Mexico: Repatriation relief, tax incentives provided in decrees

Mexico: Repatriation relief, tax incentives

Various decrees, published in the official gazette earlier this year, were intended to provide economic stimulus through tax relief or benefits. Among the tax benefits provided are measures allowing for the repatriation of assets or resources held abroad. Another benefit allows for an immediate deduction of expenses related to the acquisition of new fixed assets for small companies.

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Repatriation of income, assets

The “repatriation” or amnesty relief provides that the rate of income tax on the return to Mexico of assets or resources that are held abroad will be 8%. The intention is to encourage the return to Mexico of resources held abroad, provided that the resources are invested in Mexico for the benefit of the Mexican population for a period of at least two years. 

The relief measure applies to natural persons, permanent establishments of foreign entities operating in Mexico, and others, and the relief measure applies with respect to income generated and held abroad until 31 December 2016, including income from “preferential tax regimes.” The relief will not apply with respect to taxpayers who are currently under audit or involved in tax litigation. It also will not apply for resources related to illegal activities or for income that has generated a deduction in Mexico. The relief is available for repatriations made during fiscal year 2017, and the tax owed must be paid within 15 days after the assets are returned to Mexico.

Deduction for new fixed assets

Concerning the immediate deduction of expenses related to the acquisition of new fixed assets for small companies, the deduction applies for 2017 and 2018 with respect to new investments in certain fixed assets that are used for the first time in Mexico. This measure does not apply for investments in vehicles, office equipment, armored car equipment, and aircraft not involved in agricultural spraying.

 

Read a 2017 report (Spanish) prepared by the KPMG member firm in Mexico: Decretos de beneficios fiscales

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