AUDIT OF THE TAXPAYER S FINANCIAL SITUATION REPORT (Free translation from Spanish to English)

Transcription

1 AUDIT OF THE TAXPAYER S FINANCIAL SITUATION REPORT (Free translation from Spanish to English) To the Mexichem, S.A.B. DE C.V. Board of Directors and Shareholders, To the Ministry of Finance and Public Credit, To the Tax Administration Service (SAT), and To the General Large Taxpayer Administration 1. I issue this report on my audit, conducted under the International Standards on Auditing (ISA), of the financial statements prepared by Mexichem, S.A.B. de C.V. in accordance with Article 32-A of the Federal Tax Code (CFF, acronym in Spanish), Article 58, Sections I, IV and V of the CFF Regulations (RCFF, acronym in Spanish), Rules , the 2016 Omnibus Tax Bill (RMF, acronym in Spanish), and with the consolidation instructions and features and the forms and guidelines used to express an opinion on financial statements for tax purposes contained in Annex 16-a of the RMF as published in the Federal Official Gazette (DOF, acronym in Spanish) on May 23, On July 28, 2016, I issued a clean audit report based on my audit. 2. Exclusively per the terms outlined in this section, I hereby state the following under affirmation, based on the provisions outlined in Articles 52 paragraph III of the CFF; Articles 57 and 58, Section III of the RCFF, and Rule of the 2016 Omnibus Tax Bill: A. Concerning the audit of the Mexichem, S.A.B. DE C.V. (the Entity s ) financial statements conducted in conformity with IAS for the year ended December 31, 2015, and based on the terms established in the preceding paragraphs, I issued a clean audit report that does not affect the taxpayer s status. B. As part of my audit described in the preceding paragraphs, I reviewed the other information and documentation prepared by the Entity and under its own responsibility, in accordance with Article 32-A of the CFF; Article 58, Sections I, IV, and V of the RCFF; Rules , of the 2016 Omnibus Tax Bill, and the consolidation instructions and features and the forms and guidelines used to express an opinion on financial statements for tax purposes contained in Annex 16-A of the RMF, filed with the 2015 tax opinion submitted through the SAT s online system, SIPRED. I audited this information and documentation with the selective testing methodology, using the audit procedures applicable to the circumstances within the scope required to express my opinion on the financial statements taken as a whole, in conformity with the ISA. This information is included exclusively for use and analysis by the General Large Taxpayer Administration. I hereby express the following based on my audit: I. Within the selective testing carried out in compliance with the ISA, I reviewed the fiscal situation of the taxpayer referred to in Article 58, Section V of RCFF, Rules , , and Section XVI of Rule of the RMF, for the period covering the audited financial statements and, within the scope of my selective testing, I reasonably confirmed that the goods and services acquired or disposed of or granted in use or enjoyment by the Entity were effectively received, delivered or rendered, respectively. Under Section II of Rule of the RMF, the procedures applied did not include the examination of compliance with customs and foreign trade matters. My working papers include evidence of the audit procedures applied to items selected with the sampling method and supporting the conclusions.

2 II. I confirmed, on a selective testing basis and according to the ISA, the calculation and federal tax payments for the year included in the list of contributions charged to the taxpayer as a direct subject or in its position as a tax withholder. Because the entity does not have employees, it does not determine employer contributions payable to the Mexican Institute of Social Security (IMSS) derived from wages and salaries. III. I confirmed through the selective testing method and the ISA, that the taxpayer is entitled to the credit balances requested in the returns or applied to the compensation carried out during the year under review, and that the outstanding refund amounts or those refunded to the entity by the tax authority are derived from this balance. IV. Based on the nature and application mechanics utilized in previous years, as appropriate, I checked the items and amounts shown in the following annexes: Reconciliation between the accounting and tax results for income tax (ISR) purposes, and Reconciliation between the income audited according to the comprehensive income statement; the cumulative amount for income tax purposes, as well as the sum of all acts or activities for purposes of the final Value Added Tax (VAT), paid on a monthly basis in V. I checked the supplementary tax returns that I had knowledge of, and that were filed to cover the tax differences determined during the year, and confirmed that they were filed under the established tax provisions. I also reviewed the supplementary tax returns I had knowledge of that were filed by the taxpayer in the year object of the audit, which modified the prior years tax returns, confirming that they were filed under the established tax provisions. VI. Because the company has no employees, it did not determine or pay statutory employee profit sharing. VII. I used the selective testing method to check the balances of the accounts listed in the Annexes with the comparative analysis of the expenditures sub-accounts, and to run a comparative analysis of the comprehensive financing sub-accounts while performing the corresponding reconciliations, when appropriate, as follows: A) the differences with the basic financial statements arising from reclassifications for filing purposes, and B) the determination of deductible and non-deductible amounts for income tax purposes. VIII. During the year ended December 31, 2015, I had no knowledge that the Entity might have obtained resolutions from tax or judicial authorities (Federal Tax and Administrative Law Tribunal or the Supreme Court of Justice of the Nation, District Courts, and the Collegiate Circuit Court), or that it enjoyed tax incentives, exemptions, subsidies or tax credits, except for the following: The Entity, as a consolidated company, filed a notice on February 17, 2014, to determine its consolidated tax results during the fiscal year 2014, under the terms set forth by Section XVII of the Ninth Provisional Article of the 2014 Income Tax Act, and Rule I of the 2014 Omnibus Tax Bill. IX. During the year, the Entity was not jointly and severally liable as a tax withholder on the sale of shares by residents abroad. X. It was not practical to determine the percentage of the scope of the review of exchange rate fluctuations; however, I did review the results of the currency fluctuations checking the rates

