Mexico Has a Productivity Problem

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11/18/19 – Bloomberg

By Eric Martin

Walk down the side-streets just off Mexico City’s iconic Paseo de la Reforma boulevard, and you’ll see dozens of examples of something that is holding back growth: the informal economy.

Workers on the taco carts or shoe-shine stands don’t pay taxes, foregoing the benefits of a social safety net. And they often sit idle for most of the day.

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Mexican government mulls legalization of 18 million “chocolate cars”

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Photo by Life Of Pix on Pexels.com

10/23/19 – Freight Waves

By Noi Mahoney

Authorities in Mexico have proposed legislation to legalize around 18 million so-called “carros chocolates,” or chocolate cars – vehicles illegally imported into the country from the United States.

If the proposed legislation passes, it would be a blow to the Mexican automotive industry, which relies heavily on global supply chains from U.S., European and Asian producers to make cars.

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Mexico Elite Tremble From Threat of Tax Crackdown Under New Law

taxes accounting business

10/16/19 – Bloomberg

By Michael O’Boyle

Mexico’s elite are quaking after leftist lawmakers passed a new law that makes tax evasion a type of organized crime that could justify the seizure of assets even before judges rule on the validity of charges.

Lawmakers in the country’s lower house Tuesday passed the bill that would make tax fraud of more than 7.8 million pesos ($400,000) a national security threat and a type of organized crime that could be punished with prison without parole during trial and with as much as nine years behind bars.

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Economic substance and arm’s length – Mexico

taxes accounting business

10/15/19 – International Tax Review

By Oscar Campero and Yoshio Uehara of Chévez Ruíz Zamarripa y Cía

Mexican taxpayers are obliged to determine their taxable income and authorised deductions derived from related party transactions considering the prices that would have been used in comparable transactions with or between independent parties. This is, in Mexico the arm’s length principle is recognised for tax purposes.

In the previous administration (2), the transfer pricing department within Mexico’s Tax Administration (“SAT” for its acronym in Spanish) had an important role, from handling a mere documentation compliance matter to acting as a strategic risk assessment tool for multinational companies (“MNEs”).

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Mexican finance minister says tax reform may be necessary

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10/01/19 – Reuters

By Anthony Esposito & Julia Love

Mexico’s finance minister said on Tuesday that the country may eventually require a revamped tax code, although he reiterated President Andres Manuel Lopez Obrador’s promise of no new taxes during the first three years of the administration.

“The tax structure will not change in the first three years, but we have to think about what tax structure the country will need in 2022 and beyond,” Finance Minister Arturo Herrera said at an event in Mexico City.

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Mexico in talks with digital platforms about taxes: minister

 

Uber09/09/19 – Reuters

By Stefanie Eschenbacher & Julia Love

Mexican Finance Minister Arturo Herrera said on Monday that his government is in talks with digital platforms about taxes, aiming to ensure that all corporations pay their share.

Mexico is exploring taxing purchases on Amazon, Uber and AirBnB and other digital platforms to boost the tax take and to help fill a multibillion-dollar revenue hole after changes in the way state oil company Pemex contributes to government coffers.

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Mexico’s 2020 budget won’t include new taxes: president

7/31/19 – Reuters

By Adriana Barrera

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Mexican President Andres Manuel Lopez Obrador said on Wednesday that next year’s budget, which is scheduled to be presented by Sept. 8, will not include new taxes or fuel price increases.

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Mexico to stop forgiving taxes for big payers

5/20/2019 – Associated Press

CaptureMexico President Andrés Manuel López Obrador says that the government is ending tax forgiveness, which for years had been a gift to the country’s biggest taxpayers. According to the government, the pardons were abused under the previous administrations of Felipe Calderón and Enrique Peña Nieto to the tune of more than $15.5 billion uncollected since 2007.

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AMLO’s latest litmus test

10/26/2018 – Financial Times

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Financial Times/Citi’s Revilla

When Mexico’s incoming president Andrés Manuel López Obrador (a.k.a Amlo) clinched the presidency by a landslide election in July, the victory was met with cautious optimism. Few investors, or citizens for that matter, knew what to think about the former Mexico City head of government.

Some of his campaign promises seemed fantastical. For instance, he aims to balance the budget, while simultaneously increasing infrastructure spending, raising pensions and subsidising farmers. Oh yeah, and all without raising taxes.

Since Mr López Obrador does not take the political reins until December 1, it’s hard to know how many of his promises will come true. But this weekend, things could get a bit clearer.

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The View from Mexico | Border Adjustment Tax: Economic Impact & WTO Consistency

1/18/2017 Forbes.com, Mexico Institute Blog

By Luis de la Calle

Donald Trump has been elected U.S. President as disrupter in chief; somebody that can get things done and change the status quo.

One of the centerpieces of his program appears to be a complete revamp of the U.S. tax system. “I understand the tax laws better than almost anyone. And that is why I am one that can truly fix them,” he said several times in debates and rallies. The idea is to end up with a system that favors investment on infrastructure and capital goods.

His background as a developer and his penchant for not paying taxes have led him to believe that the best way to promote growth and generate government revenue is taxing consumption rather than investment. Furthermore, his infrastructure ambitions need significant private investment funds that might only come with a favorable regime. The idea is to prompt firms and banks holding more than a trillion dollars in cash to put it to work.

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