Mexico Reforms Tax Provisions – What you must Know

Mexico is a country that offers tremendous opportunities for foreign investors who are interested in conducting business here. In the 2013 budget, Mexico reforms certain tax provisions. This budget, approved by the Congress, has been published in the Official Gazette on December 17, 2012. Here’s a quick glance at the major changes: The income tax rate remains at 30% in 2013 A withholding tax of 4.9% has been imposed on interest paid to non-resident banks which are resident in a country having a tax treaty in force with Mexico. As per the existing provisions, Mexican companies with foreign pension funds as shareholders are tax exempt, in proportion of the pension funds’ participation in the Mexican company, provided 90% of their total receivables are derived from: The transfer of ownership of property or rent of land or buildings located in Mexico, or The transfer of ownership of shares deriving more than half of their value from land and buildings located in Mexico. For the calculation of this 90% of receipts, annual inflation adjustment is excluded. Also, foreign exchange gain on any debts incurred for the acquisition of property located in Mexico would be excluded. Nonresidents who carry out activities subject to the general income tax, and under a maquila programme authorized by the Government (Secretaría de Economía) would not be considered to have a permanent establishment in Mexico, if they satisfy the below conditions: The non-resident and the enterprise operating under maquila are not directly or indirectly related parties; and Information (as may be requested by the Tax Administration Service) about the macula related operations are submitted by the non-resident company to the Tax Administration Service before July 2014. Some IETU (Business flat-rate tax) adjustments reflected in the budget are: Taxpayers would have to continue to submit informative returns (information would also be required to be provided concerning the concepts which have been used to determine the tax base). Set off of excess deductions of IETU tax credit against income tax liability in the tax year in which such excess was incurred will not be permitted. Making it simple with expert guidance In an international expansion, it is imperative to take the help of an expert as even small mistakes can often result in excessive fines. A business expert can provide the necessary expertise in all the areas of your business like sas 70 compliance, international accounts payable, international accounting, etc. Your business can also enjoy the best advice on the overall operational, administration and executive aspects of your business. Read more on - expanding business overseas, internal audit compliance, global transfer pricing

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