Mexican tax reform update and other good news
Attendance at a Mexico Now Conference is one of the best ways to stay up to date on developments in the maquiladora industry.
At recent Mexico Now events held in Dearborn, Michigan and in Chicago, Illinois, Mexican tax expert, Cesar Ochoa, of EC Legal delivered a Mexican tax reform update to those industry executives that were in attendance. During the presentation, Ochoa asked the rhetorical question, “Can Mexico be like Germany, Japan or the USA?” This query was posed in the context of Mexico’s ability to collect revenues from a tax base that can adequately fund demands for infrastructure and services that will inevitably arise as Mexico’s population and industry presence grows.
In addition to the need to generate and collect revenues that will meet the needs of a growing population, in his Mexican tax reform update Ochoa also made it clear that expanding the countries tax base will also be necessary, if the country’s government is to have success in achieving other goals, such as:
- reducing a less than desirable pattern of income distribution;
- investing in areas that will provide needed return in terms of wealth generation and, subsequent, job creation;
- creating a social safety net that affords a minimum level of physical and social well-being to the Mexican population in general.
During his Mexican tax reform update the EC Legal expert, Ochoa, explained that systemic reforms were required and made over the course of the last year in order to improve a flawed tax collection system that was incapable of collecting sufficient public revenues in as equitable a manner as possible. He also pointed out over the course of his presentation that among OECD countries, Mexico, as of 2012, ranked last in terms of tax collection expressed in terms of GDP percentage. While Latin American tax revenues constitute approximately sixteen percent of GDP, Mexico lags behind at a rate of ten percent. Cesar Ochoa also pointed out during his Mexican tax reform update that as a percentage of GDP, excluding Mexico, the Latin American average for public expenditure as a percentage of GDP stands at twenty-seven percent, while, for Mexico, the figure is substantially less at nineteen percent.
One of important points made by the speaker regarding the need for structural reform during his Mexican tax reform update was that the need for change has been made much more urgent in recent times primarily due to the volatility of the per barrel price of crude oil. Although for many years, Mexico has depended much more heavily on oil revenues for its national income than in the recent past, the country still must find ways to increasingly reduce the importance of this valuable natural resource as regards national income generation and collection. The full content of EC Legal’s, Cesar Ochoa, presentation at the recent Mexico Now events in the Midwest can be accessed below.
LINK BELOW TO PRESENTATION: