Lowtax Network

Back To Top

Your Lowtax Account

Country Score
+3

Country Rankings - Mexico


  • Apr 11, 2017   Mexico: falls short

    Just as every individual is unique (unless they've gone and perfected human cloning while I wasn't looking), each country on earth is also an entity in its own right, with its particular personality, cultural quirks, and behavioral nuances. However, many key emerging economies share at least one characteristic in common. Many seem to be on the cusp of economic greatness, of finally joining the elite group of advanced economies. But the same countries are being held back from making that final jump. There are various reasons – political, social, historical, etc. – why this may be the case. And there's no room here to discuss them all. But another thing I've noticed about this tier of economies is that they generally have terrible tax regimes. Take Mexico for example. It has a huge foreign market on its doorstep in the form of the United States and can trade more or less freely with both the US and Canada. Its economy is now worth over USD1 trillion in absolute terms, and by all accounts incumbent President Enrique Nieto has done a reasonable job in advancing promised economic reforms. Yet, one gets the feeling that the economy should have progressed much further than it has by now. Certainly, when it comes to taxation, there is considerable progress to be made. And while taxes might not be particularly high, they are definitely highly complex – another trait shared by notable emerging economies. Recent tax reforms may well have boosted revenues, according to a recent report by the World Trade Organization, but they probably haven't boosted business confidence in the tax system. Mexico languishes in 114th place in PwC's Paying Taxes Index, and the accompanying report highlights the reams of documentation that taxpayers must file in support of their VAT returns and refund claims in particular. And the Government it seems has no immediate plans to tackle the problem, having ruled out tax reform just last month. In fact, I can attest to the complexity of certain aspects of Mexico's tax regime myself. If you ever have trouble getting to sleep at night, or on a long-haul flight perhaps, just try reading – and comprehending if possible – Mexico's special Maquiladora tax regime. I wager you'll be sleeping like a log in no time.
    Source: http://www.tax-news.com/news/Mexican_Tax_Reforms_Have_Significantly_Boosted_Revenues_WTO____73923.html


  • Jun 14, 2016   Mexico: reneges

    Another way in which governments cause uncertainty is by making frequent changes to tax laws and regulations to an extent where it becomes very difficult for taxpayers to plan their affairs ahead. Occasionally, governments commit the cardinal sin – in the eyes of investors at least – of changing tax laws retrospectively, or by arbitrarily amending the terms of legally binding taxation agreements they have concluded with taxpayers. The latter example often occurs in the minerals sector, where tax certainty is paramount because of the substantial amount of time and money extractive companies expend on mining or drilling projects. With the rise of "resource nationalism" we have seen many developing countries seek to amend tax and royalty arrangements with mining companies in their favor. Understandably, they do so to take more control of their vital natural resources and a larger share of the company's profits. It is a dangerous game to play however, because it sends bad signals to other potential investors. So Mexico ought to be careful, after apparently cancelling its advanced pricing agreement with Canadian mining firm Primero. It's never a good sign when a company has to take a country to international arbitration. Another deep source of uncertainty is one that most people are probably blissfully unaware of, but those of us who follow international tax developments are only too aware of: BEPS. The OECD and those governments bringing in BEPS-inspired measures seem fairly certain that the implementation of these recommendations will create a better world, one in which multinational corporations pay their "fair share" in corporate and other taxes, and the international tax system is based on the realities of business and commerce in the first half of the 21st century, rather than the latter half of the 20th. This all sounds good, but the reality, according to many businesses trading across borders, is different. Some countries have fatally undermined the BEPS project by diverging from the OECD's recommendations, a scenario that the Tax Executives Institute has warned will cause "global tax chaos." Or, to put it another way, create an even more complex, unfit, and uncertain international tax system than existed prior to BEPS. Indeed, just one-third of the respondents to a recent survey of middle-market business believed BEPS would provide a level tax playing field. How these changes will disrupt cross-border trade and investment flows nobody knows yet. But it's probably fair to say that most governments haven't really thought about it. As the famous Chinese proverb goes, we are cursed to live in interesting times.
    Source: http://www.tax-news.com/news/Primero_In_Dispute_With_Mexican_Tax_Authority____71392.html


