In today’s article in Abogados Cabo we will talk about fiscal or tax law, which includes the legal norms in charge of regulating the collection, management and control of the public revenues of the states contributed by taxpayers.

What is tax law? Characteristics and branches

Governments need revenues in order to operate and make investments in areas such as education, health, justice, security and roads. However, there must be something that regulates the mechanisms for obtaining funds to finance public spending. Those who are interested in delving deeper into this subject may be curious to know what tax law is and what its characteristics are.

Also called tax law, this is a branch of public law that brings together all the rules in charge of regulating the legal relations between the State, in its capacity as tax authority, and the taxpaying population. This means that it deals with legislation on the collection, management and control of public revenues.

Article 31 section IV of the Political Constitution of the United Mexican States refers to the obligation of Mexicans to “contribute to the public expenses of the Federation, the States, Mexico City and the Municipality in which they reside in a proportional and equitable manner as provided by law”. This provision is the foundation of tax law in the country, since it is dedicated to establishing the rules that determine taxes.

What does tax law study? 

Essentially, this branch of law explores the rules that establish the taxes to be paid by the governed. It reviews all the material and procedural aspects, exceptions, penalties, provisions and specific protocols on tax collection matters contained in the legal system.

In Mexico, the provisions of the Constitution, international treaties signed by the country, the Federal Tax Code, the Tax Coordination Law, the Customs Law, the Foreign Trade Law, the Value Added Tax Law, the Income Tax Law, the tax codes of the states and municipalities, the finance laws of the federal entities and municipalities and certain regulations, decrees and circulars related to the subject matter are applicable to tax matters, so all this legislation must be taken into account. 

Characteristics of tax law 

Having analyzed what tax law consists of, it is important to point out that this area has certain defining characteristics, among them:

  • It is part of public law and, especially, of financial law.
  • It determines the income to cover the Expenditure Budget of the Federation, the States and the Municipalities.
  • It has mandatory rules that cannot be agreed or negotiated.
  • It is based on an obligation, there is no possibility of not complying with the rules.
  • It monitors taxpayers’ compliance with their tax obligations.
  • In Mexico, it must comply with the basic principles of tax equity, proportionality and legality.
  • If taxpayers do not comply with their tax obligations, it establishes sanctions and fines.

Branches of tax law

Tax law is made up of different branches:

Material tax law.

It is dedicated to reviewing, studying and applying the legal regulations on which the tax discipline is based. It is the part dedicated to defining concepts such as contribution, payment obligation and exceptions, and investigates how a tax obligation arises and how it is extinguished, its sources and causes.  

Formal tax law

This is the application of the rules to specific cases. It deals with the steps that must be followed in order for a subject to make a contribution, the determination of taxes, auditing and the necessary investigations to detect tax evaders.

Constitutional tax law

It is interested in the rules that regulate taxation. It is also concerned with the coordination and delimitation of taxation among the three levels of government: federal, state and municipal.

Procedural tax law

It includes the regulation of controversies that may arise between the tax authorities and taxpayers. It is the branch that is used in cases such as the determination of a tax obligation and its amount, the application of penalties and the procedures that someone must follow to request a refund of unduly paid amounts from the tax authorities, among others.

Criminal tax law

Regulates everything related to tax offenses and the penalties applicable to each case.  

International tax law

Analyzes the regulations applicable when two or more sovereignties come into contact. Its purpose is to avoid problems of double taxation and international tax evasion through tax havens and other methods. 

It is sometimes difficult to separate these types of tax law, as their differences are not strictly drawn because they are part of the same legal framework. 

What is tax law for?

Although, as stated at the beginning, it is essential for governments to have collection mechanisms, contributions must be proportional and equitable. The federation and particularly the Mexican Tax Administration Service (SAT), as well as state and municipal governments, need to look to tax law to verify the limits, procedures and penalties that can be applied at the time of taxation.

On the other hand, both individuals and corporations need this law to ensure that their actions comply with the Federal Tax Code and other tax regulations in force. In addition, it may happen that charges or penalties are imposed erroneously, which may result in legal proceedings. 

Regarding what a tax lawyer does, it must be said that his or her tasks are varied and require a deep knowledge of the tax legislation in force in the country.

Do you need a lawyer?

Are you in Baja California Sur, Mexico? Todos Santos, Los Cabos, La Paz, Loreto, San Jose Del Cabo, Los Cabos, El Pescadero? Are you in Nuevo Leon, Mexico? Apodaca, Cadereyta Jiménez, El Carmen, García, San Pedro Garza García, General Escobedo, Guadalupe, Juárez, Monterrey, Salinas Victoria, San Nicolás de los Garza, Santa Catarina and Santiago… 

At Cabo Lawyers we seek to satisfy the different legal needs of our clients, both in their business and personal matters. Contact us at: (+52)8119384461, where we will gladly advise you.

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