Mexico's new tax code: What Americans need to know

Huge changes coming on January 1st, 2014 to the tax system.

Everything will now be done online, or "electronically":

The government will eliminate paper invoicing, or facturas, in favor of electronic reports. All employees will have to be given online invoicing and payroll receipts, rather than paper ones, in order for employers to deduct their wages. "That system may not be ready by January 1st, by either the SAT or the businesses, so that's going to create a lot of problems", warns McMullen.

Non-profits must now be registered with tax authority.

    Government will register non-profits if they want to receive a preferential tax treatment and donations, similar to U.S. tax statuses. "That's obviously going to be critical for them. They should probably start that process immediately, and try to get their major contributors to donate before January 1st."

Capital gains tax exemption for real-estate sales:

    Any gains over 3,500,000 pesos, or $700,000 USD, will be taxed. Previous limit was 1,500,000.

Also, Steven M. Fry from the Yucalandia blog also reports that all purchases above $2,000 pesos will require debit, checks or credit, not cash.

McMullen agrees that these are only just "ones that I think will affect expats the most", as there are other ways in which SAT is modifying the tax code, noting that "they did some research to determine where and why they lost tax court cases in the past, and have now plugged some of the advantages taxpayers had in court."

Most of the criticism of these new rules argue the same basic thing: they take to much from those who are already paying taxes and does little to bring in more revenue from those who pay almost nothing, mainly informal businesses and employers and big businesses who are able to effectively bring down their tax rate to almost 0%.

VIDEO: Cost of carbonated drinks after new taxes take effect

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