EPN Announces Tax Reform

On September 9, Mexican President Enrique Peña Nieto (“EPN”) released his proposed tax reform, which is aimed at fulfilling promises 69-73 of the Pacto por Mexico. Those promises are:

  • 69: increase efficiency of tax collection
  • 70: strengthening of federalism
  • 71: efficiency and transparency in public spending
  • 72: strengthen the financial capacity of the state
  • 73: comprehensive review of the policy on subsidies and special regimes, in order to establish an effective, transparent, and progressive regime

EPN’s reform has several main components:

  • A rise in income taxes for the top income bracket (> USD 38K per year), raising the 30 percent maximum rate to 32 percent and limiting deductions
  • Lower VAT of 11 percent for border states will be raised to the national rate of 16 percent
  • Elimination of certain VAT refunds for purchases such as private schools and for mortgage interest payments
  • Replace PEMEX’s fiscal regime with a regime of royalty payments, dividends, and income tax payments similar to private companies
  • 10 percent tax on stock market capital gains
  • New excise taxes on fuels, pesticides, and high-sugar beverages
  • Eliminate the deferral of corporate income tax and simplify the current law to limit deductions
  • Elimination of the alternative minimum tax (“IETU“) for enterprises, which apparently was not beneficial to companies due to the costs associated with preparing taxes under the regime

Perhaps the most significant element of EPN’s tax reform is what it did not do – i.e., imposing VAT on sales of food and medicine.

This entry was posted in economy, legislation, Pact for Mexico, reform, taxes, Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s