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Mexico Planning Tax Response To US Tax Bill: Report

by Mike Godfrey, Tax-News.com, Washington

27 December 2017


Having earlier said it wasn't concerned with the prospect of a more competitive tax system in the US, Mexico has seen the US dollar surge against the peso and is reportedly now considering a fiscal response.

Mexico's former Finance Secretary, Jose Antonio Meade, had ruled out such a response in June 2017, stating that the country is unlikely to change its tax code in response to "aggressive" US policies, including a potentially sharp reduction in the US corporation tax rate. He said that the country does not have the fiscal space to lower taxes to counter plans by the Trump Administration to cut the maximum corporation tax rate from 35 percent. At that stage, the US was considering the introduction of a rate as low as 15 percent but instead settled on a 21 percent rate in the newly approved Tax Cuts and Jobs Act, which was signed into law by the President on December 22, 2017.

Speaking to the Wall Street Journal, Meade had said Mexico would only take retaliatory tax measures if the US followed through with its threats to introduce a border tax.

Now, a report seen by Reuters is said to propose that Mexico should consider its options and reinforce the need for only deficit-neutral reform. Reuters reported the document said "there will be an assessment of whether modifications should be made to Mexico's fiscal framework."

TAGS: Finance | tax | law | corporation tax | Mexico | United States | Tax

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