EconomyThe Mexican government prepares tax reform without tax hike

The Mexican government prepares tax reform without tax hike

The Mexican government plans to soon present a tax reform without increases in tax rates, but that seeks to improve efficiency in collection and expand the taxpayer base, said Undersecretary of Finance Gabriel Yorio on Tuesday.

“In 2021 we find ourselves in a situation where Mexico has no need to increase rates. So I don’t think it will be included in any initiative that the government sends to the new Congress (lower house),” the official said in an interview with Reuters.

“We are probably going to see an administrative simplification agenda, an agenda to expand the tax base and close fiscal gaps and obviously, analyze the proposals that may come from the different economic actors, including the new composition of Congress, he added.

President Andrés Manuel López Obrador aims to increase Mexico’s tax collection to reach 15% of Gross Domestic Product (GDP), from around 14.2% today, the undersecretary said.

In order to boost the country’s collection, the López Obrador administration has cracked down on tax evasion to get more revenue from companies.

The International Monetary Fund (IMF) last year called on Mexico to enact a tax reform once the recovery from the COVID-19 pandemic takes hold, with the aim of boosting the economy and supporting spending in the medium term.

G20 countries, including Mexico, are considering a broader deal next month in Venice, following a landmark G7 deal reached over the weekend that aims to get more money out of multinational companies and reduce incentives for tax havens. abroad.

“We are obviously going to have to modify some laws, some regulations and align ourselves with the agreements we reach at the G20,” Yorio said, adding that the changes could mean higher tax revenues in Mexico.

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The government will need to negotiate the eventual tax reform with lawmakers after Mexicans voted Sunday to renew a new lower house of Congress.

“Probably some new actors in Congress could put taxes on the table that are related to the environment or sustainability. And these new concepts obviously have to be analyzed and it will be evaluated whether they are included or not,” said Yorio.

He added that the planned tax reform plan will probably not include new taxes, with the exception of the minimum global corporate tax rate agreed at the G7, and which will be discussed at the G20.

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