  • Oct 19, 2015   Mexico: emerging

    The BRICS (Brazil, Russia, India, China, and South Africa) are considered the emerging economies most likely to break into the premier league of rich nations first. Yet, based on current form, this isn't going to happen any time soon. Brazil's economy might actually go backwards this year, while Russia is also in the economic mire thanks to last year's plunge in oil prices and Western sanctions. India meanwhile is only just beginning to recapture its mojo after the depression of the Manmohan Singh administration, and China is seemingly in a panic about its decelerating economy. What's more, South Africa's economy is hardly setting the world on fire at the moment either. No, for emerging market investors, the real darling is now Mexico, which is ticking along quite nicely under the steady hand of the Nieto Government. Since he commenced his term in 2012, President Nieto has undertaken with varying degrees of success much-needed structural economic and tax reforms. The recent announcement of a series of special economic zones in the impoverished southern regions of the country is an example of the latter. However, there is also another the reason why Mexico has become one of the world's most important trading nations: its extensive network of free trade agreements (46 of them) cover about 90 percent of its trade. With the help of NAFTA, Mexico's bilateral trade with the United States is now worth more than half-a-trillion dollars a year, and the recently agreed TPP should help to cement its place as a key Pacific Rim economy. Perhaps some of the other once feted emerging economies, which have a tendency to lurch towards protectionism when times are tough (no names, no pack drill, but I'm thinking of one aforementioned country in particular) should take a leaf out of Mexico's book.
    Source: http://www.tax-news.com/news/Mexico_To_Use_SEZs_To_Boost_Economy_Of_South____69345.html


  • Sep 07, 2015   Mexico: stable

    The same cannot be said at the moment for Brazil however. Like India, Brazil has an almost unfathomable tax system, but unlike India, the Government is showing little interest in changing things for the better. Indeed, while India is trying to stabilize the tax regime, tax policy in Brazil is becoming increasingly erratic, with tax cuts announced one week and tax hikes announced the next. Nevertheless, the overall balance seems to be tilting towards a rising tax burden in Brazil, with Finance Minister Joaquim Levy recently announcing that another round of revenue-raising measures are necessary to help balance the budget. It shouldn't surprise us then that, while FDI in India is rising, foreign investment in Brazil is falling. According to fDi Markets, Mexico is racing ahead of Brazil in the Latin American race for FDI, with an estimated USD33bn invested in greenfield investment projects there last year. This was almost double the USD18bn invested in greenfield projects in Brazil in 2014. Although tax can't be the only reason why Mexico is outpacing Brazil in the FDI stakes, surely it can't be a complete coincidence that investment jumped; the Mexican Government has pledged stable taxes through a Tax Certainty Agreement, reaffirmed last month, which will keep Mexico's tax system unchanged throughout the remaining period of his administration. Notably, Moody's, the international ratings agency, downgraded Brazil's bond rating in August 2015, citing a lack of political consensus on fiscal reforms and general pessimism about the economy, among other reasons. In fact, after the Brazilian economy barely grew at all in 2014, some economists are expecting it to shrink in 2015. The reasons for Brazil's economic slump are complex, and some are linked to external forces beyond the Government's control. However, the damage must, to some extent, have been self-inflicted, including through weak and inconsistent tax and investment policies. Just like how India shot itself in the foot in the final years of the former Congress administration. Brazil could therefore learn a few lessons from the way its fellow BRICS member India seems to be turning itself around.
    Source: www.tax-news.com/news/Mexico_Commits_To_Stable_Taxes_In_2016_Budget____69037.html


  • Apr 21, 2015   Mexico: helping hand

    Mexico has extended a hand of economic cooperation towards Cuba with its proposal for a bilateral FTA, another sign that the long-isolated Caribbean nation is being welcomed back into the fold of trading nations. Mexico's gesture follows the removal of Cuba from America's list of nations that sponsor terrorism and the lifting of travel restrictions to the country by US citizens. Given the length of time which has elapsed since Fidel Castro was replaced by his more liberal and reform-minded younger brother Raul, President Obama's move was arguably long overdue, although it remains controversial in some quarters of America; while allowing capitalism in small but increasing doses, Cuba is still an unapologetically socialist country. There is a long way for Cuba to travel before its inhabitants can hope to enjoy the sort of economic and political freedoms that people take for granted just 70 miles away in Florida – including many of Cuban heritage who fled in search of a better life (and still they flee - over 14,000 Cubans risked life to cross into the US in 2013). The country never really recovered from an economic crisis in the 1990s, which was largely the result of the collapse of the Soviet Union and the termination of around USD5bn in annual economic support from Moscow. Yes, as many people who visited Cuba in the Fidel Castro era will no doubt agree, Cuba will lose much of its charm when fast food joints start springing up all over Havana, the billboards of Cuba's political heroes are replaced with adverts for soft drinks, and the 1950s Cadillacs which have come to epitomize Cuba for so long are outnumbered by Fords, Volkswagens, and Toyotas. But the Cuban people would probably accept that as a price worth paying for progress.
    Source: http://www.tax-news.com/news/Mexican_Senate_Proposes_FTA_With_Cuba____67826.html


