The so-called “zero rate” allows automakers around the world to demand reimbursement of the taxes they pay, an incentive that the SAT seeks to eliminate.
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July 20, 2021
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Raquel buenrostro , head of the tax administration service (SAT) , announced a proposal to reduce the tax exemption between Car manufacturers . The entity intends to eliminate several of the tax incentives enjoyed by these companies when established in Mexico. Among these are the so-called ‘zero rate’ of taxes , which enables automakers around the world to demand a refund of the taxes they pay in the countryside.
The proposal is part of a package of measures aimed at increase tax collection from 1% of gross domestic product (GDP) next year. Buenrostro explained that at present, the initiative is awaiting approval by the Ministry of Finance and Public Credit . It should be remembered that these advantages are an essential way for international automakers to produce their vehicles in Mexico.
“Mexico has been excluded from multilateral income tax sharing agreements concluded by automakers. We are trying to correct all these agreements because we also participate in an important way in the supply chain and we want a part of the income tax ” , said Buenrostro in an interview with Bloomberg .
Will taxes cause auto factories to leave Mexico?
The official revealed that last year she spoke to an automaker, which threatened to withdraw from the country if these tax privileges are changed. However, Buenrostro is convinced that the tax changes would not affect auto investment in Mexico.
“The threat is not credible”, said the head of the SAT. “I told him, ‘I’m not sure his parent company will be very happy if he leaves, because we see his numbers, and he won’t have such numbers anywhere in the world. . “
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Previous administrations have implemented various tax incentives in recent years to attract new investment from auto giants such as Toyota Motor Corp and General Motors Co. The strategy has positioned Mexico as the fourth largest auto exporter in the world.
“These incentives must stop. We will debug all of this. You have to see what were the incentives that the government gave at the time so that they could make the investment, but once that investment is recouped, it makes no sense to maintain them. , ”Buenrostro said at the point of sale.
The new tax reform, the key to refinancing Pemex
The official said the new Secretary of Finance and Public Credit , Rogelio Ramírez de la O , will give priority to the refinancing of Petróleos Mexicanos, since “Pemex debt is more expensive than sovereign debt” and is one of the projects on which President Andrés Manuel López Obrador has been at the table “for a long time, a long time, a long time . “
As part of this new tax reform, they will also seek to close loopholes that it says allow manufacturers who export most of their products to avoid paying taxes on products sold in Mexico.