Proposed Mexican Tax Reforms Under Fire

Recently, the Mexican President Enrique Pena Nieto, sent a proposal entitled “Tax Reform” to the Federal Congress for discussion.  At IVEMSA we strongly believe that passage of these reforms in their current form could negatively impact foreign companies with manufacturing operations in Mexico.  The proposed elements that would most directly affect us and our clients are:

• A  VAT increase from 11% to 16% for the Mexican Border States
• A new VAT on temporary imports and transfer of goods by foreign residents
• A modification the Corporate Tax (ISR) to establish changes to the definition of the maquiladora operation
• A tax of 59% on workers who are currently tax exempt, and a 2% tax increase on income higher than 500,000 Mexican pesos
• Changes to the current Shelter IMMEX program

At this time, these “reforms” are far from being approved and are in fact, are coming under increasing fire from a variety of individual companies and groups of organizations that are banding together to defeat and/or alter the proposals.

IVEMSA is participation actively in the following efforts:

1. Finalization of a comprehensive analysis by the INDEX fiscal committee to detail our position before federal authorities
2. Directly lobbying with congressmen and governors soliciting support for a “no” vote on the bill and the elimination of the changes that could negatively impact Maquiladora activity
3. A press release campaign on a regional and national level urging rejection of the bill
4. A letter writing campaign from IMMEX companies established in Mexico to the President of Mexico calling for the rejection of changes to tax rules that affect the competitiveness of companies, and instead encouraging an open dialog for reform that truly promotes economic activity, creation of jobs and an increase of productivity

We are confident that our efforts will result in a favorable outcome. Mexico values its foreign partners and the value they bring to the country, and will come to recognize that with the tide turning away from China and to Mexico for offshore manufacturing, now is the time to support our partners, not to alienate them.

If you have any questions or would like to join us in our efforts to stop these reforms, please contact Alfredo Garcia at 855-493-1936, alfredog@ivemsa.com.