  • Sep 25, 2014   Mexico: sensible

    One way in which Costa Rica's President Solis plans to raise revenue is through a crackdown on tax evasion, which represents something of a "go to" policy these days for any government in need of revenue. Refreshing then, that not too far to the north, Mexico is taking the opposite tack: offering small companies tax breaks for registering their workers with the tax authorities. It follows the taking of another unusual but sensible step by President Enrique Peña Nieto earlier this year when he signed a Tax Certainty Agreement, which commits to keeping Mexico's tax system unchanged throughout the remaining period of his administration, until November 30, 2018. Mexico's taxes aren't the lowest or the easiest to follow – anyone who has tried to get their head around the Maquiladora incentive regime would probably attest to that. But investors hate uncertainty, and while this means there is little prospect of taxes being cut, at least they won't increase or change at short notice. I can sympathize somewhat with the view that taxpayers attempting to flout the system shouldn't be offered bribes to comply with it. But there is far too much use of the stick by tax authorities these days, and not enough of the carrot. Dogs that are encouraged to be well behaved by the giving of rewards by their masters usually make the most docile and compliant companions. Beat him every time you think he has stepped out of line, and he might one day turn around and bite you.
    Source: www.tax-news.com/news/Mexico_To_Offer_Compliant_Firms_Tax_Breaks____65816.html


  • Jul 24, 2014   Mexico: trading freely

    I was surprised to learn recently that when it comes to pursuing policies of free trade, Mexico is one of the world's leading lights. Mexico currently has free trade agreements with over 50 countries, individually and as a result of its participation in regional trade arrangements like NAFTA with Canada and the United States, making more than 90 percent of its trade more or less free. Mexico's not stopping here either: it formally joined negotiations for the expanded Trans-Pacific Partnership in 2012, and more recently has sought to tie up free trade deals with Jordan and Turkey, having agreed to launch formal negotiations with the former and concluding the first round of talks with the latter. Why should this be such a surprise? Well, it has to be said that the large emerging economies don't have brilliant track records when it comes to upholding trade rules. But don't take my word for it: a report on trade-restrictive measures by the EU last year described a worrying upsurge in the use of trade barriers since the financial crisis. And the vaunted "BRICS" economies are well represented among the worst offenders: between October 2008 and June 2013, the EU observed 59 trade barriers in Brazil, 99 in Russia, 33 in India, 36 in China and 45 in South Africa. Unsurprisingly, given the way in which it has been governed in recent years, Argentina topped the list with 147 trade-restrictive measures. Mexico was observed to have used just two. Not that the EU is above reproach here either. But that is for another day!
    Source: www.tax-news.com/news/Mexico_Negotiating_FTAs_With_Jordan_Turkey____65268.html


  • Jun 19, 2014   Mexico: blankets China

    Mexico's Ministry of Economy has been taking lessons from the US Department of Commerce and is imposing anti-dumping duties on, improbably, imports of Chinese synthetic blankets. Needless to say, it's at the behest of domestic producers, and it will be their fault that Mexican consumers have to pay more for their blankets. It's an odd thing for Mexico to do, given the emphasis put by the country's new administration under President Peña Nieto on improving and expanding trade relations with China, which has an amazingly large trade imbalance with Mexico: USD5.7bn of exports to China and USD57bn of imports. That's an awful lot of blankets! China has been investing a great deal in Latin America, but apparently not in Mexico, and Nieto hopes that China, as an energy importer, will be a major player in the liberalization of Pemex, the center-piece of his reform program. The enabling legislation for that was passed last December, but there is strong public resistance to the changes (it doesn't take an expert economist to realize that loss of Government income from Pemex, which currently provides a third of the country's budget, would have to be compensated by higher taxes) and detailed implementation rules have had a difficult ride in Congress. Meanwhile the President has guaranteed the jobs of all 153,000 Pemex workers for life, and the legislation bristles with difficulties for would-be investors. Hence the importance the Government attaches to relations with China, although it is not clear why the Chinese should want to entangle themselves with a basket-case like Pemex. At all events, it's evident that someone forgot to tell the Ministry of Economy to be nice to the Middle Kingdom.
    Source: www.tax-news.com/news/Mexico_Announces_New_Dumping_Duty_On_China____64938.html


