New Taxes Coming for Mexico
September 10, 2013 Taxation in Mexico
MEXICO CITY – In order to implement new social security programs Mexico needs to go through with a overhaul of the national tax system.
In a speech given on September 9th the President of Mexico Enrique Peña Nieto announced a sweeping tax reform aimed at simultaneously boosting the economy, improving tax revenues, cutting down inefficiencies, and at funding a series of social reforms.
The President called for an increase to the top rate of personal income tax from 30 percent to 32 percent on incomes exceeding MXN 500 000, and he also announced his intentions to introduce a 10 percent individual tax on profits from dividend and stock market gains.
In his speech the president also announced a potential carbon tax to be implemented on the purchase of fossil fuels to be used for industrial purposes.
In an effort to free up some of the revenues already being earned by the government, the President stated that any tax breaks, allowances, or deferrals which “…have no reason to exist will end”.
The revenues raised from the new taxes are to be used to improve the national social security system by introducing a universal unemployment benefit and retirement fund, neither of which has existed in the country before.
To further address the issue of social and healthcare spending, sugary drinks are to be subject to a new tax of MXN 1 per liter, and taxation of goods such as concentrates, powders, syrups, essences and flavor extracts will be based on the quantity of sugary drinks they are intended to produce.
The legislative updates needed to enact the changes were submitted to Congress on the same day, to be discussed further in due course.
Photo by Aristoteles Sandoval