ENHANCEMENT CONTRIBUTIONS: FEATURES, TYPES, AND EXAMPLES - ARTE - 2025

The c ONTRIBUTIONS improvements are a special type of contribution. It is a form of financing of public services that benefits certain people who can divide the cost. There are public works whose value is divisible and can be fully or partially reimbursed to their beneficiaries through the payment of these improvement contributions.

Although some consider it a type of tax, it is not the same, since taxes are used to finance expenses that are not divisible. In addition, it does not have a periodic application like the tax, but rather it is done once, when the public work that causes the origin of the improvement contribution takes place.

Definition

Improvement contributions are a type of special contributions that accrue as a result of a benefit received by the subject who is obligated by the contribution. This benefit supposes a greater value of their properties caused by works or services undertaken by the public entity.

Their proportion, compared to the total amount of public revenue, is small. However, it is interesting because the principle of economic capacity is replaced by the principle of profit; In other words, those who have more are not obliged to pay more, but whoever benefits from the public work or service pays more.

On the other hand, it is particular to this type of contribution that the money collected is directly assigned to the work or public service in question, without becoming part of the general state budget.

Enhancement contributions are special contributions, which can be classified into:

- Contributions of improvements.

- Contributions for social security.

They arise as a way of compensating the public entity for a work or activity that benefits them, and therefore they contribute individually and proportionally with an amount that is assigned to cover the expenses of the public work or activity.

characteristics

Enhancement contributions, as special contributions that they are, have the following characteristics:

Origin

The improvement contribution is required, as soon as it can be verified that there is a direct benefit to the taxpayer as a result of the public activity of general interest.

In accordance with the principle of legality

As with other contributions, it is essential to follow the principle of legality to the letter. For this reason, the contributions for improvements must be based on a Decree of the Congress of the Union. If they are not based on the law, they lose meaning, since this is one of their characteristics.

Work carried out by a central public body

The origin of these improvement contributions is that the federal states and municipalities need to finance public expenditures. It cannot be a private work or activity.

Proportional and equitable contribution

The principle of tax proportionality must be present in the improvement contributions since it is a tax figure.

It is reflected in the Federal Constitution, article 31, section IV, which deals with the obligation of Mexicans to contribute to public expenses in proportion and in an equitable manner.

The total expense should not be covered by the individuals subject to the improvement contribution, but they simply have to contribute their proportional part.

Paying the improvement contribution is mandatory

When the public work is completed or the public service that causes the improvement contribution starts up, payment thereof is required. It is mandatory without exceptions.

Types

There are basically two types of improvement contributions: infrastructure and public services.

-Within the Infrastructure category we can find roads, buildings, green areas, among others.

-Within the category of public services we can find lighting, drainage, sewerage, paving, restoration of public works, among others.

How are improvement contributions executed?

When the public works are to be carried out, an agreement must be issued and made public in the official state newspaper. This publication has to report the following:

- The nature of the work, especially if it is new work or rehabilitation of existing work.

- Specification of the area that is benefited by the work.

- Detail of the total amount of the work.

- Specification of the applicable discounts for private donations, contributions from government entities (federal and municipal) or for income from the sale of expropriated land.

- Detail of the net amount.

- List of benefited properties or land.

- Detail of quota that corresponds according to the surface meters.

The amount of the improvement contribution must be paid when determined by the legislative decree that provides for it. It must always be adapted to what is established by the legislation applicable to each specific case.

According to each case, the Treasury will establish the settlement in a document that informs the following: name of the subject obliged to contribute, location of the property, total area, area related to the contribution, distance to the work, total amount, particular fee per meter square, property account number and total amount of the contribution.

Resources against the improvement contribution

Against these improvement contributions it is possible to resort to the resolution that establishes or liquidates the same. As long as the improvement contribution is not paid, no act of transfer of ownership can be carried out, either in full or in part.

Neither the notaries nor the registrars will give any validity to this type of transmissions unless it is updated on the applicable improvement contributions.

Examples

Examples of improvement contributions are found in a wide variety of areas:

-Special contributions for improvement of paving in urbanized areas.

-Special improvement contributions for the execution of public works to clean up green areas.

-Special contributions for improvement in urbanizations through social action initiatives.

-Special contributions for improvement in the updating of potable water canalization and sanitary drainage services.

-Improvement contributions to lighting urban areas far from the urban area.

References

1. J. Garcia. Improvement contributions. Online legal encyclopedia
2. Virtual Encyclopedia. The contribution of improvements in the federative entities of the Mexican Republic. eumed.net
3. Pepe Colts (2017) How are contributions classified: taxes, contributions, enhancement and fees? Rankia.mx
4. Wikipedia. Special contribution.
5. Daniel Perez (2012) Experience in the application of improvement contribution in Mexico. Institutodeestudiosurbanos.org