  • Dec 30, 2013   Mexico: in post-election blues

    It's Christmas week, isn't it, so obviously lots of governments will be making goodwill gestures to their stressed-out, over-taxed citizens, to show how grateful they are for the tax money that pays for their big, black cars, the trips to G3, G5, G8, G20, G30 junkets in beautiful places with long-legged personal assistants and the rest. Well, let's see: Mexico is increasing the scope of VAT and has gone back on some promised tax reductions; Max Baucus wants to reduce energy tax incentives (increase taxes, in other words and am I seeing things, or does he have a double who's going to be the Ambassador to China – that definitely proves that the President has gone off the TPP); community taxes are increasing right across Belgium; and France (that traditional home of Christmas bonhomie) is going to scale back the increases it is planning to the electricity contribution (but not for households), after the politician piloting the latest Finance Bill through parliament admitted that the rises were "brutal." So, a savage sovereign Bah, Humbug is what we're going to get. Well, politicians know all about humbug, I suppose.
    Source: http://www.tax-news.com/news/Mexican_Tax_Reforms_Gazetted____63103.html


  • Sep 19, 2013   Mexico: moving sideways

    I have been uncertain over the budget presented last week by Mexico's President Peña Nieto, but have finally decided to be negative about it, partly because it has done little for business, other than the removal of the IETU (alternative minimum tax for companies), and partly because of the miasma surrounding the reform of PEMEX. What is clear about the budget is that it is a political compromise, putting social spending and redistribution ahead of supply-side reforms. That's understandable, if you will, given that Nieto doesn't have a parliamentary majority, but he seems to have given too much away without demanding enough in return. He ought to have made the PEMEX reforms an integral part of the budget, instead of presenting them in a separate bill which can be and has been attacked separately by the opposition. He may get the budget through Parliament, but it's far from clear that the PEMEX legislation will survive without a fearsome mauling, and how many outside investors will want to swim with a government whose writ does not run, in such shark-infested waters? The jury had very much been out as regards Peña Nieto, but the verdict is now becoming clearer: "Could do better." And I also have to point out that withdrawing tax concessions is not "savings," except in the twisted arithmetic of a national treasury: it is a tax increase.
    Source: www.lowtax.net/asp/story/front/Pea_Nieto_Dilutes_His_Mexican_Tax_Reforms____62020.html


  • Sep 05, 2013   Mexico: being Pacific

    Pace Mr Lamy, it has been a good week for trade, in fact. Chile, Peru, Colombia and Mexico, constituting the "Pacific Alliance," have committed themselves to a tariff-free zone, probably coming into force in 2014, which will later be joined by Costa Rica and Panama. Separately, Canada and Turkey agreed to set up a joint economic and trade committee as part of a broader agenda for strengthening their trade and investment relationship, and mapped out an ambitious and comprehensive free trade agreement. And in Brunei, the trade ministers of the countries negotiating the extended Trans-Pacific Partnership (TPP) – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States – reaffirmed their commitment to conclude the treaty by the end of this year. A joint statement said that: "particular areas of focus have included matters related to market access for goods, services/investment, financial services, and government procurement as well as the texts covering intellectual property, competition, and environmental issues." The meeting marked the start of the 19th round of negotiations, and the first one in which Japan has full participation.
    Source: www.lowtax.net/asp/story/front/Pacific_Alliance_Closes_In_On_Complete_Tariff_Elimination____61884.html


