EXCLUSIVE Mexico does not consider tax hikes as part of tax reform – Deputy Minister of Finance
The Mexican government does not consider tax increases in an upcoming tax reform plan, but will consider closing loopholes, improving tax efficiency and broadening the tax base, the deputy minister of taxation said on Tuesday. Finances Gabriel Yorio.
“In 2021, we find ourselves in a situation where Mexico does not need to raise tax rates,” Yorio told Reuters in an interview.
“We are not going to increase tax rates. We will probably make administrative improvements, broaden the tax base and close tax gaps and of course, analyze the proposals that may come from different economic actors, including the new Congress, “Yorio said.
Mexico is in the process of finalizing its tax reform, but the plan is still underway and details are being worked out.
President Andres Manuel Lopez Obrador aims to increase Mexico’s tax levies to 15% of gross domestic product (GDP), from around 14.2% of GDP currently, Yorio said.
In an effort to increase the lowest tax rate in the Organization for Economic Co-operation and Development, Lopez Obrador’s administration has worked to increase tax collection and fight evasion in order to derive more income from businesses.
Last year, the International Monetary Fund (IMF) urged Mexico to adopt tax reform once the recovery from the COVID-19 pandemic sets in to stimulate the economy and support spending over the medium term.
G20 countries, including Mexico, will consider a broader deal next month in Venice on the heels of a landmark G7 deal struck over the weekend that aims to squeeze more money from multinational companies and reduce incentives for low-tax offshore havens.
“We will obviously have to change some laws, rules and comply with agreements reached at the G20,” said Yorio, adding that the changes could mean increased tax revenues in Mexico.
The government will have to negotiate the reform with lawmakers, after Mexicans voted in a new lower house of Congress on Sunday.
“Some new members of Congress might bring environmental or sustainable development taxes to the table and these new concepts will obviously need to be analyzed to see if they are included or not,” Yorio said.
He added that the planned budget reform plan is unlikely to include new taxes except for the overall minimum corporate tax rate agreed at the G7, which will be discussed at the G20.
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