FY2020 Tax Reform Initiative. Summary of Technical Analysis and Comments.

September 21, 2019

 

Dear customers and friends,

 

Due to the relevance of the matter and the significant effects it may have for counterparties or stakeholders outside Mexico, we are glad to share with you the English version of the Bulletin sent last week on the Bill introduced into Congress with the FY2020 Tax Reform Initiative.  We hope you find it useful.

 

Executive Summary

 

In the legislative intent of the FY 2020 Economic Package, the President expresses that, consistent with his government policy, there are no new taxes, nor are the rates of the existing ones increased, since the tax changes incorporated for the following year will seek to strengthen the Nation’s revenue through measures that will simplify the tax framework and guarantee tax compliance by closing possibilities for tax evasion and elusion, achieving a more just system and that each taxpayer adequately pays what corresponds to them.

 

Notwithstanding the objective, upon analyzing the proposed reforms, these can give rise to contrary interpretations since: (i) the income tax base would be increased by limiting or rejecting certain deductions, which would be indirectly increasing the tax; (ii) bigger responsibilities and controls for “captive” taxpayers are introduced, which carry non-tax repercussions and probably unjustified reprimands; (iii) although seen as aligned with international initiatives such as “BEPS”, measures that will eventually affect foreign investment are incorporated; and (iv) lack integrated measures that increase the base of taxpayers that are currently in the informal economy; or better yet, that encourage investment or generate more employment, all of which is necessary under the current economic environment.

 

In order to review the possible implications that could be derived in the business environment, and to prevent or be better-prepared as taxpayers, ahead we present a summary of the technical analysis of the reforms proposed that we consider relevant or of general application and affectation:

 

We invite you to read the whole document. You can download it here: 

 

 

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As always, the Partners and Associates remain at your service for any questions or comments on the content of this Bulletin.

 

 

 

 

 

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