Ángel Escalante Carpio is the founding and leading partner of Escalante & Asociados Law Firm. He graduated in law from the prestigious Escuela Libre de Derecho, where he had the best average grades in his year and was made class valedictorian. He also has a master’s degree in tax law from the Panamerican University and several diplomas in anti-corruption and international trade, as well as a specialty in criminal matters. He has more than 15 years of experience in tax, international trade and corporate matters, as well as five years of experience in anti-money laundering.
DESCRIBE YOUR CAREER TO DATE.
My career in corporate tax started in an accounting and legal firm, where I started as a paralegal and left as a partner. My next step was to collaborate in one of the most prestigious Mexican firms, Basham, Ringe y Correa, which at that time had the most renowned team in corporate tax. Here I learnt from some of the most prestigious lawyers, such as Luis Ortiz Hidalgo and Gerardo Nieto. Since 2013, I have been the founding partner of a boutique law firm specialised in corporate tax.
WHAT ATTRACTED YOU TO A CAREER IN CORPORATE TAX?
I have always been attracted to legal matters with a connection to accounting and finance. As a lawyer, I have had the opportunity to collaborate in many important corporate transactions, national and cross-border. I found myself working with complex legal and tax matters with financial and accounting implications – I find that really challenging and satisfying. I like to analyse every specific case from different points of view. This is one reason I am currently taking a degree in public accounting – to complement and reinforce my legal knowledge in corporate tax.
WHAT DID YOU FIND MOST CHALLENGING ABOUT ENTERING THE FIELD OF CORPORATE TAX?
In my opinion, corporate tax in a national and international context is the legal practice where the regulations are most continuously being modified and expanding. Additionally, the modifications in the financial reporting standards have a direct impact in the matter.
It is also important to take into account that criteria for the tax authorities and the courts are always advancing and modifying, which compels us to adjust our practice and knowledge continuously. Therefore, corporate tax is a highly regulated matter in constant flux, which I find really challenging and exciting.
HOW IS THE REDUCTION OF TAXATION IN NORTHERN MEXICO AFFECTING THE NATIONAL CORPORATE TAX MARKET?
The reduction of taxation in northern Mexico must be analysed regarding the two main federal taxes: income tax; and value-added tax (IVA).
Regarding income tax, taxpayers residing in the northern border region may apply a tax credit equivalent to one-third of the income tax, which will lower the rate to 20 per cent. However, in order to benefit from this stimulus, the taxpayers must continuously comply with a series of requirements set forth by the Tax Administration Service, and the authorisation granted to taxpayers to apply the benefits may be revoked at any time. Therefore, this tax reduction will not have a significant impact in Mexico, because the requirements are very difficult to meet and taxpayers who opt for this reduction will have a constant contingency on the basis that their authorisation may be revoked, and they will have to pay the equivalent of the tax credit applied from the start of the benefit.
On the other hand, in the case of IVA, the stimulus consists of a credit equivalent to 50 per cent of the IVA rate, in such a way that it ensures that only a tax burden of 8 per cent is transferred to the purchaser of the goods or services. In my opinion, this reduction will have a positive but limited effect on the Mexican economy, since the region where it is applicable is very restricted.
HOW IS THE NEW GOVERNMENT ADDRESSING PROBLEMS IN THE EROSION OF THE CORPORATE TAX BASE?
The main target of the current administration is to effectively combat the erosion of the corporate tax base. In Mexico, one of the most harmful practices is the simulation of operations and the use of apocryphal invoices issued by shell corporations. There are some official estimations that more than 25 per cent of potential tax collection is lost because of this problem.
One of the main actions announced by the current administration is to consider the issuance of false invoices as a felony with no-bail hold, and to consider this practice as not only tax fraud but also organised crime, as several people participate in the crime. Other actions to fight this problem will be: having a greater control in incorporation of companies; implementing better bank controls for transactions; and reinforcing the Money Laundering Prevention Law.
There is a series of legislative initiatives that aim to amend various provisions of the relevant tax regulations, in order to compel taxpayers to withhold two-thirds of IVA and income tax in every service rendered to third parties.
WHAT CHALLENGES DID YOU FACE WHEN SETTING UP YOUR OWN FIRM?
Setting up my own firm has been really challenging and exciting. One of the biggest tests was to keep the firm’s national and cross-border practices in equilibrium. We are also focusing more on our social responsibility as a firm.
WHAT MAKES ESCALANTE & ASOCIADOS STAND OUT FROM ITS COMPETITORS IN THE MARKET?
E&A stands out from its competitors since it is the only Mexican firm with international expertise and a high degree of specialisation in anticorruption and corporate social responsibility, international trade, corporate tax, private wealth law, as well as anti-money laundering.
The values that guide E&A consist of personalised attention and in-depth study of the issues, as well as the continuous search for innovative solutions with solid legal grounds, based on constant training and study, in order to render services of excellence.
WHICH CHALLENGES WILL CORPORATE TAX FACE OVER THE NEXT FIVE YEARS?
The current political situation in Mexico is really complex and will present unprecedented challenges. In an international context, the implementation of base erosion and profit shifting (BEPS) actions, the tax treaties and the multilateral instrument will also represent new and important challenges.
However, I envision that the most complex matter in the following years will be the taxation of the digital economy, which will need new and sophisticated solutions from the international community.
Ángel Escalante Carpio is a favourite among clients, who praise his "great knowledge in taxation matters" and identify him as "the best on tax issues in Mexico".
Ángel has over 15 years of experience in the tax and foreign trade areas and has solid training and ample experience in both of these types of practice, providing support and counsel to both national and foreign clients. He is a member of the International Chamber of Commerce (ICC) and is part of the ICC's commission on taxation and its commission on customs and trade facilitations.
Ángel examines in detail each and every one of his clients' concerns and needs, from a legal and business perspective, helping the customer in the provision of proper, suitable and consistent counselling for the achievement of their goals. Ángel's areas of practice include: tax and foreign trade consultancy and planning; management and performance of procedures before fiscal and customs authorities; alternative means for the solution of disputes in tax and foreign trade matters; tax and foreign trade litigation; preventive aspects (due diligence); mergers and acquisitions; corporate restructuring; and patrimonial planning for individuals. Ángel has a master's in tax law (with honours) from the Panamerican University (2009–2010), with a dissertation entitled: "Analysis of the Amendment of the Tax Consolidation Regime of December 7th, 2009 in Light of the Constitutional Right Against ex post facto Laws". He also graduated from the Escuela Libre de Derecho with a postgraduate degree in criminal law (2005–2006); and a law degree (with honours for his student trajectory; highest grade point average of his class) (1999–2004), with a thesis entitled: "Fiscal Federalism: Constitutional Aspects and Taxing Power by the States".