Dear Clients and Friends:
Please be advised that on October 18, 2013, the Mexican House of Representatives (Diputados) approved the Mexican Tax Reform Bill submitted by President Enrique Peña Nieto which in turn is to be submitted to the Mexican Senate for its discussion and approval.
Herein below, please find some relevant changes that were approved and which will be submitted to the Senate for its consideration:
- The payment of VAT on all temporary importations made as of January 1st, 2014, however, it also includes a new credit mechanism to eliminate the cash flow impact to IMMEX companies.
- The sale between two non-Mexican residents of goods imported temporarily and transferred by IMMEX companies will continue to be exempt from VAT, but sales by non-Mexican residents to IMMEX companies will be subject to VAT.
- Standardizing the border VAT rate with the rest of the country for a rate of 16% nationwide (currently 11% within the border region).
- 10% Income tax on earnings obtained due to the purchase of shares in the Mexican Stock Exchange.
- Elimination of the Business Flat Tax Law and the Cash Deposit Tax Law.
It is worth mentioning that the transfer pricing regulations were not modified and therefore would be limited to the safe harbor (greater of costs plus 6.5% or 6.9% return on assets) or an APA.
We will keep you posted on further developments.
Ernesto Velarde Danache, Inc.