Mexico Tax Reform: What Changes are Expected in 2022

The Mexican tax authority is currently working on a new tax reform. It is expected to be submitted for legislation in September 2021. The tax changes should be incorporated into Mexican federal tax law from 2022.

Various organisations and specialist groups believe that a new tax system is necessary. The aim is to increase tax revenue in Mexico and to achieve these goals (selection):

• Improve public policies to finance public resources
• More progressive income tax
• Combat tax evasion and avoidance
• Promote private investment and savings
• Formalise the economy and increase the taxpayer base
• Tax the digital economy
• Evaluate the profitability of social programmes and public investment projects.
• Rethink the competencies between the federal, local and municipal governments

Speak to us early about which aspects of the planned tax reform in Mexico will affect your business activity.

Kennya Ramírez, Tax Consultant, ECOVIS Quibrera Saldaña, Santa Fe, Mexico

Specific measures of the tax reform in Mexico are still unclear

It is not yet clear what specific measures the tax reform in Mexico will include. The current government has repeatedly stated that taxes will not be increased or new ones created. However, this does not prevent the revision of existing tax schemes, such as an inheritance tax, which would be included in income tax.

Likewise, tax bases could be broadened, or the administrative burden could be increased and auditing tightened, as well as eliminating exemptions, deductions and/or credits and limiting benefits, explain the Ecovis advisers. Such measures could include:

• Re-establish the rate and percentage of income tax deductions for individuals
• Full deductibility of social security benefits
• Implement an annual net worth tax, based on the difference between the value of all assets and rights of the person (assets) and the value of their debts (liabilities)
• Eliminate the 0% rate on VAT
• In the Specialised Production and Services Tax (IEPS), measure the existing rates or quotas of excise taxes on products that are currently taxed, as well as new products that will be taxed (cannabis and its derivatives)

For further information please contact:

Kennya Ramírez, Tax Consultant, ECOVIS Quibrera Saldaña, Santa Fe, Mexico
Email: kennya.ramirez@ecovis.mx