Mexico

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 28 October, 2020

General Information

  • On March 19th, the EU Central Bank opened a 'swap' mechanism with its counterparty from Mexico for $60,000 million of US dollars to provide liquidity in dollars for at least 6 months.
  • On March 30th, Mexican government published on the official gazette the agreement in which “Sanitary Emergency due to Act of God” is declared due to the pandemic derived from the virus known as SARS-CoV 2 (COVID-19)
  • On May 14th, Mexican government published on the official gazette an epidemiologic traffic light guide system, which allows individuals and business, understand and confirm if its activities can be reopen or if such should be closed, in this regard the colors are divided into green, yellow, orange and red, please refer to the corresponding section for further analysis.
  • On September 23th, the Ministry of Finance, through the CNBV, announced a new package of measures for credit restructuring. These supports consist on measures to encourage and allow banks and other financial intermediaries to restructure the loans of clients who request it. These measures consist in various options that they may offer such as extension of terms, reduction of rates or eventual reductions and a term of up to 5 years (60 months), depending on the client and institution.
  • On October 15th,  Banxico made an announcement on Monetary Policy  and cut its benchmark by 25 basis points, leaving it at 4.25%.

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Employment-related measures

(e.g. state compensation schemes, training…)

  • Due to the declaration of “Sanitary emergency due to Act of God”, temporary suspension of labor obligations for both (employer and employee) is established. Although, it is granted the obligation to pay an indemnity that considers the potential time of suspension and the possibility to carry out a new activity; however, it cannot exceed one month of salary. This must be validated by the Labor Board.
  • It is essential to point out that  depending on the industry and the economic activity of the Company, there must be a mutual agreement to protect workers and the sources of work, meaning that a negotiation between the parties must prevail.
  • Social Security Department (“IMSS” per its acronym in Spanish) issued legal and administrative facilities to allowed the employers to defer payments of worker-employer social security contributions up to 48 months considering interest payments with an interest rate between 1.26% and 1.82%.

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

  • Mexican government has announced that it will be granted one million loans of MXN 25,000 each one. 500,000 for the informal economy and 500,000 for the formal economy.

Customs Measures

Duty relief

  • Simplified procedure for imports carried out by the Ministry of Health and Health Sector decentralized agencies.
  • The Health Department  and, decentralized agencies  authorized by the Health Sector may import goods for medical treatment without some administrative formalities related to the customs clearance of imported goods.
  • Importation of merchandise donated to the Government trough Ministry of Health. The mentioned rule establishes the procedure to request the permit to import without payment of customs duties, this apply exclusive for merchandise donated by foreign entities to face the healthy emergency-. The importer of record must be the Ministry of Health or its related entities. 

Other measures

  • Importation of merchandise donated to the Government trough Ministry of Health. The mentioned rule establishes the procedure to request the permit to import without payment of customs duties, this apply exclusive for merchandise donated by foreign entities to face the healthy emergency-. The importer of record must be the Ministry of Health or its related entities.
  • The Ministry of Health published the agreement that establish the technical guidelines related to the suspension of activities in some sectors of the Mexican economy  in the following terms:
    • For companies, whose activities suspension may have an irreversible effect on their operation,
    • For courier companies,
    • Electronic commerce organizations and platforms are considered.
    • Companies necessary for the maintenance, maintenance and repair of critical infrastructure that ensures the production and distribution of essential services.
  • The Authority expedites issuance permits for import and export for all health inputs.
  • Low oil prices and slow growth will leave limited room for tax expansion. Government will cut spending in order to offset lower revenues. Lopez Obrador will remain committed to tax prudence.
  • The government will look to keep prices low opening opportunities to new markets in sectors that could be affected by the disruptions the virus outbreak is causing globally. USMCA has been approved in all three of Mexico, the US, and Canada, and now each country will focus on finalizing the regulatory changes needed for its implementation.

Proof of origin

  • From April 20, certificates of origin granted by the government will be delivered through email, either with the account registered on VUCEM (digital platform) or the one used in the request.

Other measures

  • Low oil prices and slow growth will leave limited room for tax expansion. Government will cut spending in order to offset lower revenues. Lopez Obrador will remain committed to tax prudence.
  • The government will look to keep prices low opening opportunities to new markets in sectors that could be affected by the disruptions the virus outbreak is causing globally. USMCA has been approved in all three of Mexico, the US, and Canada, and now each country will focus on finalizing the regulatory changes needed for its implementation.
Proof of origin
  • From April 20, certificates of origin granted by the government will be delivered through email, either with the account registered on VUCEM (digital platform) or the one used in the request.
Other measures
  • On May 14, 2020, the government of Mexico, issued a decree through the official Gazette which establishes that as part of the strategy for the reopening of activities, an epidemiological traffic light system would be used by regions.
  • The objective of the Traffic Light is to be a monitoring system for the regulation of the use of public space according to the risk of contagion of COVID-19.
  • This traffic light is made up of four colors:
    • Red: Only essential economic activities are allowed.
    • Orange: In addition to essential economic activities, companies of non-essential economic activities will be allowed to work with 30% of the personnel for their operation, always taking into account the maximum care measures for people with a greater risk of presenting serious disease of COVID-19, open public spaces will be opened with a reduced capacity.
    • Yellow :All work activities are allowed, caring for people with a higher risk of presenting serious disease of COVID-19. Open public space is open on a regular basis, and closed public spaces can be opened with reduced capacity.
    • Green: All activities are allowed, considering the recommendations of safety distance.

Main sources of information

Recovery Plan Overview

  • Recovery plan : Economic recovery plan for Mexico
  • Budget : TBD
  • Announcement : TBD
  • Main orientations : TBD

Main measures

On September 8th, 2020 the Mexican President presented to the Mexican Congress the 2021 economic legislative package; which is expected to carry out the investment of public resources on social programs as well as infrastructure projects, including education and health services.

The Government of Mexico along with Carlos Slim Foundation will be one of the countries in Latin America in charge of producing and developing along with the University of Oxford and the Astra Zeneca laboratories a vaccine to prevent COVID-19, this will allow to Mexico to have timely and sufficient access to the vaccine.

Economic Reactivation plan for Well-being of Mexico City:

  • According to the Mexico City Government statement, it is estimated that 40,000 million pesos will be spent on public investment in order to promote the economic recovery of the capital of the country, divided into social support to individuals and loans to small and medium businesses.
  • It is also planned to make an investment in public infrastructure and housing for a total of 27,000 million pesos focused on infrastructure related to: education, health, mobility, urban services, green areas.

Contact us

Tax: Armando Lara – armandolara@kpmg.com.mx
Restructuring: Federico Hernandez – federicohernandez@kpmg.com.mx
Legal: Federico Garza – federicogarza@kpmg.com.mx