3 applicable at the date of the transaction, as well as the payment, collection, and exchange at year end. XI. The Entity s balances with its main related parties at December 31, 2015, are disclosed in Note 14 to the financial statements, included in the Annex with the Notes to the Financial Statements on SIPRED. Transactions with related parties carried out during the year are disclosed in the Annex titled Transactions with Related Parties on SIPRED. XII. Within the scope of my selective testing, I confirmed compliance with the obligations relating to transactions with related parties as set out by Article 11, 27, Section XIII; Article 28, Sections XVII, paragraph four, subparagraph B), XVIII, XXVII, XXIX and XXXI; and Article 76 Sections IX, X and XII of the Income Tax Act. XIII. During the year ended December 31, 2015, according to the terms provided in the Annex on General Information in SIPRED for 2015, the Entity incorporated information related to the application of some of the different criteria reported by the tax authorities, as applicable, pursuant to subparagraph H) of Section I of Article 22 of the CFF in force at December 31, The taxpayer stated in the referenced Annex that it did not apply these criteria during the year ended December 31, XIV. Within the scope of my selective testing, I reviewed the information the taxpayer stated in its information return filed in the following Annexes of the multiple information returns without observing any omissions: Annex 2 Information about Excise Tax (IEPS) and Value Added Tax (VAT) payments and withholdings. Annex 4 Information about Residents Who Live Abroad, in the case of taxes withheld from residents living abroad Annex 9 Information about Related Parties Abroad. Other issues 3. My answers to the questions asked in the tax diagnosis questionnaires and about transfer pricing that are part of the information included in the SIPRED, are based on the result of my audit of Mexichem, S.A.B. DE C.V. s basic financial statements taken as a whole at December 31, 2015 and for the year ended on that date, which was performed in accordance with the International Standards on Auditing (ISA); consequently, the answers that indicate the taxpayer s compliance with the tax provisions are supported with: A) the result of my audit performed in accordance with ISA, or B) the fact that I checked during my audit according to ISA and did not find that the taxpayer breached any of its tax obligations. Some answers to the tax diagnosis and transfer pricing questionnaires were left blank because 1) they do not apply to the Entity, 2) there is no possible answer, or 3) the information was not reviewed because it was not part of the scope of my audit, which does not constitute a breach of the tax provisions.

4 4. In relation to the answers given by the Entity on the taxpayer s tax diagnosis and transfer pricing questionnaires included in the Annexes titled General Information and Taxpayer Information about its Transactions with Related Parties, respectively, that are part of the information contained in the SIPRED, I have analyzed and checked to make sure that the answers are consistent with the results of my audit performed in accordance with International Standards on Auditing (ISA). Consequently, the answers indicating the taxpayer s compliance with the tax provisions, are grounded in the fact that during my audit, I checked and had no knowledge of any breach of the tax obligations mentioned in these questionnaires. Also, some questions require information that is not part of the basic financial statements, so the answers were provided by the Entity and are not part of the scope of my audit. 5. At December 31, 2015, I did not identify any material differences in contributions payable by the taxpayer or in its capacity as a tax withholder. Mexico City July 28, 2016 [Illegible signature] CPA Carlos Mariano Pantoja Flores AGAFF Record Number 14393

5 gob.mx Tax Administration Service ACKNOWLEDGMENT OF ACCEPTANCE Tax Opinion Folio: Taxpayer Identification Number (TIN): _MEX TA Name, or business or corporate name: MEXICHEM, S.A.B DE C.V. CPA s TIN: PAFC681106KBA CPA s Name: CARLOS MARIANO PANTOJA FLORES CPA s registration number: Filing date and time: 07/28/ :07:13 Acceptance date and time: 07/28/ :07:13 For the following item: Reception of tax opinion on 28- CONSOLIDATION AND INCORPORATED COMPANIES For the period: 01/01/2015 through 12/31/2015 Original string: Digital stamp: Your personal information is incorporated, protected, and handled by the SAT s personal information systems within the institution s jurisdiction, and can only be provided in the terms set out by Article 69 of the CFF and other laws. If you wish to change or correct your personal information, you can do so through Mi Portal or go to your Local Taxpayer Services office. This information is provided in compliance with the 17 th for Protection of Personal Information, published in the Federal Official Gazette on September 30, 2005.