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Mexico: Update on tax reform for 2020

Mexico: Update on tax reform for 2020

Mexico’s Congress on 31 October 2019 approved the tax legislation for 2020—legislation that includes amendments to the income tax law, value added tax (VAT) law, and the special tax on production and services, among other items.


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With regard to international tax provisions, the legislation reflects changes to the income tax law that generally reflect the base erosion and profit shifting (BEPS) recommendations of the Organisation for Economic Cooperation and Development (OECD) with regard to:

  • The concept of permanent establishment
  • Rules concerning credits for tax paid to other countries
  • Hybrid mismatch rules
  • Measures concerning private equity managers
  • Measures denying deductions for certain payments made to related parties located in “low tax” jurisdictions, regarding certain payments made through structure agreements, or payments made with respect to intangibles
  • Amounts or revenue from fiscally transparent entities
  • Rules relating to deductions for payments for labor subcontracting agreements
  • New limits for interest deductions
  • VAT imposed on certain services provided via digital platforms

Read a November 2019 report (Spanish) [PDF 256 KB] prepared by the KPMG member firm in Mexico

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