Mexico: Tax reform proposals in economic package for 2022

An economic package includes proposals relating to federal budget for 2022

An economic package includes proposals relating to federal budget for 2022

Mexico’s president on 8 September 2021 presented to the Mexican Congress an economic package for the year 2022.

The package includes proposals relating to federal budget for 2022 as well as proposed changes to the federal income tax law and value added tax (VAT) and excise tax (duty) legislation. The economic package does not propose any new taxes or increases to the existing taxes, but it is possible that changes could be made during the legislation process.

With regard to taxes, the legislative proposals include certain tax incentives (specifically with regard to the excise tax paid on diesel fuel for certain activities) and rules for income tax withholding by financial institutions that are part of the Mexican financial system (similar to an estimated income tax payment on individual depositors).

Other proposals concern the tax treatment of foreign exchange rate differences, a tax credit for income tax paid abroad, back-to-back loans for financing operations, monthly estimated income tax payments, gain realized on the alienation of property, and certain business reorganizations.

Another measures proposes changes to the thin capitalization rule, and there are proposed changes to the transfer pricing rules and proposed measures relating to Mexico’s international tax regime (including tax treaty benefits and the tax treatment of income related to immovable property and securities).

Read a September 2021 report prepared by the KPMG member firm in Mexico

 

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