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  1. Home
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  3. Mexico’s Proposed New Tax Reform

Mexico’s Proposed New Tax Reform

Posted by Carlos Calderon on December 5, 2018

Carlos Calderon

As of December 1, 2018, Mexico will have officially elected President Andres Manuel Lopez Obrador. His campaign was focused on topics such as security, education and culture, fight against corruption, compliance with the law, and correct execution of economic resources, to name the most relevant.

On his commitment to managing economic resources, a new tax reform is expected to take place during the first half of his six-year term, once the new government is consolidated. The proposed tax policy includes these main economic measures:

  • Decrease of Value Added Tax (VAT) at the border, from 16% to 8%
    The proposal of 8% is applicable in the region of northern Mexico related to the activities and material delivery of goods or services made by residents of the region. The 8% value added tax is applicable when goods and services are temporarily rendered in the border region.
  • Decrease of the Federal Income Tax (FIT) for companies at the border region from 30% to 20%
    The income of Mexican residents, no matter the source, will decrease from the actual rate of 30% down to 20%. This proposal pretends to create a better business environment in the Northern region of Mexico to make this region more competitive.
  • Decrease of the Federal Income Tax from 30% to 24% to companies certified as sustainable or ecological
    This aspect of the proposal applies to companies certified as sustainable or ecological and who grant annual salary increases to all employees, equivalent to increase in productivity. The benefits from this proposal are to improve competitiveness in Mexico in relation with the tax reform in the USA, and to improve environmental competitiveness.
  • Discounts rates and 0% rates on Special Economic Zones
    There are five states within the national territory of Mexico designated as special zones: Lazaro Cardenas-La Union (Michoacan, Guerrero); Coatzacoalcos, Veracruz; Salinas Cruz, Oaxaca; Puerto de Chiapas, Chiapas. These zones will be subject to the following:

    • 100% discount on FIT for the first 10 years
    • 50% discount on FIT in the next 5 years
    • 0% rate on VAT tax on purchasing articles on national territory
    • 25% additional from deductible expense to those who train employees within a special economic zone applicable against income within the zone
    • Tax credit against FIT caused from the 50% of the employer contribution during the 10 first years and 25% during the subsequent 5 years

Clayton & McKervey expects additional changes to the above proposed tax reform as the new president takes office and works with his cabinet. Contact us with questions related to doing business in Mexico.

Our team is always ready to help.

Please contact us for more information.

Carlos Calderon

Manager, International Consulting

Contact Carlos   |   Read Carlos's bio

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Mexico’s Proposed New Tax Reform

Posted by Carlos Calderon on December 5, 2018

Carlos Calderon

As of December 1, 2018, Mexico will have officially elected President Andres Manuel Lopez Obrador. His campaign was focused on topics such as security, education and culture, fight against corruption, compliance with the law, and correct execution of economic resources, to name the most relevant.

On his commitment to managing economic resources, a new tax reform is expected to take place during the first half of his six-year term, once the new government is consolidated. The proposed tax policy includes these main economic measures:

  • Decrease of Value Added Tax (VAT) at the border, from 16% to 8%
    The proposal of 8% is applicable in the region of northern Mexico related to the activities and material delivery of goods or services made by residents of the region. The 8% value added tax is applicable when goods and services are temporarily rendered in the border region.
  • Decrease of the Federal Income Tax (FIT) for companies at the border region from 30% to 20%
    The income of Mexican residents, no matter the source, will decrease from the actual rate of 30% down to 20%. This proposal pretends to create a better business environment in the Northern region of Mexico to make this region more competitive.
  • Decrease of the Federal Income Tax from 30% to 24% to companies certified as sustainable or ecological
    This aspect of the proposal applies to companies certified as sustainable or ecological and who grant annual salary increases to all employees, equivalent to increase in productivity. The benefits from this proposal are to improve competitiveness in Mexico in relation with the tax reform in the USA, and to improve environmental competitiveness.
  • Discounts rates and 0% rates on Special Economic Zones
    There are five states within the national territory of Mexico designated as special zones: Lazaro Cardenas-La Union (Michoacan, Guerrero); Coatzacoalcos, Veracruz; Salinas Cruz, Oaxaca; Puerto de Chiapas, Chiapas. These zones will be subject to the following:

    • 100% discount on FIT for the first 10 years
    • 50% discount on FIT in the next 5 years
    • 0% rate on VAT tax on purchasing articles on national territory
    • 25% additional from deductible expense to those who train employees within a special economic zone applicable against income within the zone
    • Tax credit against FIT caused from the 50% of the employer contribution during the 10 first years and 25% during the subsequent 5 years

Clayton & McKervey expects additional changes to the above proposed tax reform as the new president takes office and works with his cabinet. Contact us with questions related to doing business in Mexico.

Our team is always ready to help.

Please contact us for more information.

Carlos Calderon

Manager, International Consulting

Contact Carlos   |   Read Carlos's bio

related news

Clayton & McKervey Announces New Stimulus Benefits Check-in Service

Clayton & McKervey, a certified public accounting and business advisory firm helping growth-driven companies compete in the global marketplace, has immersed itself into the inner workings of the latest COVID-19…

Read full story

Are Foreign-Owned or Controlled Companies Eligible for a PPP 2.0 Loan?

The persistence of the COVID-19 pandemic has created challenging business conditions in Michigan and across the U.S. The second wave of infections has forced many state and local government agencies…

Read full story

PPP Loan Round 2 – Should You Apply?

A new round of PPP loans (PPP2) was ushered in with the passage of the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) on December…

Read full story

Understanding Transactions, Even if Your Business Isn’t for Sale

Selling your small business may not have been your focus in 2020 and may not be your focus in 2021. With an economy in flux and public health at the…

Read full story

State and Local Tax Planning: What You Need to Know

In a world that is becoming more global, many companies have focused their resources on dealing with new international markets. While important, it is also imperative businesses do not take…

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Categories

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  • About Us
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  • Beth Butchart
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  • Denise Asker
  • Eric Lin
  • Jim Biehl
  • Julie Killian
  • Kevin Johns
  • Margaret Amsden
  • Miroslav Georgiev
  • Nina Wang
  • Robert Dutkiewicz
  • Ruben Ramirez
  • Sarah Russell
  • Sue Tuson
  • Tarah Ablett
  • Teresa Gordon
  • Tim Finerty
  • Tim Hilligoss
  • Wendy Reedy

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