Mexico's Tax Reform undergoes changes

PRI, PAN and PRD estimate there will be around 25 changes to the proposal

Mexico's Tax Reform undergoes changesManlio Fabio Beltrones Rivera. Courtesy
Manlio Fabio Beltrones Rivera. Courtesy

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The Tax Reform which was proposed by Mexico's President, Enrique Peña Nieto, has been the cause of a lot of discontent among the population, many congressmen have made their stance against it quite clear, and even those who are for it, have requested that it be revised before they can agree to vote on it.

Which is why we are seeing several changes to the Reform itself, some of the key points, which have been the source of so much controversy and upheaval, are already being changed, such as the new VAT to tuition and mortgages. Federal Congressman for the Party of PRI, Manlio Fabio Beltrones, informed these changes.

The legislator pointed out that there will be around 25 changes done to the proposal, among them they are “correcting” the VAT on tuition, rent and purchase of homes, they are eliminating the Enterprise Tax with fixed rate (IETU) and they are making a profile for the implementation of taxes in the borders and customs laws. The official legislation will be known on November 15th, given that it will be when the Federal Budget for Mexico will be approved for the year 2014.

Alongside this announcement, Governors of the Border states held a meeting with Secretary of Treasury, Luis Videgaray, to explain the issues implementing the tax reform would cause in the border states as well as the rest of the country. It should be noted that this meeting was held because of the request of Francisco “Kiko” Vega, the Elected Governor of the state of Baja California, who despite not being in office yet, is fully aware of the consequences this Tax Reform will have on the state.

As one of the objectives brought up in the meeting, they proposed changing a key point in the Tax Reform, where it will increase the VAT in the border states from 11% to 16%, making it the same as the rest of the country. This would imply that border states would lose a competitive edge against the United States due to the low prices customers will have simply by crossing the border, which would cause a great deal of economic losses for businesses in Mexico.

This meeting was also joined by legislators, Business owners and academics, who all presented studies on the effects of the Tax Reform. During the meeting, Luis Videgaray expressed that “It is up to the legislators to analyze the proposal, and it is they who should make any modifications necessary, given that they are fully authorized to do so”.

The changes to the Tax Reform will be announced in the coming days.

Brenda.Colon@sandiegored.com

Daniel.Aguilar@sandiegored.com

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