IEPs

The changes that are requested to modernize it

At 40 years old, the Special Tax on Production and Services (IEPS) needs some changes, in view of the 2022 tax reform. In this article we analyze what the Miscellaneous Fiscal 2022 proposes regarding the IEPS, as well as the changes demanded by the alcoholic beverage industry.

What is the IEPS? 

As we anticipated, IEPS is the acronym for Special Tax on Production and Services , which came into force on January 1, 1981.  

The IEPS is a tax or levy on the consumption of certain specific products and services, the use of which is not entirely encouraged, such as:  

Tobacco 

Alcoholic drinks 

Industrialized drinks with added sugars 

Industrialized foods with a high caloric content 

some fossil fuels 

pesticides 

According to an educational bulletin from the Taxpayer Defense Attorney's Office ( PRODECON ), the IEPS is a federal tax , which weighs on the production of certain goods and services whose consumption may imply "certain social prejudices."

Some curiosities about the IEPS  

Some items such as cigarettes are subject to a 160% tax, which is paid by the final consumer.  

For alcoholic beverages, a percentage rate is applied to the consumer sale price that ranges from 26.5% to 53%, depending on the degree of alcohol.  

On the other hand, some fuels such as gasoline, diesel, kerosene, propane and butane are taxed in cents per liter. Coal, coke and the like, in pesos per ton.  

Uncrystallizable honeys are charged 50%.  

Among other curiosities regarding the IEPS, in the purchase of snacks the consumer pays a surcharge of 8% for the purposes of the aforementioned tax. And if an energy drink is also purchased, the tax is 25%.  

Lotteries and other betting and chance activities are charged with a 30% IEPS fee or rate. Interestingly, telecommunications services charge 3%.  

The IEPS is levied on these items, regardless of whether they are domestic or imported.  

More on current affairs and taxes: Tax deduction: What is it and how to take advantage of it against COVID-19? 

Who has to pay this tax?

The quick answer to this question is: us! In our role as final consumers, we pay more or less IEPS, depending on our purchasing and consumption habits.  

When we buy snacks and sugary drinks, for example, the Special Tax on Production and Services is included in the price. It is just that the owner of the establishment is the one who must withhold, compensate and deliver said tax to the treasury, as well as VAT.  

The IEPS , as well as the VAT, is considered an “indirect tax”. The taxpayer is the "passive subject" who transfers it to other people, until it falls on the final consumer, who finally bears this tax.  

It should be remembered that the IEPS must be offset and paid no later than the 17th day of the month after the tax is incurred.