Tax Reform Bill Approval
Please be advised that on October 31, 2013, Mexican lawmakers approved the Mexican Tax Reform Bill that in turn shall be sent to the Mexican President Enrique Peña Nieto for his signature and seal of approval; thereafter, sent to be published in the Official Gazette of the Federation.
Herein below, please find the main aspects of the corresponding Mexican Tax Reform Bill:
- The payment of VAT on all temporary importations: Fixed VAT Rate of 16% to be imposed on temporary importations destined to the maquiladora industry. The companies that obtain a certification that supports that the materials, machinery and equipment are used to manufacture products for exportation may be able to request the refund of the corresponding tax.
- Deductibility on employment benefits: It increases the percentage of deductibility of benefits, both for companies and individuals, to 53% from 47%.
- Standardizing the border VAT rate with the rest of the country for a VAT rate of 16% nationwide (currently 11% within the border region).
- 10% Income tax on earnings obtained due to the purchase of shares and dividends in the Mexican Stock Exchange.
- Mining Tax: It was approved to set a 7.5% tax on profits to mining companies.
- The Payment of VAT on Junk Food: It rises from 5% to 8%. The tax on high caloric density foods (containing 275 kilocalories per each 100 grams).
- IEPS Tax on soft drinks: Special Tax on Production and Services (IEPS) to sugary beverages at a rate of 1.0 additional peso to the sale price per liter.
- Green Tax: A Tax to fossil fuels at a rate of 3% to sales. Natural gas is exempt.
- VAT to pet food: Set at a VAT rate of 16% for the processed food for dogs, cats and small animals, as pets for homes.
- Elimination of the Business Flat Tax Law and the Cash Deposit Tax Law.
Ernesto Velarde Danache, Inc.