a globalised world, seconding personnel to and from other countries as well as having frequent contact and exchange of information with offices in countries with large financial or industrial centres provide another advantage in the acquisition of skills, knowledge and experience that can be shared with peers and clients.

As of today, the tax line service of PwC Mexico has a group of members of the firm working in foreign offices, for periods of at least two years. In addition, members of foreign firms are working in Mexico, gaining experience and/or sharing the knowledge they have from their home countries.

Mexico has been one of the countries most affected by the economic crisis, as the GDP will contract -7 percent or -8 percent in 2009. As such, it is necessary to place an extraordinary effort in supporting companies to come out from the crisis and to help the country achieve the levels of growth that it had in the past. The services sector plays an important role in paving the way to come out of the crisis. Hence the important role of PwC towards viewing the future optimistically, as Mexico has historically emerged stronger from prior difficult times.

The firm is also a leader in the corporate responsibility arena, with frequent actions aiming to benefit its personnel, the community and the environment. By measuring the carbon footprint of the firm it commits itself to reduce it. This forces the firm to be creative and to take the relevant actions in order to achieve such commitment. The high levels of poverty also require an effort from the community to reduce them. As such the firm has taken several actions, especially in the educational arena. Even if the PwC contribution may be considered as small with respect to the size of the problem, remaining passive only aggravates the problem.

Taxes play a relevant role in the development of the country, as they are the source of revenues for the government and also a way to discourage harmful habits or to encourage sustainable activities, which are significant in a country with the problems that Mexico has. Providing support to the policy makers, so that they are aware of the situation that companies in Mexico face, which is key in the development of the country considering the issues with respect to tax legislation, is a role that the firm has played and that has helped in many cases to avoid reduction in unemployment rates or even stimulating job creation.

The future is here, together with its challenges. The positive attitude of the firm continues to be the focus of servicing clients and aiding the development of Mexico and its communities.

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