  • Aug 29, 2013   Mexico: being oily

    That, by the way, you'll be surprised to learn, was the award of a bouquet to Greece, which may finally be turning the corner, and another country showing signs of redemption is Mexico, although it's best not to lift the lid and look too closely. The jury is still out on new President Enrique Pena Nieto: he has good intentions, we verily believe, but it's not clear yet that he has the political and personal strength to face down the forces of darkness. At least now he is grasping the nettle of PEMEX, saying that private companies will be allowed into joint ventures for the development of new oil and gas fields. Well, you could say that he has no choice, given falling yields from PEMEX's existing antidiluvian operations, which have been milked for decades for . . well, we won't go there. The problem of course will be that, while Pena Nieto may be a trustworthy partner, he is only an elected politician, and Mexico's history does not engender confidence in its reliability as a venture partner. And looking around the world, governments have not been the best partners to have in oil and gas. Venezuela and Russia are just two of the more egregious examples, but there are plenty of others.
    Source: www.lowtax.net/asp/story/front/Mexico_Working_On_Private_Oil_Tax_Regime____61830.html


  • Jun 20, 2013   Mexico: trying to grow up

    If we applaud Mexico for joining the G5 in their post-FATCA attempt to create a seamless information-sharing international community, it's not because the oncoming Big Brother world order is a Good Thing, it's because Mexico needs to drag itself out of the mire. Phew; where to start? Information-sharing is a done deal, I suppose, unless you are running PRISM, but that doesn't make it beneficial. Why not? Why should it matter if your aunt's Bahamas trust is known to belong to her? Known to whom? is the first question. Let's assume that your aunt is Canadian and has correctly declared her offshore interests to the Canadian Revenue. That's a private matter between her and the Revenue and probably the trust administrator in the Bahamas, and as such is probably reasonably secure. But if there is information-sharing between the Bahamas and Canada, including such niceties as total asset value and amount of annual distributions, then that justifiably private information is suddenly in the public sector. Oh, they will say, it is confidential and can only be utilized in the event of prima facie evidence of wrongdoing. That is footling: there has been ample evidence lately of what is self-evidently true, being that information supplied by one government to another is vulnerable to theft, misunderstanding and "public interest" disclosure. So the Gadarene rush to sign up to "automatic information exchange," inevitable as it is becoming, has a severe downside, and there is no international Devil's Advocate to fight back: it's just like a set of dominoes falling over.
    Source: www.lowtax.net/asp/story/front/Mexico_Requests_To_Join_Multinational_Tax_Info_Exchange____61077.html


  • Apr 18, 2013   Mexico: get trade medals

    The Trans-Pacific Partnership (TPP) had a good week, with Mexico agreeing to allow Japan into the negotiations, and the US administration reaching an agreement over automobile tariffs with Japan, albeit accompanied by howls of anguish from Detroit, and ritual protestations from the usual suspects among protectionist politicians. This will clear the way for the President to give Congress 90 days' notice of his intention to begin actual TPP negotiations. It's thought that this step may happen towards the end of the month when some other existing members overcome their reservations about the inclusion of Japan. All twelve actual and prospective members of the TPP are also members of APEC, and there is an APEC meeting in Indonesia next week, which would be an opportunity for remaining issues to be ironed out, meaning presumably that Japan will have to make the right noises about opening up its agricultural sector to Australia and New Zealand. That is immediately followed by a Canada/Japan meeting in Ottawa, which may provide the final trigger for the US to go ahead.
    Source: www.lowtax.net/asp/story/front/Mexico_Backs_Japans_Bid_To_Join_TPP_Talks_____60416.html


  • Dec 31, 2012   Mexico: hmmm

    Enrique Peña Nieto, Mexico's new president, is something of an enigma. Nominally the PRI is a right-wing party, in the past not always in a nice way, but you can't readily describe Peña Nieto as right-wing. Some commentators criticize him as being just a "product", a confection made up to suit the PRI's presentational goals, but this may be unfair: he certainly achieved quite a lot as Governor of the State of Mexico, but it seems to have been mostly by spending money on projects made possible by increasing taxes. The Economist said that he was the least bad choice as President, which is hardly a ringing endorsement. He will have to be judged by his actions, and in my book he is off to a bad start, postponing a corporation tax rate cut and various other improvements which the outgoing, supposedly left-wing government had forced through against considerable opposition.
    Source: http://www.lowtax.net/asp/story/front/Mexicos_2013_Revenue_Decree_Postpones_Corporate_Rate_Cut____58895.html



 

« Back to Country Rankings