Global Tax Alert (News from Americas Tax Center) | 31 October 2013

Mexico's proposed tax reform awaiting approval and signature by president

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The Mexican tax reform has been approved by the two houses of congress and is now pending approval and signature by the president. The original proposal submitted to Congress on 8 September 2013, was reviewed by the lower house of Congress and an amended version was approved on 18 October 2013 (see EY Global Tax Alert, Mexico's lower House of Congress approves tax reform proposal, dated 21 October 2013). After significant debate and some additional amendments the reform was approved 31 October 2013 by the Mexican Senate.

The amendments made by the Senate have been approved by the lower house and now the reform will be enacted once signed by the president.

In general terms, the Senate has approved the lower house's version with certain amendments, the most significant of which are the following:

  • The special excise tax on certain high caloric food products has been increased from 5% of the price to 8%.
  • The rule that disallows the deduction of a portion of the payroll related expenses, which are not considered taxable income to the employee, was amended by the Senate to increase the level of deduction in certain instances. The previous draft provided that only 47% of such costs would be tax deductible (disallowing 53% of the deduction). The final rule states that 53% of the expense may be deducted (disallowing 47%), to the extent that the amount of the benefit being paid to the employees, has not decreased from the prior year. If there is a decrease, then the deduction is limited to 47%.

Other provisions were debated but not changed in the final version.

For additional information with respect to this Alert, please contact the following:

Mancera, S.C., Mexico City
  • Manuel Solano
    +52 55 1101 6437
  • Koen van´t Hek
    +52 55 1101 6439
  • Jorge Castellon
    +52 55 5283 8671
  • Santiago Chacon
    +52 55 5283 1449
Mancera, S.C., Latin American Business Center, Mexico City
  • Terri Grosselin
    +52 55 1101 6469
Ernst & Young LLP, Latin American Business Center, New York
  • Alfredo Alvarez
    +1 212 773 5936

EYG no. CM3930