Requirements for requesting a reduction in provisional tax payments for legal entities

Obligation to calculate provisional ISR payments

In accordance with Article 14 of the Income Tax Law (LISR), legal entities are required to calculate and pay monthly provisional ISR by applying the profit coefficient determined in the tax return for the most recent 12-month fiscal year. If no profit coefficient results, the most recent coefficient determined within the last five fiscal years shall apply. 

If taxpayers estimate that the profit coefficient applied during the first half of the fiscal year will lead to an excessive annual ISR payment, or if they anticipate a tax loss at year-end, they may request a reduction of the profit coefficient. This would result in reduced or no tax payments for the period from July to December. 

Submitting the request for a reduction in ISR payments

In accordance with Article 14 of the Regulations of the Income Tax Law (RISR), the request must be submitted to the tax authorities one month prior to the date on which the relevant tax payment is due. If a reduction is requested for several provisional payments, the request must be submitted one month before the due date of the first such payment. 

The request can be submitted electronically or in person, as follows: 

• Via the SAT portal in this link
• In person at SAT Tax Collection Offices, at the official reception desk.

The full list of requirements for submitting the request is outlined in procedure form 29/ISR, Second Amendment to Annex 1-A of the 2025 RMF. However, in summary, the following are required: 

• A formal letter requesting the reduction of the profit coefficient.
• Form 34: "Request for authorisation to apply a reduced profit coefficient to determine provisional ISR payments", duly completed.

Form 34 also specifies the tax calculations required as part of the procedure: 

• The estimated calculation of the taxable profit or loss for the fiscal year.
• The determination of the taxable profit or loss (difference between authorised deductions and taxable income) for the period from January to June of the year for which the reduction is requested (actual and proportional data for the period).

If a reduction is requested for provisional payments for any month after July, the relevant tax amounts (income and deductions) would correspond to the month immediately preceding the month for which the reduction is requested. In this case, a reconciliation between accounting and tax results must be carried out as if it were an irregular fiscal year.

Recalculation of provisional payments

Taxpayers who obtain authorisation to reduce the profit coefficient for calculating provisional ISR payments must, at the end of the fiscal year, compare the amount paid using the authorised (reduced) coefficient against the amount that would have been due had the standard profit coefficient for the fiscal year been applied. 

If, after this comparison, differences arise in favour of the tax authorities, the taxpayer must pay the corresponding late payment interest via the annual tax return. In other words, there is no obligation to pay such interest through the filing of supplementary provisional tax returns. 

Conclusion

The reduction or exemption from provisional ISR payments can help improve the taxpayer's cash flow by avoiding excessive payments, the recovery of which would require refund or offset procedures that consume time and resources through administrative processes with the SAT. 

At Forvis Mazars, our team of tax specialists is available to provide advice on the procedure, as well as to assist with the review or preparation of the necessary tax calculations for this request.