Supreme Court of Justice (SCJN)Constitutionality of Dividend Tax

The Supreme Court of Justice of México (SCJN) recently upheld the constitutionality of the 10% additional tax on dividends (Article 140 of the Income Tax Law -ISR-), rejecting the claim that it violates rights and confirming the legality of this tax on profits distributed by companies to shareholders. This reaffirms the legality of established tax withholdings, not creating new taxes, but rather confirming those already in place on profit distributions to individuals.

The Supreme Court upheld the regulatory system contained in the Income Tax Law, in effect since 2014, regarding the tax applicable to dividends, concluding that it is not confiscatory, respects the progressive structure of the Personal Income Tax (ISR), and does not, itself, violate the right to a minimum living wage or human dignity.

The Supreme Court concluded that the arguments of the affected parties, who filed suit and maintained that this regime violated the minimum living wage, human dignity, tax proportionality, and the prohibition of double taxation, were unfounded and inoperative. Consequently, the Court overturned the original ruling that had granted (Amparo) and decided not to grant constitutional protection, thus maintaining the dividend taxation scheme established by law.