Mexican Senate Makes Last Minute Changes To Budget

by Mike Godfrey, Tax-News.com, Washington

03 November 2009

The Mexican Senate has stretched negotiations on the budget right up to the October 31 deadline, and has introduced last minute amendments.

The measures approved by the Senate include the following:

• VAT will increase from 15% to 16%, and will not include food and medicines as envisaged in President Calderon's original budget.
• The top rate of income tax for individuals and corporations has been raised from 28% to 30% (although this is set to drop back again to 28% in 2014).
• More than 2/3 of the population will not be subject to income tax liability as a result of raising the tax free monthly income threshold to MXN10,300 (USD780)
• The tax on bank deposits that exceed MXN15,000 on a monthly basis was raised from 2% to 3%. This tax was designed to bear on black economy activities.
• Corporation tax provisions now provide that 25% of deferred taxes owed be paid immediately, instead of 40%, with the rest payable over the following four years.
• Proposed increases in excise taxes on beer cigarettes and gambling were retained fom President Calderon's early proposals, although a 2% supplementary sales tax on all goods and services was rejected.
• Pressure to remove the 3% tax on telecommunication services from the bill was resisted.

The Treasury Committee approved the Senate changes on October 31, but further approval of the amendments will be required from the lower house, and the spending part of the budget will be approved by the lower house by November 15 without further reference to the Senate.

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