Mexico To Offer Compliant Firms Tax Breaks

by Mike Godfrey, Tax-News.com, Washington

12 September 2014

Small businesses in Mexico will be granted value-added tax (VAT) and sales tax exemptions if they register their workers with the tax authorities, President Enrique Pena Nieto has said.

The measure is aimed at boosting tax collections by bringing informal workers into the tax net.

Among the measures suggested, the Government has proposed that those traders who make supplies of less than MXN100,000 (USD7,550) a year would not be required to pay VAT or the Special Tax on Production and Services (IEPS), the latter being levied on items such as junk food and cigarettes.

Businesses earning between MXN100,000 and MXN2m would be exempt from the taxes for up to one year. Thereafter they would pay lower rates until the tenth year, when full rates will be restored.

There are currently about 28.6m people employed in Mexico's informal sector, accounting for about 58 percent of the workforce.

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