Baja Dogs La Paz, Inc. is a U.S. non-profit charity operating under the Internal Revenue Service (I.R.S.) code 501(c)(3). This status gives donors a U.S. tax deduction when they make a contribution to Baja Dogs La Paz, Inc.
Late in 2017, the Baja Dogs team began the process required to form a Mexican Charity named “Voluntarios por Los Perros de La Paz, A.C” with the “A.C.” standing for “asociación civil.” This allows us to have a Mexican bank account and also requires strict reporting to Mexican government authorities.
Unlike U.S. non-profit charities, Mexican charities do not automatically get a “tax deductible” status. This is a separate process we are exploring. But it does mean that all local donations in La Paz are deposited in the bank account and thus tracked with receipts from the bank. On a monthly basis all receipts and expenditures are reported to the Servicio de Administración Tributaria or “Hacienda” as it is referred to in Mexico. Then to offset any taxes, all expenditures are backed up by a electronic receipt in Mexico known as a “factura.” These facturas are electronically emailed to Hacienda as well as the treasurer of Voluntarios by the store or vendor at the time the expenditure is made. Hacienda also receives, electronically, statements from our local bank. Our reporting to Hacienda must reflect the income and expenditures from this bank statement and any corresponding facturas. If we make an expenditure, but have only a receipt and not an electronic factura, then the corresponding income received for this expenditure is taxable at a rate of 16%. This “factura” system is designed to prevent organizations in Mexico from operating on a strictly cash basis to avoid paying legitimate taxes.
While this adds some complication to our work here in La Paz, we felt it was a necessary step as we grow and initiate fundraising activities locally. It also gives us the ability to apply for grants and assistance within Mexico. Finally, it provides transparency to donors and supporters so that we always remain 100% accountable.
The Mexican and US charities share some of the same board members (for purposes of continuity between both organizations) and the new Mexican charity includes local La Paz board members for purposes of local financial reporting and day-to-day operations.
Ultimately, Baja Dogs La Paz, Inc. is the policy setting organization and funding source for the Mexican charity. All policy is set by and financials are reported to Baja Dogs La Paz, Inc. with input from the local team.