Mexico Issues Tax Amnesty

On January 26, the Presidency issued a Decree which establishes certain tax incentives for the repatriation of capital (tax amnesty) and certain tax compliance alternatives (tax anonymity) for individuals with foreign source income. This was done to promote the repatriation of productive capital and increase the security of taxpayers derived from their individual tax compliance obligation.

From a private wealth management perspective two items are worthy of distinction:

The Decree establishes that income, dividends and retained earnings from indirect investments held outside Mexico in preferential tax regimes, including the black-listed tax havens and jurisdictions in which the tax rate is lower than 75% of Mexico’s Income Tax Rate (i.e. 22.5% in 2005), including those generated in 2005, which are repatriated to Mexico for their investment, will be allowed to acknowledge as taxable income only 25% of said income, dividends or retained