Mexican Tax Reforms Gazetted

Mexico's much-anticipated tax reform bill, which includes measures affecting the direct and indirect taxation of corporate taxpayers, has been published in the country's Official Gazette, completing the enactment procedures...

Important changes are also made to Mexico's maquiladora tax regime. Maquiladoras are Mexican companies that process, transform, assemble or repair imported materials, parts and components into finished goods that are subsequently exported out of the country. So long as they meet certain requirements, these companies are permitted to import the goods needed to carry out their production activities free of customs duty or import value-added tax and pay lower rates of corporate tax. They are also exempt from Mexico's permanent establishment rules.

The changes gazetted this month tighten the qualification criteria for a company to avail of the maquiladora regime. ...[it will] require that a maquiladora's income associated with "productive activities" be derived solely from its maquila activities for the maquiladora to qualify for the permanent establishment exemption, and not include sales of products directly to Mexican customers. There is some uncertainty as to the precise definition of "productive activities,"... Additionally, only two transfer pricing methods are available for maquiladoras–a safe harbor method and a possibility of an advance pricing agreement (APA) from the tax administration...

This has been excerpted from the 20 December 2013 article by the Global Tax News, and is available in its entirety at: http://www.tax-news.com/news/Mexican_Tax_Reforms_Gazetted____63103.html.